Ford Motor will stop making cars in India and take a hit of about $2 billion in 10 years.
The automaker does not see a path to profitability in the country. It is the latest automaker to leave the major growing market dominated by Asian rivals.
The automaker entered India 25 years ago but still has less than 2% of the passenger vehicle market.
The automaker said on Thursday that it had accumulated operating losses of over $2 billion in 10 years in India and demand for its new vehicles had been insignificant.
“Despite (our) efforts, we have not been able to find a sustainable path forward to long-term profitability,” Ford India head Anurag Mehrotra said.
Ford’s decision to cut its losses in India after leaving Brazil and Argentina earlier this year highlights the pressures on global automakers to invest more in electric and autonomous vehicles.
India’s auto market is dominated by low-cost, and small cars made by Japan’s Suzuki Motor. Its Maruti Suzuki brand accounts for seven of the top 10 sellers with South Korean automaker Hyundai Motor making the other three.
Ford India will cut down operations at its factory in Sanand in the western state of Gujarat by the fourth quarter of this year and vehicle and engine manufacturing in its southern Indian plant in Chennai by 2022.
The automaker has the capacity to produce about 440,000 cars in India a year throughout both plants but is only using about 25% of that, according to data intelligence company Global Data.
The automaker will keep selling some of its cars in India through imports and it will also provide support to dealers to service existing customers, it said. About 4,000 workers are expected to be affected by its decision.
The decision to stop production came after Ford and India’s Mahindra & Mahindra failed to agree on a joint venture partnership that would have allowed Ford to keep making cars at a lower cost.