Ford Set to Return to India: Plans to Restart Manufacturing in Chennai for Exports
Ford Motor Company has taken a significant step towards resuming its manufacturing operations in India by submitting a letter of intent (LOI) to the Tamil Nadu government. The American automaker plans to restart production at its Maraimalai Nagar plant in Chennai, primarily focusing on exports, with electric vehicles (EVs) likely to be at the center of this revival. The announcement comes two years after the company ceased its operations in India and exited the market due to mounting losses. This time, Ford’s “Ford+ Growth Plan” will drive its ambitions to tap into global markets, using the Chennai facility as a hub for exports, particularly to Southeast Asia.
Strategic Focus on Electric Vehicles and Exports
Ford set to return to India with a renewed focus on the growing electric vehicle market. The Maraimalai Nagar plant, which was shuttered in August 2022, will be a critical part of the company’s global expansion strategy. As the world increasingly shifts towards sustainable and electric mobility, Ford aims to use the Chennai plant to produce electric vehicles for export. This move aligns with global trends in the automotive industry and leverages Tamil Nadu’s growing EV ecosystem, which has attracted major investments from other companies like Vinfast and Tata JLR.
The decision comes after Tamil Nadu Chief Minister M K Stalin’s visit to Ford’s headquarters in Dearborn, Michigan. The Tamil Nadu government has been in continuous discussions with Ford executives for several months, promoting the state’s capabilities in electric vehicle manufacturing. Tamil Nadu has become a favored destination for automotive companies, with its supportive policies and strategic location near key ports, making it an ideal choice for companies looking to establish export-driven operations.
Ford Set to Return to India: A Boost for Tamil Nadu’s Automotive Sector
The announcement of Ford set to return to India was made by Kay Hart, the president of Ford’s International Markets Group. In her statement, Hart highlighted that the company had submitted a letter of intent to the Tamil Nadu government, outlining plans to utilize the Chennai plant for manufacturing and exports. “We are grateful for the support of the Tamil Nadu government as we explored different options for the Chennai plant,” said Hart, underscoring Ford’s commitment to the region.
Ford’s move is part of a broader trend of global brands returning to India. Companies like Shein, Carrefour, and Papa John’s have all announced their re-entries into the Indian market. Renault, which initially exited India after a failed partnership with Mahindra & Mahindra in 2007, also made a successful comeback in 2010 by setting up a facility with Nissan India in Chennai.
Ford’s decision to restart its Chennai plant is seen as a major win for the Tamil Nadu government. According to government sources, efforts to find a buyer or alternative use for the plant have been ongoing for over a year. Automotive giants like Ola Electric, Hyundai Motor India, Tata Motors, and MG Motor had shown interest in acquiring the plant, but no deal was finalized. The Tamil Nadu government has been actively working to attract Ford back into operations, and the latest developments are a testament to their successful negotiations.
In July 2023, Tamil Nadu’s Industries Minister TRB Rajaa met with Ford executives in San Francisco to discuss the potential revival of the Chennai plant. Ford was given six months to evaluate its options. By early 2024, reports suggested that Ford was seriously considering restarting production. The decision was further solidified when Chief Minister Stalin visited Ford’s main factory in Dearborn in July 2024, personally assuring Ford’s leadership of the Tamil Nadu government’s full support for the automaker’s reintegration into the state’s automotive landscape.
A Strategic Plant with a Global Vision
Ford’s Chennai facility spans 350 acres and has a production capacity of 200,000 vehicles and 340,000 engines annually. Its proximity to Chennai and Ennore ports, as well as its short distance from Bengaluru, makes it a highly strategic location for manufacturing and exports. Before Ford exited India in 2022, it had accumulated $2 billion in losses over a decade and held less than 2% of the passenger vehicle market, despite the popularity of models like the EcoSport and Endeavour.
The automaker’s other manufacturing facility in Sanand, Gujarat, was taken over by Tata Passenger Electric Mobility (TPEML) in December 2022 for Rs 725.7 crore. The Sanand plant has an annual production capacity of 300,000 units, further supporting India’s growing position in the global automotive industry.
“We plan to leverage Tamil Nadu’s manufacturing expertise to serve new global markets,” Hart said, emphasizing Ford’s global vision for the Chennai plant. Ford’s decision to re-enter India reflects the importance of the country as a key market in its global strategy. Currently, Ford employs around 12,000 people at its Global Business Operations unit in Tamil Nadu, with plans to increase this number by 2,500 to 3,000 in the next three years.
Ford’s Future in India
Although Ford exited the Indian market two years ago, the company continues to serve over a million customers in the country by providing services, aftermarket parts, and warranty support. When the Maraimalai Nagar plant was closed in 2022, Ford provided severance payouts totaling Rs 1,296 crore to 2,592 workers.
Ford’s decision to return to India marks a significant milestone in the company’s history. As the global automotive industry pivots towards electric mobility, Ford’s Chennai plant is poised to become a key part of its future. With a strong focus on exports and electric vehicles, Ford is set to leverage India’s manufacturing prowess to establish a new chapter in its global growth strategy.
In the coming months, Ford is expected to disclose more details about its plans for the Chennai plant, outlining the specific models and markets it will serve. For now, the news of Ford’s return to India signals a promising future for both the automaker and Tamil Nadu’s thriving automotive sector.
You might also be interested in – Tata Motors shares drop 6% following weak growth forecast and UBS downgrade
