Ford India Raising Product Profile Locally, Globally

MUMBAI – India is becoming a bigger player in Ford’s global plans.

Ford India’s fortunes started to change in the financial year ending in March 2014, when it made a small profit for the first time in 17 years. And although it did not sustain its profitability in the following year, Society of Indian Automobile Manufacturers data shows exports reached an all-time high 81,703 units, 70% above prior-year.

Exports are one component of Ford’s commitment to India, but so are R&D and development of products for the local market.

Former President and CEO Alan Mulally said during a July 2014 visit to India that the country was becoming Ford’s centerpiece for compact cars such as the Figo, compact SUVs such as the EcoSport and an export hub reaching out to more than 50 countries.

Mark Fields accompanied Mulally and returned in March, immediately after taking over as president and CEO. Inaugurating Ford India’s second plant at Sanand in Gujarat state, he reaffirmed the country was becoming a global center of excellence for small cars and smaller engines.

“Our vision over the next five years would be to triple our exports from India,” Fields added.

Ford India’s investments in Sanand and its Chennai facility in Tamil Nadu state total more than Rs125 billion ($2 billion). The automaker employs more than 14,000 people and has the capacity to produce 440,000 cars and 610,000 engines yearly. Both its plants are fully automated and follow Ford’s global manufacturing practices.

In addition, Ford is investing Rs50 billion ($800 million) to set up a Product Development Center for R&D activities inside the Chennai plant. Fields calls the center the largest of its kind in the Asia-Pacific region, noting, “India has tremendous engineering talent, a huge pool of skilled researchers and a dedicated work force.”

Adds Gaurav Vengal of IHS Automotive, “Product-development cost in India is half, if not one- third of (that of) evolved markets.”

Product cycles are becoming shorter in the developing markets of ASEAN, South Africa and South America. Accordingly, India’s low R&D costs and innovations help Ford and other automakers bring more products to market on time.

On his 2014 visit Fields learned Indian engineers offer key inputs into Ford’s global array of vehicles. This facilitates local production of cars and utility vehicles that eliminate dependence on imports and lowers manufacturing costs.

High Aspirations for Figo Aspire

Ford India so far has followed a limited-model strategy starting with the Ikon and Fiesta and adding the Figo and EcoSport. The cars were well accepted but did not sell in numbers large enough to grow Ford’s market share. WardsAuto data shows Ford light-vehicle sales totaled 77,140 units in 2014, down 24.8% from 2011.

According to SIAM, exports of Figo hatchbacks, which were stagnant for two years at about 28,000, declined 17.5% to 25,814 in the 2014-2015 financial year. But exports of the new EcoSport tripled to reach 51,326.

Fields now plans to transform Ford India into a multiproduct company covering several segments, aiming at volumes and profitability. The automaker will launch four models in the country, half the number originally planned, but each will occupy a different segment.

The first of the new models is the Ford Figo Aspire, not to be confused with the Mazda-designed, South-Korea built subcompact marketed in North America as the Aspire from 1994 to 1997.

A subcompact sedan less than 157 ins. (4,000 mm) in length, this Aspire is designed to compete with Maruti Suzuki’s Swift Dzire, Honda Amaze, Tata Zest and Hyundai Xcent in a segment accounting for 45% of the Indian market. Ford expects the segment to grow from 1.1 million sales this year to 1.6 million in 2019.

The other new Fords are a new-generation Figo, new Endeavour SUV and Mustang sports car, the latter priced at about Rs5 million ($78,000). But in addition to displaying the Aspire at 40 locations in 25 Indian communities, the automaker also will market the subcompact globally, emphasizing its interior features and spaciousness and sophisticated styling.

The Aspire will be available with a 1.5L TDCi diesel or 1.2L TiVCT gasoline engine. Ford has not yet revealed fuel efficiency, but it is believed it will exceed the EcoSport diesel’s 53.4 mpg (22.7 L/100 km).

‟In a subcompact car, the looks depend on the balance between comfort and styling, reliability and safety, parts and the whole,” says Ehab Kaoud, chief designer of the Aspire.

‟Our most effective tool to price the newly designed cars economically is our B-platform. With this, we don’t have to develop new products from scratch. When we use the B-platform, we get the global engineering efficiencies and Ford’s scale efficiencies. We can use the B-platform for our subcompact cars and pass on the cost benefits to the customers.”