Ford’s exit shows that India’s passenger car market is a tough nut to crack

India’s passenger car market is predictably huge – and worth around $30 billion – but it is a tough nut to crack.

American auto giant Ford is the latest major company to run into difficulties. On September 9, it announced it will completely shut down manufacturing operations in India, after 20 years of unsuccessful operations. In the financial year that ended on March 31, 2019, Ford sold just 93,000 units, capturing a mere 2.75% of the market. In comparison, the country’s largest car manufacturer Maruti Suzuki, has over 50% of the market, which saw 27 lakh personal vehicles sold in the financial year ending in March.

Ford’s exit comes after General Motors abandoned its efforts in India. Meanwhile, Japan’s Toyota has said it will not expand its investments in the country.

Automotive industry analysts explained what Ford got wrong in India, and what it takes for foreign car companies to beat the competition in India’s growing car market.

Price sensitive market

Car buyers in India are particularly price-sensitive, experts say, which means the cheapest compact cars do best. Those tend to come from Asian carmakers, rather than US ones.

Vahishta Unwalla, a lead analyst at Mumbai-based credit rating agency Care Ratings, says most Indians have limited disposable income, and so cannot afford a discretionary item like a passenger vehicle,…

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