As Ford takes the exit route from India, dealers urge govt to step in

Great Wall Motor to buy Indian plant from GM. Photo: Nikkei Asian Review. Sketched by the Pan Pacific Agency.

NEW DELHI, Sep 12, 2021, Indian Express. Days after Ford announced its decision to stop operations in India, employees and dealers of the company have decided to challenge the plan for a complete shutdown, Indian Express reported.

Leaving only ‘Ford Business Solutions’ operational in the country, Ford India’s decision to cease manufacturing vehicles for sale in India immediately will affect thousands of employees directly and hundreds of others in related sectors, they said.

Reacting to Ford’s move to stop vehicle assembly at its plant in Sanand, Gujarat, by the fourth quarter of 2021 and vehicle and engine manufacturing in Chennai by second quarter of 2022, Vinkesh Gulati of the Federation of Automobile Dealers Associations (FADA) told The Sunday Express that the government should immediately step in and force Ford India to continue services for a period that matters to vehicles it has sold.

Gulati said Ford India has promised to adequately compensate dealers who continue their services for vehicle owners. “But that promise is not going to compensate for the huge investments made by dealers. Ideally, the government should step in and ensure that the company continues their services for a deserving period, as they are still selling their vehicles in India,” Gulati said.

FADA CEO Saharsh Damani told The Sunday Express: “Ford has certainly said they will continue service support, but once you stop India operations there is a big question mark. Companies leaving India say such things, but it does not work in the long run because there are spare parts issues, manpower issues. Then many dealers will not want to continue.”

FADA said it is already flooded with distress calls from worried dealers. “This will impact dealers, dealership employees and their families. Outside auto retail, component manufacturers who supply Ford in Gujarat and Tamil Nadu will feel the impact,” Damani said.

He said: “All developed markets have a Franchise Protection Act. Once this Act is there, companies can’t abruptly exit. They have to give sufficient time and suitable compensation. Dealership agreements then will have a long-term vision. It takes around Rs 5-6 crore to set up a Ford dealership in India. There is specific Ford-related hardware and infrastructure that is of no use once you are not associated with the brand. Dealers are SMEs and family-run partnerships, and this will be the biggest loss in their entrepreneurial career. Ford has 4,000 employees, the dealers have 40,000 employees…”

According to FADA, there are 170 dealers and 391 outlets with an investment worth Rs 2,000 crore. “While Ford India employs 4,000 people, dealerships employ around 40,000 people…. Ford India dealers currently hold 1,000 vehicles, which amount to Rs 150 crore via inventory funding from reputed Indian banks… Ford India also appointed multiple dealers until five months back. Such dealers will be at the biggest financial loss in their life,” the automobile organisation said in a statement.

While many Ford employees in Chennai were reluctant to talk, as they were still unaware about the company’s move regarding their jobs and possible compensation packages, at least two Ford engineers said they are still waiting for a communication about their future. “Either they will be laid off, or a few may be retained as part of ongoing projects in overseas plants. We have to wait and see,” one of them said.

R Suresh of Chennai Ford Employees Union said they may get a clear idea about the company’s plan when they meet company representatives Monday.

“There are mainly two categories (of staff), including hourly paid technicians and salaried,” Suresh said. “There are 2,635 technicians in Chennai alone — mostly diploma-holders with an average salary of Rs 55,000. Salaried categories include engineers and those in other senior positions, whose salaries start from Rs 80,000. About 350 of them are in Chennai,” he said.

“We will not accept anything less than jobs. We will not accept this shutdown; we need jobs,” Suresh added.

NDA ally and Pattali Makkal Katchi (PMK) leader S Ramadoss has also asked the state and Central governments to hold talks with the Ford management to probe options to continue their operations. Ramadoss also cited the Maharashtra government’s decision early this year to reject General Motors’ proposal to close down its Talegaon plant despite a compensation offer.

At Harpreet Ford, an outlet in Delhi’s Moti Nagar, Jitender Sadana, a sales representative, said cancellations have started since Thursday, the day Ford India released a video message from its country head, Anurag Mehrotra, stating that “we will be working closely with our dealers”.

Sardana, 44, who has spent 24 years working with Ford, however, said he does not know what lies ahead.

Damani said: “This happened just before Ganesh Chaturthi. There has been a lot of backlash from customers. Around 400 vehicles across India that were due to be delivered on this auspicious day could not get delivered because customers are jittery. In fact, there are a lot of customers who had confirmed bookings, but now want a refund. Customers don’t know how Ford will continue servicing their vehicles.”

Sunil Tandon, executive director at Harpreet Ford, said, “We have multiple dealerships with other car manufacturers in our dealership bouquet, so we will try to absorb as much as we can. I can’t say the same for small dealers. The service section will continue, but the sales department is the worrying part. We will talk to Ford. It is surreal that we began operations on September 9, 1996, and Ford’s announcement came the same day, 25 years later.”

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