Tata could be a promising contender to takeover both the production factories of Ford and here are the reasons why
Recently, Girish Wagh, Executive Director of Tata Motors convened with Tamil Nadu Chief Minister, MK Stalin and Chief Secretary V. Irai Anbu at the secretariat. He was joined by the brand’s Global Head of Government and Public Affairs, Sushant Naik and southern Regional Manager KG Prasad along with other Tata executives.
The timing of the meeting certainly interests us considering that the state government is looking for buyers to takeover Ford’s Maraimalainagar plant near Chennai. The American auto major announced its exit from India a few weeks ago and it caused quite a stir as job losses are in aplenty. The brand only runs the Chennai and Sanand plants as it has obligations to meet the export quantity.
After that, both the production facilities will be closed and recently a report from FADA (Federation of Automobile Dealers Associations) indicated that about 170 dealers are suffering along with 40,000 job losses directly and indirectly with an investment of Rs. 2,000 crore going in vain – the highest in the history of the Indian automotive industry.
The DMK government is actively playing a part in finding takers for the Chennai plant and Ford appears to be looking at a good value out of its plants as it already reported a loss close to Rs. 15,000 crore in the last ten years in India. Moreover, it will have to deal with dealer and employee compensations but will there be any prospective buyers?
Before quitting its local operations, Ford contacted many brands including VW Group, MG Motor and Ola for contract manufacturing but nothing really came into fruition as the industry was reeling on the back of the health crisis and the road to recovery could not have come at a worse time for the Blue Oval, which has ambitious expansion plans in the US and Europe.
While the content of Tata Motors and the TN government’s meeting is yet unknown, it must be noted that Tata already has a number of facilities pertaining to its CV and PV operations and it may not be in a desperate need to acquire the Maraimalainagar factory. But, taking into account its announcement of Rs. 5,000 crore investment in Hosur, Tamil Nadu for electronic components, Tata might see the potential in buying the Chennai plant.
It spreads across 350 acres with an annual production capacity of around two lakh vehicles and 3,40,000 engines. The plant was responsible for the rollout of EcoSport and Endeavour as Ford invested around USD 1 billion and in its heyday, the brand catered to the needs of around 37 countries through exports.
Tata could be a primary contender to take over both the facilities of Ford as its sales numbers are improving a lot in recent times and is planning to retailed 40,000 units from the next financial year. Moreover, the soon-launching Tata Punch will likely become India’s top-selling car if priced under Rs. 5.5 lakh for the entry-level variant and is expected to be awarded five stars from Global NCAP – becoming India’s safest budget car.
The largest seller of passenger EVs in India may use one factory dedicated to producing electric vehicles and is gearing up to expand its regular portfolio over the next two to three months as five new models are in the works such as Punch, and the CNG versions of Tiago, Tigot, Nexon and Punch. In addition, the electric variants of Punch, Tiago and Altroz are high possibilities for the near future.
According to speculations floating across social media, Tata may get exclusive rights to sell Ford cars including Endeavour, EcoSport and upcoming CBUs like Ranger and Mach-E. These rumoured moves could aid in Tata Motors becoming the second largest car manufacturer in the country sooner rather than later.