Tata Motors Signs MoU for Potential Purchase of Ford’s Gujarat Plant

Tata Motors said on Monday its electric mobility unit has signed an agreement to potentially acquire Ford Motor’s Sanand vehicle manufacturing facility in Gujarat.

The US automaker last year stopped production in India, where it had a less than 2 percent share of the passenger vehicle market and had struggled to turn a profit for more than two decades.

The company said earlier this month it was seeking options for its two factories in the country while shelving plans to make electric vehicles in India for exports.

The memorandum of understanding between Tata Passenger Electric Mobility Ltd, Ford India Private Ltd and the government of Gujarat includes the land, assets and all eligible employees working at the Sanand facility.

Ford India will operate its powertrain manufacturing facilities by leasing back land and buildings of the powertrain unit from the Tata Motors unit, the company said.

Earlier this month, Tata Motors’ chief financial officer said that inflation and a semiconductor shortage are the biggest challenges faced by the company, as the Jaguar Land Rover (JLR) owner reported improved demand.

Chinese lockdowns to tackle a surge in coronavirus cases also represent an emerging risk to the carmaker, P B Balaji told reporters after Tata Motors reported a fourth quarter loss.

“The two big worries are inflation and semiconductors. It is going to be a challenging few months,” Balaji said, adding that the Ukraine crisis has exacerbated the situation.

Tata Motors will nevertheless meet its profit and cashflow targets for the year, Balaji said, adding that the combination of a chip shortage and strong demand has resulted in pending orders of around 168,000 vehicles at JLR.

Carmakers across the globe have resorted to gradually hiking prices in a bid to deal with steep raw material and shipping costs, which are squeezing profit margins at companies looking to recover from the pandemic.

© Thomson Reuters 2022