Auto sector slump: Facing decline in demand, Ford Motor going to sell Gujarat factory?

Ford Motor Co. plans to sell off one of its twin factories to at least one global automobile company in the purview of its struggles in this intensely competitive market, two people who are aware of this development told Livemint.

Ford motors is most probably selling its newer Gujarat factory, reported Livemint. Ford’s moves are related to the company’s likely understanding that it may not require two factories in India in the future.

“The Sanand plant is a more than feasible option for any existing or new original equipment manufacturer looking for setting up capacity, as it is a very modern facility and close to the port. Hence, the logistics cost can also be reined in," a source from Ford told Livemint. “It is very difficult to predict the final outcome at this level since these kinds of transactions take a long time."

The negotiation for the possible selling off is directly being looked over by Ford’s Asia- Pacific headquarters in Shanghai, the sources said. They could not name the buyer companies Ford is in talks with or tell Livemint in how much time the discussions are expected to conclude.

GM announced in May 2017 its decision to stop selling vehicles in India. It sold a factory at Halol in Gujarat to China’s SAIC Motor Corp.

According to Livemint, Ford’s outfits in India have been struggling and current product introductions could not draw healthy volumes.

The company now essentially uses India as an export base for emerging and developed markets.

Ford’s domestic sales during April-August dropped down 26% from earlier to 30,010 units, while exports declined 11% to 57,985 units. In FY19, domestic sales rose 2.5% to 92,937 units, but exports fell 10% to 162,801 units, according to the Society of Indian Automobile Manufacturers, reported Livemint.

However, a representative for Ford’s production unit in India denied that the company has plans to sell off the Sanand factory saying that the company is continuously looking to expand its production and brand portfolio in India.