The apex body of automobile dealers in India has approached the Narayan Rane-led Micro Small and Medium Enterprise (MSME) ministry to seek intervention from the Ministry of Heavy Industries in resolving the Ford Motor India exit issue.
As per a letter sent to Rane, Federation of Automobile Dealers Association (FADA) has requested the minister to reach out to Ministry of Heavy Industries, headed by Mahendra Nath Pandey, for a mediation in the matter.
On September 9, Ford Motor Company decided to end its manufacturing operations followed by a phasing out of sales operations of its existing models due to "huge accumulated losses and lack of growth in a difficult market". This left Ford’s dealers high and dry.
As per FADA, around 170 Ford dealers (with more than 300 dealership) have been impacted because of this sudden exit decision leading to loss of employment of around 40,000. Dealers have collectively invested around Rs 2,000 crore in setting up infrastructure required for the dealerships.
Ford’s exit has been the biggest so far from India in terms of job loss and shutting of dealerships. This is followed by the 2017 exit of General Motors which saw 142 dealers getting affected and a loss of employment of 15,000.
In the letter addressed to Rane, Vinkesh Gulati, President, FADA said, “We humbly request your Ministry to speak to Ministry of Heavy Industries for an intervention in the matter."
FADA wants the ministry to create a taskforce which takes day to day update from Ford India to monitor the compensation plan for automobile dealers and dealership employees, instruct Ford India to keep FADA in loop for dealership related issues and compensation structure, initiate a formal discussion on Automobile Dealers’ Protection Act, and its importance to protect small and medium enterprises, their skilled employees and the customers and make sure that Ford India indemnifies dealers from various consumer and civil cases, both under pendency and against any future cases that may arise directly or indirectly out of Ford’s restructuring announcement.
FADA claims that Ford India is forcing its dealers to first sign a Non-Disclosure Agreement (NDA) before any discussion about future or compensation package is worked out. Many Ford dealers have directly or indirectly requested FADA to take up the matter for amicable resolution.
“Such coercive efforts on Ford's part to get their channel partners to sign an NDA, under economic duress is not the right approach and adversely impacts dealer interests,” Gulati said.
Ford invested about USD 2.5 billion at its Chennai (Tamil Nadu) and Sanand (Gujarat) plants after setting foot in India after mid-1990s. The company which made models like the Endeavour, EcoSport and Figo has accumulated operating losses of around USD 2 billion in India in the last ten years.
Ford approached several automakers to sell its India plants before it decided to shut them down. These offers, however, were made during the peak of the pandemic.