Ford India’s exit has affected 170 dealerships across the country with an estimated job loss of around 40,000 and Rs. 2,000 crore investment
A major manufacturer quitting the market definitely has adverse effects on people’s lives directly or indirectly and in most cases, their livelihoods have been impacted heavily. The exit of the American manufacturer Ford has caused significant woes across the industry and FADA (Federation of Automobile Dealers Associations) says it could not get any worse.
With estimated job loss for 40,000 people involving 170 dealerships and other mediums, and Rs. 2,000 crore investment going in vain according to FADA, you cannot help but think that proper planning and regulations should be in place to avert this catastrophe once more. When GM decided to give up on the Indian market, 142 dealers were affected.
In addition, 15,000 people lost their jobs and Rs. 65 crore investment took a beating. After nearly three decades of operation in India, Ford Motor Company announced on September 9 that it would stop producing vehicles at its manufacturing facilities locally and would sell only imported vehicles going forward as part of the restructuring process.
The brand invested about USD 2.5 billion at its Chennai and Sanand plants and reported losses of over USD 2 billion in India. FADA has pointed the finger at the potential loopholes in the Non-Disclosure Agreement (NDA) that dealers were asked to sign as it does not provide accurate details on the types of losses being dealt by dealers and the respective compensation.
In addition, concerns over losses like establishment and infrastructure, maintenance, etc have been raised. FADA has asked the central government to begin discussions on Automobile Dealers’ Protection Act and it has already been proposed by Parliamentary Committee on Commerce and Industry in Report No.303 as more transparency is needed to prevent excessive job losses and investments.
FADA also requests the government to establish a task force to monitor discussions regarding compensation for Ford dealers and keep it involved in all conversations. It also wants Ford’s India division to provide indemnity to its dealers against civil and consumer cases that could appear in the future due to its abrupt restructuring plans.