The advert, showing three women bound and gagged in the boot of a Ford Figo, appeared on a website.
Silvio Berlusconi was shown in the driver’s seat with a slogan: “Leave your worries behind with Figo’s extra-large boot.”
The advert has not been used commercially.
Reports say that it was posted online by the India-based advertising agency hired by Ford.
Ford Motor Company said it regretted the incident and called the images “contrary to the standards of professionalism and decency within Ford”.
“We deeply regret this incident and agree with our agency partners that it should have never happened,” Ford said.
A Ford spokesperson said the company was taking the incident “seriously and are reviewing approval and oversight processes, and taking necessary steps to ensure nothing like this ever happens”.
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