The History

Ford had been one of the leading names in the automobile industry of America and Europe since ages. This Dearborn, Michigan headquartered organisation has given this world cars which are synonymous to the right blend of quality, power and performance. Since their first ever car, Model T in 1908, Ford  went on manufacturing some of the most iconic cars this world has ever had. Cars like Ford Cortina, Ford GT, the Le Mans winning GT40 which beat the then Goliath Ferrari, Ford Focus and Focus RS, Ford Mustang, Ford Shelby and their trucks, Ford Raptor and F-150, are few examples of cars which either used to or are still ruling the American and European markets.

After all the success Ford tasted globally, they also set foot in India in the year 1995 with one of their globally successful car, Ford Escort. They entered India car market forming a joint venture with Mahindra. Although the Escort was a wonderful sedan, it was too expensive to own and maintain putting it far out of the reach of most people back in the era. This made them fail miserably to make a mark in the Indian car market which was still nascent back in the 90s when we had just started our journey towards the concept of globalisation.

The company had however learned their lesson to some extent when they launched their next piece of beauty, the Ford Ikon, which they called ‘The Josh Machine’, and boy I swear it was every bit of what Ford had promised. It was the fastest, the best looking mid segment sedan which also handled like a dream. It could be viewed as a common man’s sports car. Although, Ford was yet to master the pricing placement of their product as how much ever less the Ikon costed than the Escort, it was still way too costly to have one. Back in the days with Maruti leading the way with their economical and cheap cars and vast sales and service network, Ford was still unable to crack the market despite having better cars than any other mass market manufacturers but rather expensive ones. What followed Ikon was yet another not so successful hatchback in the form of Ford Fusion, and their premium sedan, the Mondeo which too were marred by the high pricing, maintenance cost and limited availability of service centres across the country.

The car that gave Ford a taste of their first success in India was an affordable hatchback for the people, the Figo (I will have to dedicate a separate article to talk about just this car). This new car now paved a way for Ford to expand their business in the country. By this time, Ford had started to manufacture their cars locally in their Chennai plant rather than importing the CBUs from the European market which was one of the main factors for their cars being too pricy for India. However, in spite of making their cars locally, Ford had still maintained almost the same level of quality and standards of their products which they used to build for European markets. Thus started their streak of, however short-lived, success with Endeavour, EcoSport, the new variants of Figo/Aspire and Freestyle.

Why They Failed?

As we have discussed earlier in this article about how great Ford has been with their products, could not do equally well and did not received the amount of credit they deserved.

Lets discuss the factors which led to their failure in the Indian market in a little detail in order to actually understand what possibly went wrong for them:

1. The High Maintenance Image

As we have already learnt that their initial products like the Escort, Ikon, Mondeo and Fusion, which in spite of being marvellous cars were indeed expensive and were a severe pinch to the pockets of Indian customers to keep up. Whereas, at the same place, there were cars from Maruti and later came Hyundai, which were a lot cheaper to at price and pretty easy to live with.

Although Ford did eventually learn their lesson the hard way and launched the car like Figo, which they built locally in their newly opened unit in Chennai to keep the cost at check but the image of being a costly car stuck with them like a leech. Even today, most people in the country think that owning a Ford must be an expensive affair whereas, the reality is the exact opposite of it as the cost of its service and spare parts have come to be even cheaper than a Hyundai.

Unfortunately, Ford’s marketing strategies have not been so effective which could have changed their brand image in the market. This resulted in low sales volume as the buyers were mostly limited to either people who somehow came to know about how easy it is to maintain a Ford or people belonging to the dying breed of enthusiasts who actually love to drive and enjoy the feel of powerful, peppy cars like that of Ford that can also handle like dream.

2. Reading the Market Wrong

The one area where Ford miserably failed was in identifying the trend of the Indian car market which had started leaning more towards SUVs and compact SUVs, rather they entered into a head on competition in the small car segment with Maruti and Hyundai who were already leaders in this space. Though they did produce marvels like Figo and Aspire but they were of no match of the cars from the house of Hyundai with their feature loaded and futuristics design cars.

The only exception was their blockbuster launch of EcoSport which happened to be their most successful car of all time in India. Clearly, one of the reason it was successful was because it was in the segment which India loves, an SUV. Apart from EcoSport, none of their cars proved to be as successful, even in the premium segment with Endeavour and Mustang. What Ford needed was to read the Indian mindset and cater to the demands of the buyers rather than being adamant their philosophy and strategies.

3. Significant Investments in Insignificant Areas

Another reason for Ford not doing so well in Indian market was there stubbornness on their family business values and ethics which led them to invest in areas which really made no sense and gave them absolutely no return for surviving in this cut-throat competitive market which was already going through a declining phase.

Ford invested really big in their new plant in Sanand, Gujarat, which had the capacity of producing 2,40,000 vehicles and 6,10,000 engines per annum. Ford went ‘all in’ in building this mammoth of a plant but they were just not done yet even after making this plant a state-of-art, global standard unit. They spent another lot of big bucks for the equipments for this factory. Simultaneously, for keeping the price in check, they had to cut costs by compromising and dumping some of the good features form the offerings, one of which was its amazing Sync3 technology. This did not bode well with the potential customers and backfired by pulling down their sales figure.  

What followed thereafter was a Hindenburg disaster for Ford, as they could not sell the estimated number of cars which in turn kept this plant running at nearly half its capacity. This made Ford accumulate huge losses due to the astronomical operating cost as they couldn’t succeed in generating any significant amount of sales to keep it running any further.

What Ford could have done instead was to listen to what this market had to say and making investments in areas like putting in more features and spending more on giving their cars better design, rather than just sticking to what they believed in and spending on things which meant nothing to Indian consumers.

4. The controversial Joint Venture with Mahindra

If we recall, Ford entered India in the year 1995 by forming a 50:50 joint venture with Mahindra when they started with a launch of their first car Escort in India. At that point, it was a regulation for a non-Indian company for form an alliance with an Indian company to operate in the country. However later on, Ford increased its stake to 72 per cent to take more control in their hands and eventually, in 2005 Mahindra sold their remaining stake and pulled out of the JV handing over complete control of business to Ford. This was done as the alliance was unable to meet its sales target year on year.

Now, after nearly two decades, both these automobile giants again came together for a new joint venture where they would have shared their platforms and technologies with each other. There were seven new cars planned to be churned out of this JV but unfortunately, the world will never get to see them as the JV fell apart in 2021 with Mahindra pulling out again from the alliance. What followed next was a tirade of blames and finger pointing at each other by both the companies, alleging each other as the reason for failure of this JV.

The feud went on as follows:

• Mahindra accused Ford of being opaque on the pricing of their components to be sourced from the Ford universe. This meant that Mahindra would be inadequately armed while negotiating on the prices and the terms of agreement.
• Mahindra charged Ford with the allegation of making a last moment change in the clause of royalty payment in the annexures of the agreement without even informing or consulting with Mahindra.
• Mahindra also looked at some of Ford’s deal clause as its exit strategy as one of their clauses mentioned that Ford will not be investing any more money after they feed in for the initial three years. This made Mahindra wary with the thought that Ford would be unwilling to contribute to the expenses incurred in the JV after three years and Mahindra may end up spending more than what would be profitable for them.
• On the other hand, Ford said that Mahindra actually saw them a competition rather than partners. This thought seeped into Ford when they showed one of the vehicles they had developed for the JV, the C-SUV. This car was supposed to be the counterpart of Mahindra’s new XUV700 but as per Ford, what Mahindra felt was that the C-SUV was a better looking car and might challenge the sales figure of XUV700 despite being planned to be sold at a premium prize than Mahindra’s XUV700.

5. The Infamous Unforgiving Indian Consumer

A car has always been a thing of great importance to us Indians. Maybe because until recently, cars were not so easily accessible for most people in the Indian society and hence, we still take enormous pride in owning one. Cars are seen as symbol of status among people of this country, however the first thing a buyer will look out for while making the buying decision is how economical the car is to buy and running it. The next factor which comes to a buyer’s mind is that the car should look good with striking cosmetic features and should be packed with all possible gadgets and gizmos and all these should be served at a reasonable price. There is a very small percentage of consumers in market who actually look out for the build quality of the car, its drive and handling ability, the power and performance which the car delivers and the driving pleasure a car would provide.

Although the cars from Ford were amazing to drive with throbbing power from the engine delivered with total ease, the impeccable drive and handling which keeps the car glued to road even while going quickly around the corners and a perfectly tuned suspension setup for Indian roads which can keep the people inside the car still comfortable while delivering a small sports car like performance.

What Ford missed on is that the Indian market is a tough nut to crack and here, the companies will have to be flexible with their strategies and mould themselves according to what the buyers want rather than staying put with their own and hoping they can make people fall in love with what they serve instead. What they failed to realise is that there was already a robust competition present in the form of Maruti and Hyundai who lead this market and are providing what an average Indian buyer wants. This stubbornness costed them big and they could only penetrate to a very small slice of the market.

The Final Thoughts

The cars from Ford are adored by a very small section of people who really understand cars and loved to drive powerful and capable machines which can put a smile to their faces when they are behind the wheels, but as the automobile market is already going through a tough phase, where the manufacturers are just trying to survive, giving it their all to cater what the buyers demand, I wish Ford would have also become a little more flexible in planning their products and placing them wisely so as to appeal to the mass market without losing their core essence of being an enthusiast’s car.

It was really disheartening to see Ford wind up from India. I personally would have loved to see them grow and deliver more wonderful products as they had in their line up. But, it is what it is, and I just hope that I won’t see any other big players like Ford to follow their suite and leave from the market.