In a statement, CEO Jim Hackett said that Ford is "very fortunate to have an experienced and committed executive team in place driving every day to significantly strengthen our business while building toward our vision of becoming the world's most trusted mobility company, designing smart vehicles for a smart world".
In a prepared statement by Nair that was released by Ford, he said that he sincerely regretted the instances where he did not exhibit leadership consistent with the principles at Ford that he has espoused.
In August, Ford agreed to pay up to US$10.125 million to settle an investigation into sex and race harassment at two plants in Chicago conducted by the US Equal Employment Opportunity Commission (EEOC).
Last May, the automaker named Hackett its new chief executive, replacing Mark Fields.
It certainly wasn't planned - Ford just offered Nair a US$5m retention bonus a year ago that would vest in May 2020.
In an accompanying statement Nair regretted the incident.
Nair joins numerous business leaders who have been fired or have resigned in recent months because of inappropriate behavior in the workplace. Nair was a rising star at the company, she said.
Though the exact nature of Nair's misconduct remained unclear, The Journal noted the company had struggled with a history of sexual harassment on the assembly floor, with outstanding claims by women workers going back to the 1990s. Previously to his new appointment, where he will now be responsible for leading all aspects of Ford's North American business, Galhotra led the Lincoln Motor Company - a luxury vehicle division of Ford.
Hackett, 62, wrote an open letter to employees in December after the New York Times published a story about the history of harassment at the plants that the newspaper said drew from interviews with more than 100 current and former employees. It also said that Ford had also retaliated against staff who complained of such harassment.
As leaders' behavior is fundamental to the culture that an organization wants to build, the adherence to the company's values is paramount. Galhotra had added chief marketing officer to his duties November 1 past year. He also worked on assignments in Europe, South America and Asia Pacific.
Nair, who is a mechanical engineer, has been Ford's point man when it relates to global product development and was widely considered as one of the few possible successors at CEO.