Team-BHP > BHP India > The Indian Car Scene


Reply
 
Thread Tools Search this Thread
Old 12th September 2019, 13:55   #1
Senior - BHPian
 
TusharK's Avatar
 
Join Date: Jul 2017
Location: Pune
Posts: 1,736
Thanked: 13,643 Times
Default Rumour: Ford might sell its Gujarat factory

According to a media report, Ford is planning to sell one of its factories in India. The company currently operates plants in Chennai, Tamil Nadu and Sanand, Gujarat.

Rumour: Ford might sell its Gujarat factory-2018fordaspirefacelift06.jpg

It is believed that the carmaker is in talks with at least one global automotive company for the sale of its Sanand plant. The negotiations are reportedly being handled by Ford's Asia-Pacific headquarters in Shanghai. However, a Ford spokesperson has rejected these rumours.

Ford's Sanand plant was set up in 2015. The company is said to have invested around US$1 billion in the facility. It has an annual capacity of 2,40,000 cars and 2,70,000 engines.

The Figo and Aspire are built at the Sanand plant. The facility also caters to the export market. Cars built here are exported to more than 30 countries.

Source: Livemint

Link to Team-BHP News
TusharK is offline   (23) Thanks Reply With Quote
Old 12th September 2019, 14:40   #2
BHPian
 
tarik.arora's Avatar
 
Join Date: Dec 2018
Location: Noida
Posts: 411
Thanked: 834 Times
Default Re: Rumour: Ford might sell its Gujarat factory

Thanks for sharing. Heard this rumour a couple of days back from my Automotive circle. The guy is pretty well connected with the top brass so i am pretty sure that this is happening. And he did tell that Great Wall seems interested.
tarik.arora is offline   (13) Thanks Reply With Quote
Old 12th September 2019, 14:53   #3
BHPian
 
sri_tesla's Avatar
 
Join Date: Apr 2016
Location: Hyderabad
Posts: 398
Thanked: 999 Times
Default Re: Rumour: Ford might sell its Gujarat factory

Quote:
Originally Posted by TusharK View Post
It is believed that the carmaker is in talks with at least one global automotive company for the sale of its Sanand plant. The negotiations are reportedly being handled by Ford's Asia-Pacific headquarters in Shanghai. However, a Ford spokesperson has rejected these rumours.
I wonder which global automotive company is entering India at this stage? Most likely it will be a Chinese company. Great Wall Motors, BYD are rumored to enter India in the next 1-2 years.

Ford and GM are struggling across the world including major markets like China, Europe and India. GM exited both India and European markets already. Only USA is the saving grace for these giants currently. Bad management, silly decisions like stopping sedans entirely, no future planning are the main reasons for the struggles of these companies.

Last edited by sri_tesla : 12th September 2019 at 14:57.
sri_tesla is offline   (7) Thanks Reply With Quote
Old 12th September 2019, 15:17   #4
Distinguished - BHPian
 
Join Date: Mar 2011
Location: Back to Chndgrh
Posts: 3,239
Thanked: 7,202 Times
Default Re: Rumour: Ford might sell its Gujarat factory

As per my knowns, discussions are ongoing with Mahindra but for some issues on the pricing given the high investments at Sanand. They have one of the most modern plants with the very best European machinery except for Press shop which is from Korea but of very high quality. Other's like TATA sources most of their machineries inhouse from TAL. It will be a bargain deal in this market considering the land size and the machines they have put. Our's a tough market where you have to compete with players who will save the last gm on the steel and likewise and companies like FORD cannot compromise on many things without approvals.

Wish, they stay independent.

Last edited by Turbanator : 12th September 2019 at 15:21.
Turbanator is online now   (27) Thanks Reply With Quote
Old 12th September 2019, 17:00   #5
Senior - BHPian
 
kiku007's Avatar
 
Join Date: Apr 2005
Location: Brisbane
Posts: 1,839
Thanked: 2,185 Times
Default Re: Rumour: Ford might sell its Gujarat factory

Bound to happen.

From the day the Ford Sanand plant was announced, it didn't make any sense to me. Hyundai was selling several times over Ford and was happy with expanding around its existing plant. But Ford for god knows what reason wanted another plant on the other side of the coast so far away.

I hope the new buyer is able to fully utilise the fantastic facility.

But this isn't new for them. They tried a similar thing with their IT services in Gurgaon and later shut it down.
kiku007 is offline   (9) Thanks Reply With Quote
Old 12th September 2019, 17:13   #6
BHPian
 
sharktale's Avatar
 
Join Date: Mar 2015
Location: Kolkata
Posts: 317
Thanked: 513 Times
Default Re: Rumour: Ford might sell its Gujarat factory

Quote:
Originally Posted by TusharK View Post
According to a media report, Ford is planning to sell one of its factories in India.
Can anyone enlighten why they are even thinking of choosing to part with the newer Sanand instead of the older Chennai?

Since Sanand is new, won't it be more aligned in terms of tech , equipment and factory processes, to Ford's current Global Standards. Won't that help the company put out better/newer products and stay relevant in the market?

The cost recovery angle of "not selling old but new" puts me into further dilemma.

Yes, if they sale Chennai, they'd have to transfer a lot of manpower, but Sanand too is a Manufacturing hub, and has the relevant infrastructure needed IMHO.

Last edited by sharktale : 12th September 2019 at 17:16.
sharktale is offline   (2) Thanks Reply With Quote
Old 12th September 2019, 17:42   #7
Senior - BHPian
 
Join Date: Nov 2009
Location: RJ-02,DL,MH-12
Posts: 1,188
Thanked: 1,633 Times
Default Re: Rumour: Ford might sell its Gujarat factory

Quote:
Originally Posted by sharktale View Post
Can anyone enlighten why they are even thinking of choosing to part with the newer Sanand instead of the older Chennai?
Depreciation on books. In the initial years one can book higher depreciation, which Ford has done and since the plant is new, they will be able to negotiate higher value; its a win win.

The older plant is already depreciated and will also not fetch them good value, whereas it will continue to serve them well (production activities) since it's a fully functional facility.

The second reason for selection of Gujarat is that export orders would require longer surface hauling leading to higher lead time and lower margins (cost of transportation of goods); Chennai offers better access to ports. its thus a supply chain issue.

Third, the ancillaries / vendors may be optimized at Chennai whereas Gujarat being a new facility, the vendor optimization could be work in progress.

& last - State exercise and duties; Chennai is considered as Detroit of India. The state might be offering better business terms to manufacturers.


Its plain simple accounting !

Last edited by i74js : 12th September 2019 at 17:54.
i74js is offline   (26) Thanks Reply With Quote
Old 12th September 2019, 17:58   #8
Senior - BHPian
 
kiku007's Avatar
 
Join Date: Apr 2005
Location: Brisbane
Posts: 1,839
Thanked: 2,185 Times
Default

Quote:
Originally Posted by sharktale View Post
Can anyone enlighten why they are even thinking of choosing to part with the newer Sanand instead of the older Chennai?

Which of the below gets better sale value?

1. Sparingly used 2017 Ford Ecosport with only 15000 kms on the odometer.

2. 2005 Ford Ikon

I hope this helps. 😀
kiku007 is offline   (23) Thanks Reply With Quote
Old 12th September 2019, 21:15   #9
Distinguished - BHPian
 
Join Date: Mar 2011
Location: Back to Chndgrh
Posts: 3,239
Thanked: 7,202 Times
Default Re: Rumour: Ford might sell its Gujarat factory

Quote:
Originally Posted by i74js View Post
Depreciation on books. In the initial years one can book higher depreciation, which Ford has done.
I don't think they make any money yet and their Indian operations will be in Red so depreciation may not be the factor.


Quote:
The second reason for selection of Gujarat is that export orders would require longer surface hauling leading to higher lead time and lower margins (cost of transportation of goods)
No, Mundra port handles export and it's not far off from Sanand. As far as I know, Mundra port is one of the cheapest when it comes to handling large cargos. Maruti also uses the same.
Quote:
Third, the ancillaries / vendors may be optimized at Chennai whereas Gujarat being a new facility, the vendor optimization could be work in progress.
Partially correct, most of their ancillaries have setups nearby as Sanand is home to Tata as well. Now with Suzuki Gujarat and Honda plants, this area is developing very fast.

Quote:
The state might be offering better business terms to manufacturers.
From whatever I know, Gujarat is more conducive for manufacturers and businesses.

Reasons for this sale/ partnership will be the overall value it will get because of the age and size of the Sanand plant. But if FORD decides to leave, who knows if the Chennai plant is also a part of the deal
Turbanator is online now   (8) Thanks Reply With Quote
Old 13th September 2019, 10:41   #10
Senior - BHPian
 
Join Date: Nov 2009
Location: RJ-02,DL,MH-12
Posts: 1,188
Thanked: 1,633 Times
Default Re: Rumour: Ford might sell its Gujarat factory

Quote:
Originally Posted by Turbanator View Post
I don't think they make any money yet and their Indian operations will be in Red so depreciation may not be the factor.
I beg to differ.

https://www.autocarpro.in/analysis-s...96-units-42650

These are the official numbers for previous FY. Ford indeed is making profits from exports. How the books are prepared would depend upon where the profits are booked - In India or Overseas. It is possible that Ford India might be transferring produced goods at TP value and showing its books in RED.
i74js is offline   (6) Thanks Reply With Quote
Old 13th September 2019, 10:53   #11
Senior - BHPian
 
Reinhard's Avatar
 
Join Date: Nov 2010
Location: Pune
Posts: 1,692
Thanked: 2,654 Times
Default Re: Rumour: Ford might sell its Gujarat factory

I hope this isn't true. Its a huge state of the art facility. Tremendous output numbers (=lot of employment opportunities). Especially important since it is used as a manufacturing base for export cars. If it isn't viable for a giant like Ford to run an export business from India, its alarming & tells that manufacturing sector is still not efficient & business friendly yet in India to compete with the other hubs like China, Malaysia, Brazil, Romania & Argentina. Sad to see this if thats the case.

I won't be surprised if our lack of zeal for quality, union issues labour laws & taxation caused this.

On the other hand, if Ford just sells it off & doesn't actually open / enlarge another plant elsewhere on the planet - that would mean they grossly miscalculated business pipeline, their own capability to make & sell cars & invested money where they aren't getting any returns at all. Built for a capacity that wasn't needed at all.

If this happens - I hope the deal has a safe outcome for those employed at the plant.
Reinhard is offline   (5) Thanks Reply With Quote
Old 13th September 2019, 11:13   #12
Senior - BHPian
 
himanshugoswami's Avatar
 
Join Date: Oct 2004
Location: !!!!
Posts: 2,061
Thanked: 1,177 Times
Default Re: Rumour: Ford might sell its Gujarat factory

One of my cars is an ecosport, and had owned a Chevy Captiva in the past. So I know the angst of a manufacturer leaving you in the lurch. Henceforth, my cars will only be from home grown manufacturers so that at least you are not left in the lurch. Even if Tata and Mahindra cease operations in the future, the overall ecosystem is strong enough to receive service and spares support for the useful life of the car.
himanshugoswami is offline   (2) Thanks Reply With Quote
Old 13th September 2019, 12:47   #13
Senior - BHPian
 
Reinhard's Avatar
 
Join Date: Nov 2010
Location: Pune
Posts: 1,692
Thanked: 2,654 Times
Default Re: Rumour: Ford might sell its Gujarat factory

Quote:
Originally Posted by himanshugoswami View Post
One of my cars is an ecosport, and had owned a Chevy Captiva in the past. So I know the angst of a manufacturer leaving you in the lurch. Henceforth, my cars will only be from home grown manufacturers so that at least you are not left in the lurch. Even if Tata and Mahindra cease operations in the future, the overall ecosystem is strong enough to receive service and spares support for the useful life of the car.
But GM leaving India was a different matter to this news. Ford has 3 facilities in India. They are rumored to be looking to sell just one of them. Not pulling out. In fact with a partnership taking shape with M&M, their future here should be fairly long term. GM left India as a car seller due to low customer volumes. They still have presence in India for some R&D and exports I think.
Reinhard is offline   (1) Thanks Reply With Quote
Old 13th September 2019, 13:09   #14
Team-BHP Support
 
Join Date: Feb 2004
Location: Bangalore
Posts: 13,264
Thanked: 16,013 Times
Default Re: Rumour: Ford might sell its Gujarat factory

Ford do not need this factory anymore. The Ford Ka / Figo is shortly going to be deleted from the European Product line. Makes more sense to utilise the Chennai factory. All Euro Ecosports come from Romania. The next mid size SUV would be built by Mahindra if I am correct.

Perhaps the factory might be bought by Maruti for the new Vitara/Jimny or a new Chinese entrant

Last edited by ajmat : 13th September 2019 at 14:31.
ajmat is offline   (8) Thanks Reply With Quote
Old 13th September 2019, 13:51   #15
Senior - BHPian
 
Durango Dude's Avatar
 
Join Date: Mar 2009
Location: Chennai
Posts: 1,147
Thanked: 1,477 Times
Default Re: Rumour: Ford might sell its Gujarat factory

Ford India has started to "wriggle out" slowly but steadily. First the JV with Mahindra, then the sale of the Sanand plant rumors. When the downturn strikes hard the 'consolidation' phase begins: where fringe players are unable to bear the losses throw in the towel and the established players will be able to brave the storm. It's the customers and the dealers who'll feel the pinch.
Durango Dude is online now   (4) Thanks Reply With Quote
Reply


Thread Tools Search this Thread
Search this Thread:

Advanced Search


Similar Threads
Thread Thread Starter Forum Replies Last Post
Rumour: Volkswagen Group might sell Ducati, Scania and MAN dZired The International Automotive Scene 3 13th March 2019 20:46
Rumour: Force India F1 Team might drop ‘India’ from its name dZired Int'l Motorsport 18 3rd July 2017 16:49
Peugeot ditches Gujarat Factory plans. GM unwilling to let Peugeot use its plants GTO The Indian Car Scene 47 7th October 2016 12:57
2011 i10 Asta A/T - its Korean, its new, its fast, its red, and its coming. nirupesh Test-Drives & Initial Ownership Reports 1 8th January 2011 10:45


All times are GMT +5.5. The time now is 14:00.

Copyright ©2000 - 2019, Team-BHP.com
Proudly powered by E2E Networks