The US automobile giant Ford Motor Company’s decision to scrap selling its Tamil Nadu plant to the Sajjan Jindal-led JSW Group was largely due to the latter buying stake in Chinese auto company SAIC Motor.
Marking its entry into automobile sector, JSW Group late last month inked an agreement to acquire 35 per cent stake in China’s SAIC Motor which owns MG Motor India.
Following the deal, SAIC Motor will offload its ownership in MG Motor India to the new company which will be jointly operated by both JSW Group and the Chinese company.
The US government, which already has a strained relations with China, had imposed economic sanctions on many entities and individuals from China for dealing with Russia.
“US has been restricting trade with China by imposing strict import barriers and Ford obviously did not want to get into their Government’s glare by dealing with JSW which had link with China,” said sources.
JSW Group did not respond to an email from businessline seeking a response.
Likely re-entry
Amit Goel, Chief Global Strategist at Pace360, said Ford did drop plans to sell the Chennai plant to JSW after its deal with the Chinese company SAIC to buy MG Motors.
Ford’s sudden change of plans also hints at a potential re-entry into the Indian market as auto sector has shown signs of recovery recently, he added.
Earlier, the JSW Group had finalised an agreement to buy the Ford plant for about $100 million for the automobile venture. However, Ford called off the deal as it is no longer looking to sell the factory.
This plant is Ford’s only remaining factory in India. The company decided to shut down the Maraimalai Nagar-based plant in July 2022, after incurring huge losses amid slowdown in the passenger vehicle market post-Covid.
Ford India’s main manufacturing plant located in Maraimalai Nagar is spread across 350 acres and has a capacity to produce 150,000 cars in two shifts and 200,000 cars in three shifts. It has an annual capacity of almost 340,000 engines.