Ford’s abrupt exit leaves dealers jittery, their employees in lurch

Brimming with festive decorations, India’s oldest Ford dealership is decked up with standees and promotional danglers announcing its 25th-anniversary celebrations. But the mood inside the sprawling Harpreet Ford outlet in Delhi’s Moti Nagar does not match the decoration on its walls.

While Ganesh Chaturthi would be the busiest time for salesmen at any car dealership, there are only a few around, and there is no rush to attend to anyone walking through the door. Ford India’s sudden announcement to pull the plug on its vehicle manufacturing operations in India seems to be raw and sinking in still.

“Some guys have gone to talk to the HR about what happens next. Some have already managed to line up interviews. People have families to feed, they are anxious,” says Jitender Sadana, a sales representative at the dealership.

While trying to hide his own anxiety, Sadana (44) is busy taking a customer through the final pre-delivery inspection (PDI) for a new Ford Endeavour that is all but ready to roll-out of the showroom.

As Gaurav Gupta’s family settles into their new car, he winces when asked if he is worried about buying a Ford right after the company’s dire announcement.

“Had I known about this a month back, I would have certainly bought some other car. I had already suffered a similar fate with Chevrolet (after it announced its India exit in 2017). But I will have to live with this decision now and trust Ford to deliver on their promise to provide after-sale support,” says Gupta.

Sadana, who has delivered two cars since morning, smiles doubtfully as he mentions that cancellations too have started since Thursday.

“We were in such a celebratory mood on September 9. Our dealership was completing 25 years. Everyone had been asked to come in casuals. We had ordered pizzas and a big cake. Beginning Thursday and going up to Diwali, we had special customer offers planned too….But just as we were busy celebrating, the news flashed on TV. Many among us had tears in their eyes…,” says the 44-year-old, adding that he has spent 24 years working with Ford and does not know what lies ahead.

Sunil Tandon, Executive Director, Harpreet Ford, has few answers to offer.

“It has just happened. We have multiple dealerships with other carmakers in our dealership bouquet, so we will try to absorb as many as we can. I can’t say the same for small dealers. The service section will continue, but sales department is the worrying part. We will be talking to Ford. It is surreal that we began operations on September 9, 1996, and Ford’s announcement came on the same day, 25 years later,” he adds.

The Federation of Automobile Dealers Associations (FADA), a body representing 15,000 automobile dealers, says that Ford’s decision will impact over 40,000 dealership employees. That is ten times the number (approximately 4,000 Ford India factory employees) that the US automaker says will be hit by shutting down of its manufacturing plants in India.

FADA says that it is already flooded with distress calls from worried dealers.

“This will impact dealers, dealership employees and their families. Outside auto retail, component manufacturers who supply Ford in Gujarat and Tamil Nadu will feel the impact,” FADA CEO Saharsh Damani tells The Indian Express

“This happened just before Ganesh Chaturthi. There has been a lot of backlash from customers. Around 400 vehicles across India that were due to be delivered on this auspicious day could not get delivered because customers are jittery. In fact, there are a lot of customers who had confirmed bookings, but now want a refund. Customers don’t know how Ford will continue servicing their vehicles,” he adds.

In a video message released on Thursday, Ford India head Anurag Mehrotra had said: “Ford has a long and proud history and over a million customers in India. I want to be clear that we are not leaving and will continue to take care of you like family. We will be working closely with our dealers, all of whom have supported Ford for long, to ensure accessibility of service and spare parts, quality of service with a ‘family-wali feeling’, competitive cost of ownership, and honouring of our warranty promise.”

Damani responds: “Ford has certainly said they will continue service support, but once you stop India operations, then there is a big question mark. Companies leaving India say such things, but it does not work in the long run because there are spare parts issues, manpower issues, and then many dealers will not want to continue.”

According to FADA, there are around 170 Ford dealers in India who have 391 outlets. The auto dealers’ body says that given that Ford is the 5th biggest exit from Indian markets since 2017, India urgently needs a Franchise Protection Act for Automobile Dealers.

Damani explains: “All developed markets have a Franchise Protection Act. Once this Act is there, companies can’t abruptly exit. They have to then give sufficient time and suitable compensation. Dealership agreements then will have a long-term vision. It takes around Rs 5-6 crore to set up a Ford dealership in India. There is specific Ford-related hardware and infrastructure that is of no use once you are not associated with the brand. Dealers are SMEs and family-run partnerships, and this will be the biggest loss in their entire entrepreneurial career. Ford has 4,000 employees, the dealers have 40,000 employees. On an average, a dealership outlet has around 100 employees…”

Asked about the future of these dealership workers, he added: “No one knows. If my dealership will not survive, how will I keep paying my employees?”

Ford dealers are also miffed about being kept in the dark in the run-up to the announcement.

“I spoke to Ford managers, that we are regularly in touch with, soon after the announcement and they said they too did not have a clue,” says Tandon.

Damani adds, “These decisions are not taken overnight. Till five months back, Ford was appointing new dealers. There were discussions with dealers over ‘upcoming’ EcoSport facelift bookings around 4-5 days back. They allowed these bookings based on pictures. The customers and the dealers have been fooled.”

At Harpreet Ford, a salesman flips through his phone’s media gallery to show pictures of this ‘upcoming’ EcoSport.

“Customers were booking just after seeing these pictures. I had bookings going up to Diwali,” says one of them.

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