India is the place to be as far as Ford is concerned, as the car company plans to turn the country into its new manufacturing center for the Africa and Asia-Pacific region.
The Ford Motor Company has decided to release a new line of small and efficient cars over the next three years in an area that it feels it hasn’t looked after properly. This problem has arisen particularly because in Asia, Ford has discovered, the smaller a car is the better.
Michael Boneham, the president of Ford India since 2008, has admitted that ignoring the Indian economy, where seventy percent of all cars are purchased, was a mistake. Now, however, they plan to rectify that error by implementing this new plan to focus on smaller cars for the Indian consumer.
Ford India has struggled since it opened its doors in 1995, where it has had to compete with Hyundai and Suzuki ever since then. While those companies took advantage of the Indian desire for smaller, more fuel efficient vehicles, Ford continued to produce larger vehicles that flopped. As of last year, Hyundai has outsold Ford by five times the amount of their profit.
But now Ford is fighting back. Boneham reportedly believes that India can become the hub of operations for Ford, as he spoke about other developing countries who exhibit the same tendencies as India when it comes to the kind of cars natives seek to own.
Having exported 30,000 cars from India last year, Ford now seeks to increase its shipments to North Africa especially. Boneham also spoke about Ford’s plans to design and build their models with an eye on the global market. Costs are lower because the countries Ford is targeting seek entry-level cars, and these can be produced at a cheaper rate and sent out more efficiently from India. So-called “Indian steel,” which the company has used in its production since 2007 and is produced in Thailand, saves an estimated hundred dollars per car.
Ford has also honed its hiring skills. They have five thousand young employees, many of them with engineering degrees, working in their Indian factories, lured by the promise of government incentives.
By 2014, Ford plans to open a brand new manufacturing plant in India at an estimated cost of one billion dollars. The company is hoping that they can capture the small car market by upping its models produced to twelve. Their goal is to produce nearly 250,000 cars a year. The company is feeling ambitious as well as optimistic: they predict that sales will triple from three million last year to nine million over the next eight years, despite the fact that car sales in general have slowed due mostly to the rising cost of fuel.
For now, Ford should watch their back as the market grows even more competitive. Volkswagen and Mercedes-Benz have also recently announced their intentions to market smaller cars in India as well.
Boneham, however, feels that the pace Ford is taking is just right, and has announced that he will be thrilled when the company is ready to expand its operations as soon as they are able.
Evan Fischer is a contributing writer for Hire Cars – Car Hire Malaga Airport an online car rental supplier with over 4,000 locations worldwide.