For Tata Motors, which is shifting gears towards eco-friendly vehicles, the addition of Ford’s manufacturing facilities in Tamil Nadu and Gujarat will enhance its capabilities in the automotive industry.
Tata Motors currently has three passenger vehicle manufacturing plants in the country (one is a joint venture with Fiat Chrysler).
The Ford India deal, which is at an early stage, comes after Tata Motors demerged its domestic passenger vehicle business, valued at around Rs 9,420 crore, into a standalone entity.
Ford, for its part, will abandon its money-losing India unit and increase investment in electric and automatic vehicles, the future of mobility. Tata Motors’ interest in Ford’s local arm gained momentum following its leadership, including Chairman N Chandrasekaran and Executive Director Girish Wagh. Tamil Officials of the Government of Nadu.
While Tata Motors does not have any manufacturing facility in Tamil Nadu, it has a plant in Gujarat, which is next to Ford’s production unit. Tamil Nadu is very keen to find an owner for Ford’s facility in the state so that it can protect jobs as the US major has decided to stop making cars in India. Ford took this step after its Indian unit crossed $2 billion accumulated losses over the past 10 years and the road to profitability remains bleak.
Discussions are on and Tata Motors may decide not to go ahead with the deal. A Tata Motors spokesperson said Chandrasekaran held a “courtesy meeting” with Tamil Nadu Chief Minister MK Stalin, but declined to share details of the discussion. A Ford India spokesperson said: “We continue to explore potential options for our manufacturing facilities and have nothing more to comment on ongoing speculation.”
Siddharth Khemka, head (research) at Motilal Oswal Financial Services, said the Ford India deal for Tata Motors would be worth it as it would be a distress sale with few gains expected from the Tamil Nadu government.
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