New Products Spearhead Ford’s India Recovery Strategy

MUMBAI – Ford India is forming a strategy to reverse its falling growth rate and declining market share in the country this year.

“We are taking steps to meet the challenges of the Indian market arising from diversity of demand and tough business environment, ”Executive Director Nigel Wark says.

Steps that Wark has in mind include increased investment, expanding Ford’s range of low-priced models, including the next-generation EcoSport B-segment cross/utility vehicle and offering new engines such as the award-winning 3-cyl. EcoBoost.

Ford India’s struggles are a result of limitations in both plant capacity and model offerings. The introduction of the Figo subcompact hatchback in 2010 drove passenger-car sales 195% above prior-year, and 2011 deliveries improved 15.6% year-on-year, according to WardsAuto data. But sales through October were 6.7% below like-2011.

The Figo pushed Ford’s 2010 share of the country’s light-vehicle market to 3.1% compared with 1.8% year-earlier. The auto maker’s share climbed to 3.3% last year but had slipped back to 2.7% year-on-year through October, WardAuto’s data indicates.

The auto maker has assets such as the powerful, efficient and affordable 1.5L Duratec gasoline engine and 1.4L Duratorq diesel. But it offers only four models: the Figo, the high-end Endeavour SUV, priced at Rs2.3million-Rs2.6 million ($42,000-$47,000), a new-generation Fiesta B-segment sedan and its predecessor, rebadged as the Classic.

The EcoSport launches early next year, giving Ford an entry in India’s competitive small- CUV segment, but it still lacks an affordable midsize CUV.

Ford has managed to create enough combinations from its limited range of models and engines to stay afloat in India. For example, the Classic’s Titanium variant features a 1.6L Duratec gas engine that achieves best-in-class fuel efficiency of 50 mpg (4.7 L/100 km).  The auto maker also claims its 1.4L Duratorq diesel’s fuel efficiency is 76.2 mpg (3.1 L/100 km).

Ford has earmarked $2 billion (Rs108.6 billion) to expand its presence in India, including Rs54.3 billion ($1 billion) to build two state-of-the-art facilities due to open in 2014 in Sanand in Gujarat state. The auto maker has spent Rs3.9 billion ($72 million) to expand its two existing plants in Chennai.

The new Sanand plants and the expanded Chennai facilities will allow Ford to triple engine capacity to 610,000 units and 450,000 vehicles annually by 2014. The production boosts are keys to the auto maker’s plan to introduce seven new models, including the upcoming EcoSport, by 2015.

Existing products are not being ignored. Ford recently launched a facelifted Figo priced between Rs470,000-Rs730,000 ($8,550-$13,300). At less than 13.2 ft. (4 m) long, it is in the lowest tax bracket, but its interior appears as roomy as that of a Fiesta sedan.

Overseas markets are one of Ford India’s strengths; according to Society of Indian Automobile Manufacturers, the auto maker’s exports surged 110.7% to 25,616units from April 2010 to March 2011, the most recent period for which statistics are available.

Exports of the new Figo to 34 countries started last month. Ford plans to eventually reach 100 countries with its Figo and newer models. “We expect 60%-70%of our growth in the next 10years to come from the Asia/Pacific and Africa regions, wherein India and China will be the growth markets,” Wark says.

New leadership will guide Ford India’s expansion efforts. Boneham is retiring Dec. 31 after 27 years with the auto maker. He will be succeeded by Joginder Singh, who will oversee the eight new-product launches by mid-decade and production increases at the Chennai and upcoming Sanand facilities.