Tata Motors, an Indian carmaker, has agreed to pay 7.26 billion rupees ($91.5 million) to acquire a Ford manufacturing facility in Gujarat, a state in western India.
The agreement comes as Tata increases its automobile production to keep up with demand. The agreement between the Indian division of the US automaker and Tata’s electric vehicle subsidiary includes all “qualified personnel” as well as property and machinery.
Ford discontinued production in India this year after battling for more than two decades to earn profits there.
“With our manufacturing capacity nearing saturation, this acquisition is timely and a win-win for all stakeholders,” Tata Motors said in a statement.
According to the parent company of the UK’s Jaguar Land Rover, the Sanand plant will initially have a capacity of 300,000 vehicles per year, with the potential to rise to 420,000.
The announcement, according to Ford transformation leader Steve Armstrong, represents a significant advancement in Ford’s efforts to restructure its Indian business.
Ford announced in September of last year that it would shut down its auto facilities in India as part of a $2 billion move. The American automaker estimated that the move would have an impact on 4,000 workers at the time. $2 billion had been lost by Ford’s activities in India over the preceding ten years.
The company’s decision to significantly scale back its efforts in India contrasts sharply with its prior goal of making the nation one of its largest markets.
However, the demand has increased for some Indian automakers. One of Tata’s competitors, Mahindra & Mahindra, claimed on Friday that demand for its popular sport-utility vehicles was outpacing supply.
As a result, its quarterly profits increased, and sales of its passenger automobiles increased by 74 percent over the previous year.
“We have kicked off capacity expansion programs but had not anticipated this kind of demand,” Mahindra and Mahindra’s executive director, Rajesh Jejurikar said.
The automobile manufacturing arm of the Indian multinational conglomerate Tata Group is called Tata Motors.
In the UK, Tata Motors acquired Jaguar and Land Rover in 2008 from Ford and combined the British luxury automobile manufacturers into one business.
The Tata Group is the owner of numerous companies worldwide, notably Tata Steel Europe, which comprises the UK’s erstwhile British Steel assets.
