Ford dealers invested over Rs 2,000 cr to set up sales infra; staring at huge loss: FADA

PTIUpdated: Thursday, September 09, 2021, 08:54 PM IST
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"The auto retail fraternity is really shocked to hear another Ford India's announcement where it has said that it will shut down production with immediate effect," FADA President Vinkesh Gulati said/ Representational image |

Ford dealers in India are staring at huge losses with the automaker deciding to shut production in the country with immediate effect, automobile dealers' body FADA said on Thursday.

Terming the company decision as shocking, the industry body noted that the dealers have invested over Rs 2,000 crore in creating sales infrastructure while employing around 40,000 people across the country.

"The auto retail fraternity is really shocked to hear another Ford India's announcement where it has said that it will shut down production with immediate effect," FADA President Vinkesh Gulati said in a statement.

There are 170 dealers who in turn have 391 outlets and have invested Rs 2,000 crore for setting up their dealerships, he noted.

Gulati added that Ford India dealers currently hold around 1,000 vehicles worth Rs 150 crore via inventory funding from reputed banks.

"The dealers also carry demo vehicles which run into the 100's in numbers. Moreover, the company also appointed multiple dealers until five months back. Such dealers will be at the biggest financial loss in their entire life!" he stated.

Gulati said the FADA has been for long requesting the Union Government to roll out Franchisee Protection Act as without that auto dealers are not adequately compensated like their counterparts in other countries like Mexico, Brazil, Russia, China, Indonesia, Malaysia, and Japan.

After General Motors, Man Trucks, Harley Davidson, UM Lohia and multiple fly by night electric vehicle players, Ford India is the fifth biggest exit from Indian markets since 2017, Gulati noted.

The Parliamentary Committee on Industry in its report in December 2020 had recommended the enactment of the Franchise Protection Act for automobile dealers in the country, he added.

US auto major Ford Motor Co on Thursday announced that it will stop vehicle production at its two plants in the country and will sell only imported vehicles going ahead as part of a restructuring exercise.

The company, which invested about $2.5 billion at its Chennai (Tamil Nadu) and Sanand (Gujarat) plants, has accumulated operating losses of around $2 billion in India in the last ten years. Its decision will impact over 4,000 employees and around 150 dealer principals who operate over 300 outlets.

It will, however, continue to manufacture engines from its Sanand plant which will be exported to the company's global operations.

With shutting down of the vehicle manufacturing operations, the automaker will stop selling vehicles such as the EcoSport, Figo, Endeavour, Freestyle, and Aspire, which are produced from these plants.

Ford said it will maintain parts depots in Delhi, Chennai, Mumbai, Sanand, and Kolkata and will work closely with its dealer network to restructure and help facilitate their transition from sales and service to parts and service support.

It will continue full customer support operations for these vehicles with service, aftermarket parts, and warranty coverage, the company added.

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