Ford is ending production in India and taking a $2 billion hit in the process

In an announcement Thursday, the company said that roughly 4,000 employees will be laid off and manufacturing will end immediately. CEO Jim Farley said the move was “difficult but necessary” to achieve long-term growth.

“Despite investing significantly in India, Ford has accumulated more than $2 billion of operating losses over the past 10 years and demand for new vehicles has been much weaker than forecast,” Farley said.

Ford’s India head, Anurag Mehrotra, said that the unit has not been able to find a “sustainable path forward to long-term profitability that includes in-country vehicle manufacturing.” He added that the decision was “reinforced by years of accumulated losses, persistent industry overcapacity and lack of expected growth in India’s car market.”

Ford (F) has long struggled in India. The automaker began operations there in 1995, and has invested more than $2 billion in the country over the past 25 years. Two plants in the cities of Sanand and Chennai will shutter in the coming months and the company will “work closely” with employees affected by the closures.
In 2019, Ford reached a deal with local rival Mahindra to transfer most of its Indian business into a new joint venture, but the deal fell apart late last year. The companies cited “fundamental changes in global economic and business conditions” caused in part by the pandemic.
Ford is the latest US carmaker to cut back its India business in recent years. General Motors (GM) announced in 2017 that it would stop selling cars in the country.