Production at Ford’s Chennai plant will commence in 2029, with an initial target of 235,000 engines per annum
A few weeks back, it was reported that Ford was rethinking its plans to restart operations at the Maraimalai Nagar plant in Chennai. The uncertainty was created due to the 25-50% tariffs imposed by the Trump administration. In the latest development, Ford has given the green signal for restarting production at the Chennai plant. Let’s explore how Ford will utilize the Chennai plant and the possibilities that could emerge in the future.
Ford to restart production in Chennai from 2029
When Ford was operational in India, it had two manufacturing facilities, one in Chennai and the other in Sanand, Gujarat. As part of its plans to focus on profitable markets, Ford decided to exit the Indian market in 2021. The Sanand plant was sold to Tata Motorswhereas the Chennai plant was retained. However, the Chennai plant has remained unused since 2022.
In 2024, Ford revealed plans to commence manufacturing at the Chennai plant for export markets. For this, a Letter of Intent (LoI) was submitted to the Tamil Nadu government. But then tariffs were announced by the US government, aimed at boosting domestic production in the United States. This prompted Ford to revisit its strategy for the Chennai plant.
Tariffs are still active, which makes one wonder why Ford still wants to restart operations in Chennai for exports. Some reports speculate that instead of focusing on exports to the USA, Ford may be eyeing other markets such as Europe. This approach will completely bypass the high tariffs imposed by the US government. Europe too has tariffs, but these are not as high as those in the USA.
In the initial stage, Ford will be producing its all-new next-gen engines at the Chennai plant. The manufacturing facility is likely to undergo a major revamp before production commences in 2029. Development work on the plant is planned to commence later this year. When operational, the plant will have an initial capacity of 235,000 engines annually. It will create more than 600 jobs.
Leveraging India’s manufacturing expertise
The Chennai plant will be an integral part of the Ford+ plan. This multi-pronged strategy has various objectives such as enhancing customer satisfaction, ensuring strong cash flow, generating profitable growth and improving capital efficiency. The Chennai plant will be useful, as India has lower production costs and established auto component manufacturers.
Supply chain can be optimized, as the Chennai port is quite close to Ford’s Chennai plant. Benefits available via the Chennai plant will be something similar to how Ford utilizes its other global facilities in China, Mexico and South Africa. With the existing infrastructure just needing an upgrade, Ford will not have to invest heavily in building an entirely new plant.
While initial focus will be on exporting engines, new opportunities can come up in the future. Trade negotiations are currently underway with both the US and Europe. If tariffs are reduced and bilateral trade ties increase, Ford can come up with new plans for the Indian market. So, will we see new vehicles with the Blue oval on Indian roads again? That’s a question for another day.
