Late on Thursday, Ford Motor Co announced that it would be following in the footsteps of General Motors in exiting the Indian market, bringing to a close an ill-fated 25-year foray into the Indian automobile market. 

Claiming that the company saw no route to profitability in the country, it noted that it had accumulated operating losses to the tune of over $2 billion in the last ten years, adding that demand for its product portfolio remained muted. Ford’s decision to exit India arrives only months after it shuttered operations in Brazil. 

Why can’t American automakers crack the Indian market?

The fact that the Indian automobile market is the second-largest in the world doesn’t necessarily mean that opportunities will fall into a prospective automaker’s lap. Over the last two decades, the market has consistently shown how difficult it is to crack. 

Ford entered India in 1996 hoping that its established global image will give it some form of leverage. But having sold just 48,041 units in FY21, the automaker is now set to depart boasting a paltry market share of 1.84 per cent. 

At the heart of Ford’s failure was an inability to adapt to the unique Indian market. Unlike in the US where vehicle size and engine power serve as primary lures, the Indian market is more responsive to price points, re-sale value and mileage. Ford’s first play was the Ford Escort which crashed and burned in a market that was growing increasingly infatuated with smaller vehicles. 

Other products like Ford Ikon, Ford Fiesta, Ford Figo and EcoSport experienced some minor success but not enough to turn the automaker into a genuine rival to Hyundai which, having also arrived in Indian in 1996, rode high on the success of the Santro. 

Ford’s portfolio also faltered against that of market leader, Maruti Suzuki. The company tried to dig itself out of a hole via proposed partnerships, most notably with Mahindra & Mahindra, but these never materialised. 

The case with General Motors (GM) was different. The automaker began selling cars under the Chevrolet brand in 2006 and had a portfolio of eight models – larger than both Ford’s and Hyundai’s. But its entire product portfolio only managed to win it a market share of 1.60 per cent by the time it exited the country in July 2015. 

GM’s flaw was not its product portfolio but an inability to adapt its vehicles to Indian roads. It also charged exorbitantly for aftermarket parts – another huge turn off for Indian customers. Poor reviews ultimately saw the brand’s image fatally tarnished and when it did eventually leave India, it did so carrying an operating loss of $27 billion. Last gasp cost-cutting measures towards the tail end of its India stint that hindered its products’ drivability quotient even further also did little to endear the brand to Indians. 

The case is similar with the American two-wheeler brands that struggled in India before eventually cutting their losses and leaving – Harley Davidson and UM Motorcycles. 

Harley’s entrance ignited an interest in cruiser bikes in India but, having been around for a decade, the iconic brand managed to get less than 30,000 units off the shelf. 

India is one of the largest two-wheeler markets in the world with over 17 million two-wheelers sold in 2019. But it isn’t particularly responsive to large, powerful bikes as evidenced by the fact that more than 90 per cent of two-wheelers on the streets are scooters and mopeds with engine capacities under 500cc. 

Harley’s high price points – its cheapest motorcycle was priced at Rs 4.7 lakh and its most expensive at about half a crore – saw Indians come to view Royal Enfield as a much more suitable alternative. In many ways, it was Royal Enfield that benefitted most from the cruiser interest that Harley’s entrance into the country sparked. 

Customers also frequently complained that Harley’s bikes were not tuned to Indian roads, with the company, on several occasions, forced to recall its vehicles to fix defects and malfunctions. 

UM Motorcycles began its India adventure by partnering with Lohia Auto, initially bringing to the market high-end cruiser motorcycles for the very first time including Renegade Sport S, Renegade Classic and Renegade Commando. 

However, despite being flashy, like Harley’s products, the motorcycles were criticised for their poor quality which hurt the company’s brand image. The company had hoped to become a legitimate rival to Royal Enfield but left in 2019 with a whimper.