Ford to drive its first small car into India

September 24, 2009 08:48:23 AM

• A⁺ 
• A^-
• |
• 
• |
• 
• |
• 

US automaker Ford said Wednesday it would launch its first small car in India next year, accelerating its drive to penetrate the fast-growing vehicle market to offset tough global conditions.

Chief executive officer Alan Mulally unveiled the hatchback Figo -- Italian slang for "cool" -- in New Delhi as he said the giant car company was still on track to turn profitable in 2011.

Ford is aiming at the "sweet spot" of the Indian car market, Mulally said, referring to the fiercely competitive small automobile segment, which accounts for over 70 percent of new sales.

"We are going after the heart of the Indian market," he said, calling the Figo a "game-changer" for Ford's India strategy.

Global vehicle manufacturers, hoping to offset anaemic car sales growth in the developed world, have been steering towards India and China, seeing huge potential in their billion-plus populations.

Mulally said pricing for the Figo would be "very competitive" but would not challenge the Nano, the world's cheapest car, produced by India's Tata Group, which sells for around 2,000 dollars (96,000 rupees).

Analysts said other models in the Figo "B" class sell for 6,258 dollars to 10,430 dollars.

But analysts said Ford and other foreign carmakers faced an uphill drive to win over Indian consumers.

"They have no track record of good performance -- the foreign carmakers will have to struggle against competition from the domestic carmakers which have strong brand images," said Vaishali Jajoo, analyst at Angel Broking.

General Motors has also chalked out an ambitious strategy to roll out new cars in India, whose market it sees as key to fuelling future growth.

Mulally added that Ford was poised to return to profitability by 2011 but said the US vehicle market would recover more slowly than from previous recessions.

"The guidance we have given overall... is that we will be profitable in 2011," he said.

Ford has posted three straight years of annual losses but is the only one of Detroit's Big Three automakers to have avoided bankruptcy.

Ford has invested 500 million dollars to double capacity at its car plant near the southern city of Chennai to make the Figo. The plant will be able to produce 200,000 cars a year, some of which the company aims to export.

"We will significantly expand exports of engines and vehicles to additional markets across our Asia Pacific region," said Michael Boneham, president of Ford India.

India's car market is growing as the economy expands, creating a new prosperous breed of car buyer. India is one of the world's least penetrated car markets in the world.

Indian car sales jumped for a sixth straight month in July, climbing an annual 31 percent, as new launches and cheaper finance boosted demand.

Ford India, which began operations 14 years ago, makes the mid-sized Ikon sedan, the Fusion and Fiesta sedans and the Endeavour sport-utility vehicle in Chennai.

Ford said fuel-efficient small cars represented the future for automakers and that Asia-Pacific would be a key region.

"We expect the small car segment to double in volume during the next 10 years," said Boneham, adding, "When we look out the next 20 years, we see about one-third of all vehicles being purchased in the Asia-Pacific region."