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In a surprising turn of events, it has been reported that the American carmaker Ford, which earlier last year stopped its production in the Indian car market, managed to post a respectable profit figure. As per the financial report for the fiscal year 2022-23, the company managed to collect an impressive profit of Rs 505 crore in this period.
Financial Turnaround
According to reports, Ford India managed to post this impressive Rs 505 crore profit due to a few reasons. The first one has been stated to be the reduced restructuring expenses. Meanwhile, the other chunk of this profit has come from a significant increase in engine sales volume. During the 2022-23 financial year, Ford India’s total revenues from operations stood at Rs 7,079 crore. In the grand scheme of things, this made up for a 31 percent decline compared to the previous fiscal year. It was also reported that the total expenses for this period were reported as Rs 9,607 crore, reflecting the impact of the restructuring decision announced in September 2021.
Revenue Breakdown
Coming to the specific details about the revenue of Ford India, it has been reported that in FY23, the company’s total revenue included Rs 980 crore from domestic sales and Rs 6,099 crore from export sales. These figures marked a substantial drop, with domestic sales falling by 59 percent and export sales declining by 22 percent compared to the previous fiscal year. Prior to this, in the fiscal year 21-22, revenues from domestic sales and exports stood at Rs 2,399 crore and Rs 7,802 crore.
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In terms of volume, Ford India managed to sell 17,219 cars and an impressive 1,77,864 engines during the financial year under review. This comes in contrast to the prior year when they sold 69,223 cars and 82,067 engines. These figures represent a 75 percent decrease in vehicle sales and an astounding 117 percent increase in engine sales.
Exit Strategy and Plant Sale
For those who are still unaware, in September 2021, Ford India announced its decision to cease production in India due to increasing losses. The company faced immense challenges in finding a path to profitability, prompting the strategic exit. By February 2022, they briefly explored the production of electric vehicles (EVs) but could not bring it to fruition, and the idea was dropped in May 2022. Following this, finally in July 2022, when the last Ford EcoSport SUV rolled off the production line in Chennai, exclusively for export markets, the production of Ford cars in India stopped.
Soon after the company decided to end its India stint, a notable event during this period took place. The company decided to sell its Sanand plant in Gujarat to Tata Motors in January 2023. Tata Passenger Electric Mobility Limited (TPEML), the electric vehicle division of the country’s third-largest carmaker Tata Motors, acquired the facility, ensuring the continuity of employment for the plant’s workers, who were offered the opportunity to transfer their employment to TPEML. Presently, Ford India continues to operate the Sanand Powertrain Manufacturing Facility, having leased back the land and buildings of the Powertrain Manufacturing Plant from TPEML on mutually agreed terms.
Future Prospects
Presently, the company has not expressed any interest in returning to Indian shores. However, we can never fully undermine the possibility of a potential return of Ford to India. It has been stated that despite scrapping the plans for EV production, the company may return for this exact purpose. It could also come back for the production of vehicles for exports to international markets.
Additionally, it has been reported that Ford is actively engaging with potential buyers for its Maraimalai Nagar plant. Reports have suggested that Vietnamese carmaker VinFast and the JSW Group are among the interested parties. This could be indicative of Ford’s interest in not completely severing ties with the Indian market.
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