industry

Ford likely to fuel India drive with $1 billion


MUMBAI: Ford Motor Co is likely to make an additional investment of as much as $1 billion in Indian operations over five to seven years as it restructures or exits key businesses around the world. Although the Indian passenger vehicle market crawled to its slowest growth in recent years in FY19, Ford is looking to make the country a centrepiece of its longterm global strategy, said people with knowledge of the plan.

At least $500 million will go toward two SUVs that will be developed by Ford’s India centre. An additional $400-500 million will likely be in Project Black, in partnership with Mahindra & Mahindra. The two companies had announced plans for a C-segment SUV last month.

This reflects Ford’s twin-track approach — on its own and in partnership with M&M. The two SUVs, codenamed BX744 and BX745, are planned to be launched in 2021 and 2022, respectively. The 744 is an India-specific, sub-4-metre SUV, while the 745 is a global project aimed at China, Brazil and India, besides other emerging markets. It’s aimed at challenging the likes of Hyundai Creta and Renault Duster.

A Ford India spokesperson said, “The company does not comment on future product and investment road map.”

This investment underscores Ford’s commitment to India following reports that it was reviewing its presence in the market.

India Plays Important Role for Ford Headquarters

India plays an important role for Ford headquarters, especially from an emerging market cluster perspective, said one of the persons. This is a departure from its earlier stand of catering mostly to evolved markets.

“Beyond independently penetrating the Indian market, Ford is looking at ways and means of participating in the global emerging market in tandem with Mahindra,” said the person. “A partial JV may not be ruled out… maybe one of the plants, but exiting is definitely out of question.”

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While the company has seen volumes almost static at 80,000 to 100,000 units in the Indian market over the past few years, exports have played a key role in ensuring capacity utilisation at its plants in Sriperumbudur, Tamil Nadu, and Sanand, Gujarat. Still, the latter facility has significant surplus capacity, which the company is looking to fill up.

With exports to Europe from India facing emission challenges, especially for its compact car and sedan, supplies to the continent will be gradually phased out in the coming months from India.

The new emerging market focus for India — solo and in tandem with Mahindra — will play a lead role in building global volumes for the company, said another person aware of the plan.

India has transitioned — from low-cost manufacturing, to an export hub, to a development base, said Gaurav Vangaal, country lead for production forecasting at IHS Markit.

“Having successfully created a positive name for the country in global markets for its manufacturing quality, India’s engineering capability can definitely help global car companies… in global markets, especially emerging markets,” he said.

Ford has officially announced an investment of close to $100 million in the C-segment SUV in partnership with Mahindra, which will be sold in India and other emerging markets. The maker of the EcoSport is also likely to reach an accord on sharing electric vehicles with Mahindra on its own B562 or Figo architecture. This too may be sold in global markets, said the people cited above.

Improved capacity utilisation and lower costs under the emerging market operation model (EMOM) has helped Ford make a profit. It’s working with Mahindra’s sourcing team to lower costs further to sustain profitability in operations.





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