How Sajjan Jindal, MG Motor Deal Will Revive Ford Motors Chennai plant
With Sajjan Jindal tipped to steer MG Motor India’s next phase of expansion in India, this could just end up being the best piece of news to Ford India’s defunct plant at Maraimalai Nagar near Chennai.
The American carmaker announced its decision to exit India a couple of years ago which meant that its facilities in Tamil Nadu and Gujarat would have to be sold. While Tata Motors acquired its Sanand plant in Gujarat, the one near Chennai is still awaiting a buyer since the time Ford wrapped up a severance package with the workforce in September last year.
It now seems very likely that the next phase of MG Motor’s growth plans, spearheaded by a Sajjan Jindal-led entity, will happen in this Ford facility though there has been no official confirmation on the subject. The location is a huge plus given that it is in the midst of a vibrant automotive hub along Maraimalai Nagar — Oragadam — Sriperumbudur.
This belt includes other prominent brands such as Renault-Nissan, Daimler India Commercial Vehicles, Royal Enfield, Yamaha and Hyundai Motor India, the biggest of them all. It is also home to a strong supplier base and, beyond this, Tamil Nadu has declared its intent to be the go-to destination for EVs.
Hyundai has recently committed huge investments in electrification while Renault-Nissan are also expected to follow suit. A little over two hundred kilometres away in Hosur, TVS Motor and Ola Electric are going all out with their electric two-wheeler plans.
The Ford plant could then be the ideal base for the new phase of MG Motor which will largely focus on the production of EVs. When that happens, the American automaker will also make a complete exit from India in terms of manufacturing and retailing cars. It will also mean that its Chennai facility will not lie abandoned; incidentally, there have been unconfirmed reports that VinFast of Vietnam, which makes EVs, is exploring this plant for its
India project.
Ever since Ford made known that it was shutting down its operations here, the Tamil Nadu government sent out a message that it would pull out all the stops to get a buyer for the Chennai unit. The Hyundai group was apparently interested in Ola Electric but all these remained in the realm of speculation. When the Tata top brass met the TN Chief Minister, MK Stalin, it looked as if a change in ownership was underway till the company decided to buy out Ford’s Sanand plant instead.
Since then, the names of other potential suitors also began doing the rounds, a list that included Foxconn and BYD of China which has a facility in Sriperumbudur not too far away from the Ford plant. BYD, incidentally, has also been keen on investing more in India but the Chinese firewall remains an issue to contend with. There was also a time when Changan Automobiles of China was looking at using the Ford Chennai facility but shelved its India plans when its country’s relations with India took a nosedive.
General Motors was the other American auto brand which decided to pull out of India after nearly two decades of operations which hardly saw it make a ripple in the market. It was quick to find a buyer in SAIC for its Halol plant in Gujarat and almost sewed up a deal with Great Wall Motors, again of China, for its Talegaon facility near Pune.
However, the onset of the pandemic in 2020 followed by the Chinese army’s aggression along the border ensured that there would be no progress on the deal. After a wait of nearly two years, Great Wall Motors finally decided to drop the plan of acquiring the GM facility which has now found a new suitor in the form of Hyundai Motor India. Whether Ford will be as fortunate to wrap up an agreement with the Sajjan Jindal group remains to be seen.
Recent reports in the media suggest that the steel honcho is likely to form a new entity to operate the business which will largely focus on the production of electric vehicles. MG Motor India, which set up operations in 2017, has quickly made a name for itself with the popular Hector SUV and has been on overdrive with its electrification plans too.
The hitch, however, for the company to invest further in India lies in its China parentage. The Indian government is in no mood to encourage new investments from Chinese automakers which has been a massive setback to MG Motor whose parent company is SAIC Motor Corp. Incidentally, the company has gone all out to put its Chinese association in the background since the time it set up operations here. This was perhaps acknowledging the fact that Indian customers would not react very well to a China overhang for its product range. Hence, the decision to keep MG Motor — the British brand acquired by SAIC — as the face in India and other parts of the world.
Yet, the reality is that with SAIC as its parent, new investments cannot be contemplated by the company given the hostile relations between India and China. What started as a border skirmish has since grown to a level of mutual distaste and suspicion. The net result is that investments from China have been derailed even while MG Motor is in dire need of expansion.
The company has already made it public earlier this year that it would ‘Indianise’ its operations as part of an overall business restructuring exercise. This would see a new partner come in while the supporting system comprising employees, dealers and vendors would also get a stake in MG Motor. An IPO has also been planned in this recast initiative and effectively it will mean that a pragmatic solution will be found to bypass the Chinese investment hurdle.
This is where Sajjan Jindal’s name has been doing the rounds as the most likely candidate to get into the driver’s seat. Speculation is rife that the announcement of the change in ownership will be made by mid-November which will then lead to the appointment of a new Managing Director and a plant to make EVs. This is where the Ford plant in Chennai could end up being the most likely choice.
