Wednesday, 28 September, 2022
HomeOpinionDashboardDear Rahul Gandhi, Ford, Fiat quit India due to market conditions, not...

Dear Rahul Gandhi, Ford, Fiat quit India due to market conditions, not Modi’s politics

Rahul Gandhi’s reasoning on foreign automakers’ exit from India is an extreme stretch of imagination.

Text Size:

In a recent article in these columns, author and journalist Vir Sanghvi wrote about Rahul Gandhi’s obsession of attacking Prime Minister Narendra Modi and likened him to the Congress leader’s grandmother, Indira Gandhi, who also faced similar, frequent opposition attacks during her days. Rahul Gandhi proved Sanghvi right again when he attacked Modi on Twitter, holding his brand of politics responsible for the failure of several automobile companies in the Indian market over the past few years.

 

At best, that is an extreme stretch of imagination. At worst, a falsehood.

All the companies mentioned in that tweet by the Congress leader failed due to market conditions. Some like Ford were very unfortunate departures from the Indian automobile market. Others like General Motors and Harley Davidson had to leave because of market failure. Simply put, nobody was buying their products. Let us look at each one individually.


Also read: Lexus NX350h—projected as a crossover but meant for the road, not off it


General Motors: Exit 2017

General Motors (GM) kept manufacturing cars at their Talegaon plant outside Pune all the way till 2019 even after ceasing India sales in end-2017 for multiple reasons.

Their product line-up at the time of their departure consisted of the Chevrolet Beat hatchback, Chevrolet Cruze sedan and the Chevrolet Tavera multi-person vehicle. For GM, sales were at best slow and while the manufacturer announced a five-year free service scheme to entice buyers, it had the effect of killing residual values of the fleet.

A branding fiasco in the early 2000s may also have contributed to the company’s woes in one of the world’s fastest-growing automobile markets. GM India switched over from their German Opel brand to the American Chevrolet brand, albeit selling vehicles from Korean Daewoo Motors that GM had acquired previously.

The American automobile giant had also been embroiled in an emissions scandal in India that involved its MPV Chevrolet Tavera and had to face the possibility of severe sanctions as well.

But there were two straws primarily that broke the camel’s back.

The first was a Supreme Court order that restricted diesel vehicles in the National Capital Region to just ten years of operation, a problem for a brand which had almost 75 per cent of sales in diesel models.

Then there was the 2016 decision to fast-track the introduction of Bharat Stage 6 (BS6) emission norms. To adhere to such norms for diesel motors in particular would have required massive investments in engine development. Despite GM Chief Executive Officer Mary Barra coming to India to meet Narendra Modi in 2014 and reiterating their commitment to the Indian market, the investment in cleaner engines made little or no commercial sense for a brand with depressed sales numbers. They had invested heavily in their Talegaon plant, so they kept the plant running until 2019 and made plans to sell it to China’s Great Wall Motors. But that deal was torpedoed by Chinese actions in Ladakh. Although they had already sold their old Halol factory to Shanghai Automotive Industrial Corporation (SAIC) that sells cars under the MG brand in India.

So yeah, this one you could pin on the government. But then again, every other manufacturer changed over to BS6. Sure they cribbed about it. And less emissions are a good thing, right? General Motors still operates in India, thanks to a massive software development centre in Bengaluru’s Whitefield.


Also read: Hisashi Takeuchi is Maruti-Suzuki’s new boss. Driving on Indian roads isn’t his only challenge


MAN Trucks: Exit 2018

MAN Trucks, part of the German giant Volkswagen Automotive Group shut shop in India in 2018 after a decade of sales. The company was a joint-venture between MAN and India’s Force Motors, and manufactured a lower-cost truck based on the ‘CLA’ platform. But just like GM, the root of MAN’s failure can also be attributed to weak sales. The German brand hoped the Indian bus and freight companies would choose reliability of European-designed and engineered vehicles over other manufacturers. But domestic players such as Tata Motors and Ashok Leyland saw the competition coming and upped their game. Eicher Motors, another Indian manufacturer, tied up with Swedish firm Volvo Trucks causing MAN to flounder.

This was even more surprising given the relative success that BharatBenz, the heavy commercial vehicle arm of Daimler-Benz, enjoyed in India. Falling sales coupled with the accelerated introduction of BS6 norms that would have made their vehicles prohibitively expensive and a very small market for premium trucks in the country meant that MAN, along with sister firm Scania Buses had to call it quits in India. What may have also added to their woes was that parent Volkswagen Group was suffering from an extreme downturn in fortunes, with fines being slapped on it word over following the ‘Dieselgate’ emissions scandal in Europe and the United States. Difficult business decisions had to be made about marginal global operations.

It isn’t as if the bottom has fallen out of the heavy commercial vehicle market. In fact, the past few months have seen a resurgence in sales and the likes of BharatBenz have proven that newcomers can make a difference and even develop engines that adhere to the BS6 norms. To be fair to MAN, they did rehabilitate many of their 1,000 employees.


Also read: Why electric scooters are catching fire & should this really make you worry about EVs


Fiat: Exit 2019

Okay, Datsun’s case is a ‘brand decision’. The Fiat brand was withdrawn in India as parent company Fiat Chrysler Automobiles (FCA) saw the global shift towards Sports Utility Vehicles and switched over to only producing the Jeep models in India. Since then, FCA has merged with French firm PSA-Citroen to form Stellantis, globally. Stellantis India is in operation. In fact, they have three factories and the upcoming Jeep Meridian, which goes on sale in a couple of weeks, will be rolling out of the same Ranjandgaon plant where Fiat produced their cars.

While most Fiat dealers shut shop, some shifted to selling Jeeps.

And why did Fiat fail? After all, they made great cars. Well, simply put, Indian buyers preferred Marutis and Hyundais and anybody who bought a diesel-powered Maruti (until 2020) used a heart that was designed by Fiat in Turin.

United Motors: Exit 2019

This one was a blink and a miss. A joint-venture with the Lohia Group turned sour almost instantaneously. A misreading of the Indian two-wheeler market, which was undergoing some severe stress, meant that there was no demand for their products. This one almost died in infancy, after generating some interest among the mid-weight segment buyers. So attributing blame on the government of the day may not be a great idea.

Harley-Davidson India: Exit 2020

When a global company is facing financial pressures, thanks to falling sales, the first operations to suffer are the smallest ones. Harley’s mix of American and cruiser riding tradition did not find much traction in Royal Enfield loving India, despite Donald Trump publicly making import tariffs an issue (although Harley actually assembled most of their bikes in India). In fact, Royal Enfield’s boss Siddhartha Lal recognised the challenge posed by Harley and completely updated the Royal Enfield line-up with products like the Continental GT and Interceptor 650 twins, which made potential buyers question why they were spending three times as much for a similar experience?

Even older riders who cared about the badge were showing an increasing predilection towards choosing brands like BMW and Triumph, and younger buyers only wanted to buy fast Italian and Japanese machines. This is not unique to India, this is happening to Harley-Davidson across the world.

Ford: Exit 2021

This was a truly puzzling one. Despite being one of the first entrants into a liberalised Indian car market in the mid-1990s, Ford’s stay in India remained, for large parts, troubled to say the least. Just a couple of weeks before they finally pulled the plug on their Indian sales operations, they launched an automatic variant of their Figo hatchback.

A proposed marriage with Mahindra Group announced by Bill Ford and Anand Mahindra in late-2020 went sour in the engagement period itself and led to acrimonious accusations in the automotive media circles.

Ford subsequently found their sales operations in India unsustainable, as they had been unable to compete with Maruti, either with hatchbacks and sedans or with Hyundai and Kia in the Sports Utility Vehicle (SUV) market. But their cars were not bad, ask any automotive writer and they all have fond memories of driving Fords whether it is the EcoSport or the Endeavour. Sadly, fond memories and good reviews do not guarantee a successful business make. Despite a massive billion dollar plus investment in a brand-new factory at Sanand, Gujarat that produced the EcoSport for export and continues to do so as it winds down in addition to producing engines, Ford seemed to leave India almost in a huff.

But the story isn’t over. After giving its dealers attractive separation packages and assuring customers that they will support vehicles for a decade, there has been talk that Ford can re-enter the Indian market with their line-up of electric vehicles. And if it fails to find a buyer for its factories in Sanand and Chennai, it could potentially start back limited manufacturing as well.


Also read: Your next car should be electric. But do the math first before you decide to plug and play


Datsun: Exit 2022

This brand withdrawal is what started the conversation by some Congress leaders.

Datsun is a sub-brand of Nissan Motors. Nissan and Renault jointly run a large factory outside Chennai, and Nissan continues to sell their compact SUV, the Magnite, in India. Indeed, Nissan has not had the best of times in India and Datsun definitely has not. But the reason the Datsun brand is being discontinued requires a bit of a back-story.

Datsun isn’t a new brand. It was the original name of Nissan, and the Datsun Z sports cars were legendary in their time. But the carmaker withdrew the Datsun name because they felt it was a bit down market in the mid-1990s and started selling all their vehicles under the Nissan brand. The brand was actually relaunched by Carlos Ghosn, the former boss of the Renault-Nissan alliance. You might have heard of him, he was credited with rescuing Nissan from collapse but more recently, he was accused of embezzling funds from the company and that sent him to a Japanese prison from which he made a daring escape hidden inside a cello case. The entire story is possibly worth a Netflix special, but back to Datsun.

Datsun was relaunched in 2013 with a lot of fanfare at a global event in Gurugram’s Kingdom of Dreams. Ghosn felt that Datsun would be an ‘affordable’ brand under the Nissan aegis for markets like India, Indonesia and Russia. The Datsun Go, however, was plagued with bad luck from the start. Simply put, most Indian buyers found it too basic and while the company also launched a ‘three-row’ Go-Plus and a sportier ‘Redi-Go’, sales just did not materialise. It was not as if this small car platform was a failure, Renault developed their own small car on the ‘Go’ platform and called it the ‘Kwid’ which, if you follow cars, you’d know continues to do well.

The Go was launched with much fanfare and Ghosn thought that the Indian customer wanted a modern, cheap hatchback instead of the dated old Maruti-Suzuki Alto. It turned out that the Alto could not be dethroned and that Indian consumers really wanted the SUV form factor, which is why the Renault Kwid did well. Maybe, Datsun could have survived with a second generation of products but Nissan possibly wants to erase all vestiges of the Ghosn-era and Datsun was a big one.

@kushanmitra is an automotive journalist based in New Delhi. Views are personal.

(Edited by Anurag Chaubey)

Subscribe to our channels on YouTube & Telegram

Support Our Journalism

India needs fair, non-hyphenated and questioning journalism, packed with on-ground reporting. ThePrint – with exceptional reporters, columnists and editors – is doing just that.

Sustaining this needs support from wonderful readers like you.

Whether you live in India or overseas, you can take a paid subscription by clicking here.

Support Our Journalism

Most Popular

×