Small is big in Ford's India drive

Tue Mar 6, 2012 8:46am EST
 
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By Henry Foy

CHENGALPATTU, India (Reuters) - Ford Motor Co (F.N: Quote) will focus on small, low-cost cars in India to make the country a manufacturing hub for Africa and the Asia-Pacific region, the head of its Indian operations said, as it races to catch up with global rivals in the fast-growing market.

Ford will launch a slew of new small cars in India over the next three years to target a market it has neglected and ramp up exports to other emerging economies as it doubles capacity in Asia's third-largest economy, where the small car is king.

"We haven't been a major player (in India) because we weren't positioning ourselves in the segment where 70 percent of all cars are sold," Michael Boneham, president of Ford India told Reuters. "We were focused more on issues outside of India and sending cars that were force-feeding the Indian consumer.

"That was a mistake and we've learned from that mistake and now have a very robust plan for the business...You can expect a heavy focus on small cars from Ford."

Ford India began operations in 1995. A year later, South Korea's Hyundai Motor (005380.KS: Quote) entered the market and immediately began targeting the small car sector where formerly state-run Maruti Suzuki (MRTI.NS: Quote) had a virtual monopoly.

As Ford struggled with sluggish sales of oversized, costly vehicles, Hyundai's compact cars drove the company to second place in the market within two years. Hyundai India sold 616,000 cars in 2011, around five times Ford's total.

Cheap, small models dominate India's car market, accounting for around 70 percent of sales as aspirational middle class families, mainly relying on loans, trade in their motorcycles for four-wheeled status symbols.

Many global automakers have moved low-cost export operations to India recently. Japan's Nissan Motor (7201.T: Quote), which entered the country in 2005, exported 60,000 Micra sub-compacts last fiscal year, 80 percent of the vehicles' production.   Continued...

 
An employee speaks to a potential customers next to a Ford car inside the company's showroom in Mumbai March 3, 2012. Ford Motor Co will focus on small, low-cost cars in India to make the country a manufacturing hub for Africa and the Asia-Pacific region, the head of its Indian operations said, as it races to catch up with global rivals in the fast-growing market. Picture taken March 3, 2012.  REUTERS/Danish Siddiqui