Ford wakes up badly burnt from its India dream
When Ford Motor Co built its first factory in India in the mid-1990s, US carmakers believed they were buying into a boom – the next China.
The economy had been liberalized in 1991, the government was welcoming investors, and the middle class was expected to fuel a consumption frenzy. Rising disposable income would help foreign carmakers to a market share of as much as 10%, forecasters said.
Last week, Ford took a $2 billion hit to stop making cars in India, following compatriots General Motors Co and Harley-Davidson Inc in closing factories in the country.
Among foreigners that remain, Japan’s Nissan Motor Co Ltd and even Germany’s Volkswagen AG – the world’s biggest automaker by sales – each hold less than 1% of a car market once forecast to be the third-largest by 2020, after China and the United States, with annual sales of 5 million.
Instead, sales have stagnated at about 3 million cars. The growth rate has slowed to 3.6% in the last decade versus 12% a decade earlier.
Ford’s retreat marks the end of an Indian dream for US carmakers. It also follows its exit from Brazil announced in January, reflecting an industry pivot from emerging markets to what is now widely seen as a make-or-break investment in electric vehicles.
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