Ford in talks with JSW for India re-entry

New Delhi: For its third sojourn in India, Ford Motor Company may seek to collaborate with Sajjan Jindal-led JSW Group, according to two people with direct knowledge of the matter who spoke on condition of anonymity.

“The discussions are still very exploratory and [it is] premature to conclude what shape, if any, an alliance might take," one of the people cited above said.

The American automaker is preparing to restart operations at its Chennai manufacturing facility for the purpose of exports out of India.

On Friday, Ford had said in a statement that it had signed a letter of intent (LoI) with the Tamil Nadu government to explore the use of its Chennai facility for exports to its global markets.

Ford’s leadership, including executives from its global operations, recently met with Tamil Nadu Chief Minister M.K. Stalin in the US. “Further information about the type of manufacturing and other details will be disclosed in due course," Ford said in the statement.

A third person aware of the development said that Ford never stopped development and product work in India. “Their factory has depreciated significantly, and the consideration was whether to sell it or repurpose it as a production hub," this person said.

This person added that the company may introduce some premium models like the Mustang in India, but a full-fledged comeback to the domestic market at this time was unlikely.

An emailed query to JSW and Ford did not receive a response.

Also Read: JSW woos a Chinese tech partner for its lithium-ion cell project

Discussions between Ford and JSW come after last year’s failed attempt by the latter to acquire the Chennai facility. Ford was also previously in talks with Mahindra & Mahindra about the plant’s sale. Now, it is exploring several possibilities with JSW, which already has an automotive alliance with MG Motor India.

Ford reiterated its commitment to India in its statement, emphasizing the country’s importance in its global strategy. “Ford currently employs 12,000 individuals in Global Business Operations in Tamil Nadu, a number expected to grow by 2,500 to 3,000 jobs over the next three years. Combined with the engine manufacturing operations in Sanand, India represents Ford’s second-largest salaried workforce worldwide," the statement added.

The move to double down on other global markets comes in the backdrop of global automakers like Ford, General Motors, and Volkswagen rapidly losing ground in China to local OEMs.

Chinese manufacturers have been aggressively capturing market share, causing global giants to see their profits shrink. General Motors' CEO, Mary Barra, has even called the current scenario in China “unsustainable" for foreign automakers.

This has forced companies like Ford to refocus their strategies on export markets such as Australia, New Zealand, Saudi Arabia, and the UAE, where it has a stronger foothold.

Also Read: Ford's India strategy: A turnaround or exit from the evolving market?

“Ford’s current plan focuses on repurposing the Chennai plant to target export markets, all part of the Ford+ plan announced by CEO Jim Farley in 2023," said Ravi Bhatia, president of auto intelligence firm JATO India. “This initiative aims to maximize value for customers while improving resilience, efficiency, growth, and margins. Markets like Australia, New Zealand, Saudi Arabia, and the UAE are crucial for Ford's global operations."

Ford had previously entered into a joint venture with Mahindra in 2019, but the partnership ended in 2020, followed by the automaker’s decision to exit the Indian market in 2021.

Despite halting new product sales, Ford has maintained its service network to support existing customers, reflecting its long-term view of India as a key market.

To be sure, JSW also has a joint venture going with MG Motor. In March this year, the JSW Group entered its first automotive alliance with SAIC's MG Motor India to form a JV to focus on creating a robust EV ecosystem with forward and backward integration of the supply-chain.

JSW at the launch of the MG Windsor said "its full focus" is on MG for the moment, while fielding questions about a possible collaboration with the Volkswagen group, which JSW is also reported to have considered earlier.