Tata buys Ford Manufacturing plant
Tata Motors subsidiary TPEML ( Tata Passenger Electric Mobility Ltd ) had signed an unit transfer agreement for the acquisition of Ford India’s manufacturing plant in Sanandh ( Gujarat). It is well known that Ford had stopped it’s Indian production last year after two decades of struggling to get in to profit zone. The Pandemic had taken it to the worst stage and the American giant had to give up it’s game in Indian Automobile sector. Tata Buying Ford plant would be a lesson for the Western giants to learn how different is Indian market.
The Deal is known to be of 726 crores in Indian Currency and it would also transfer eligible employees of Ford along with the Land owned by the plant. The plant was running with a capacity of 3 lakh units per year before Pandemic in 2020.
The Gujarat Government and Tata Motors ( TEPL ) had signed MOU for the smoother approvals to expedite the process.
However, the sources said that the Ford would continue it’s power train manufacturing in the same zone by leasing back the part of it.
Is Ford really leaving India?
Ford has announced about production halt last year in india due to heavy losses or fall in demand post pandemic. However, the US company was unable to produce any great four wheeler post ” Ford- Ecosport”. Ecosport was the last huge successful model in India for Ford and it’s sequential model with changes was not so attractive for Indian consumers.
Tough competition from Hyundia -Creta, Renault Duster , Maruti Suzuki – Brezza and KIA was the main reason why Ford lagged behind in the race and lost it’s 2 percent share also. The Compact SUV range was taken over by the competitors with better designs and appealing models. Hector MG entry was the last nail in the coffin for Ford.
Hatchback models of Ford were never primary choice of Indian consumers in the recent times. Ford Aspire was the last model which slightly appealed consumers but not as expected. Tata’s rise in this segement with Tiago, bolt , along with economical models like Maruti Suzuki never gave any space for Ford in this segment.
Lack of upgrading, delivering updated models as per trend in the market was the major reason for the failure of Ford in India.
However, the Ford Company Transformation officer Mr.Steve Armstrong stated that it has decided to opt the restructuring the business in India and selling of plants is part of the Restructuring So Ford has not left hopes on India as India is one of the largest Automobile market in the world.
How it would boost up Tata Share price in market ?
Tata Motors would be modifying the plant according to it’s needs . Specially the electric vehicle segment. With more production capacity now, Tata is expected to ease it production issues and deliver quickies to consumers in electric and other segments in which the wait time is high.
Tata motors share price is at 468.00 INR and there was not much hiccups or sharp growth in the trend today. Since it is matter of acquiring more assets which would influence production in long run. The Share price is not to get influenced much in short time. However, due to the aggressive move in Electric segment, Tata motors share is one of the most promising share in the Indian automobile market and it is likely to cross 4 digit by 2023. So, it is good idea to invest on Tata shares as a long investment.
