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Ford starts preparatory work to resume operations at its Chennai plant
The automobile company also finalised the components to be manufactured from the Chennai facility and it may resume work in the second half of 2025
New Delhi
The US automaker Ford has started the preparatory work to restart the first phase of its operations at its Chennai plant, Tamil Nadu Industries Minister TRB Rajaa said on Wednesday, according to a report by The Financial Express.
'There was some slowdown (in the process) due to the regime change in the US, but now things are back on track,' Rajaa said.
According to the news report, the automobile company also finalised the components to be manufactured from the Chennai facility, and preparatory work is underway for the same.
However, it is still not clear if Ford would resume full vehicle production as it was planned. Citing the government official, the report mentioned that Ford may resume the manufacturing work in the second half of 2025.
Trump tariffs affect
After Trump imposed tariffs on several countries, it affected all of the industries globally, especially major sectors like the automobile industry. From imports and exports to manufacturing, companies are unable to take decisions, as many countries are still in conversation with the US to secure a trade deal. These talks are aimed at avoiding the high import tariffs imposed by Trump.
US auto major Ford is also impacted by this uncertainty in the global market. According to the report, the company had a limited plan to export engines, gear systems, and transmissions instead of manufacturing complete cars. However, this limited plan still ran into trouble when the Trump administration put a high 25 per cent tax on imported cars and major parts, making it unclear if using India as an export base would still make sense.
But in a big policy change, Trump signed orders on Tuesday that reduce some of the pressure. The 25 per cent tax will stay, but carmakers that complete their vehicles in the US will get a 15 per cent rebate, which lowers costs for those willing to do the final assembly in the US.
Why did Ford exit India in 2021?
Ford's exit from India in 2021 ended a long struggle to succeed in the country. Even though it launched popular cars like the EcoSport, Figo, and Endeavour, it could not keep up with rivals like Maruti Suzuki, Hyundai, Tata Motors, and Kia, who led the market with their affordable, fuel-efficient vehicles.
With $2 billion in losses and less than 2 per cent market share, it became too hard for Ford to keep running its business in India. Things got worse when its partnership with Mahindra & Mahindra fell apart in 2020, leaving Ford without a local partner to help in the price-sensitive market. Although Ford stopped making cars in India, it still supports its customers with parts and service and continues to export vehicles from the country.
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