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Ford Can Scale New Highs in This Important Emerging Market

May 31, 2014 | About:

Ford (NYSE:F) is one of the world's leading auto makers with strong footprints all over the globe. Ford is seeing tremendous growth in Europe. According to Ford’s head of European operations, demand for new vehicles is strong. This clearly shows Ford’s fantastic PR and the success of its cars.

The European market is one of the important regions for Ford. It is accelerating its production in this market. Now, Ford is planning to expand to Russia. Ford’s European sales grew almost 9% in July to 90,000 units, which was twice the industry’s growth rate.

All such exciting facts present a clear image for Ford as it is seeing good times in the European market. However, India is also turning up to be one of the next potential markets for Ford as the automobile market in this country is expected to triple by 2020.

Making a mark

India is the second largest populated country in the world. However, the auto market in this country seems to be growing at a sluggish pace. Still, according to JD Power, the growth potential in India is huge. It is estimated that the market will grow to 9.3 million units by 2020, driven by the growth in disposable income in India.

Ford has been making impressive moves and is expecting its initiatives to reap fruit in the future. The launch of the Ford Figo in the Indian market was a landmark by the company as the car was accepted well in India, which led Ford to dominate the booming small car market.

The Indian market was dominated by Suzuki’s subsidiary Maruti Suzuki. Statistics show that the this company was having more than 40% of the market in India. But, Ford’s Figo sold more than 300,000 units in past three years, which shows that it is slowly capturing the Indian auto market.

Seeing bright prospects in India, Ford is investing around $1 billion in opening an engine and vehicle assembly. Further, with the success of the Figo Ford, it is confident of its growth from this new platform.

Besides this, Ford is having one more plant in India. This was much needed as Ford is seeing difficulty in satisfying demand for its recently launched EcoSport. This five seater SUV by Ford is a good competitor of Renault’s Duster and even has better dimensions than Duster.

The EcoSport

The EcoSport is performing amazingly well in India. Ford’s EcoSport is the highest selling SUV in India, which hurt the sales of Renault’s Duster. EcoSport sold 4,715 units in just two months and received over 30,000 bookings in 17 days since launch. This is a worry for Renault’s Duster, as after the launch of the EcoSport in India, Duster sales were up by 32%.

So, Ford has found its way in the Indian market and so far, it has succeeded in the SUV segment. Further, according to IHS automotive, the market is expected to grow from 6,140 vehicles sold last year to over 126,000 units in 2015. In addition, the EcoSport has been making waves in China as well. Ford’s sales in China jumped 71% year-over-year in July last year, and the Ford EcoSport has contributed to this success as it sold 25,467 wholesale units since its late March launch.

Speeding ahead

Having seen the statistics, it can be noted that the EcoSport has played an important role so far to create room for Ford in potential markets such as India and China. It is expected to grow massively in these markets. However, Ford might face stiff competition from other auto makers such as General Motors and Nissan which are also moving at an aggressive pace to get a bite of the growing SUV market in these countries

The Terrano has a tad better-looking interiors and exteriors than the Duster, but the Terrano will also be priced above the Duster due to certain terms in the Renault-Nissan Alliance. This makes the EcoSport the more value-for-money bet even after taking competitors into account. However, it might be Toyota Motor (TM) that might pose a threat with its expected launch of the Toyota Rush compact SUV.

Final words

Ford is penetrating the Indian market aggressively with its EcoSport, and has done really well to prop up sales. The company is launching a new plant in India, which will help Ford to capture more of the market in the future.

Rating: 3.0/5 (2 votes)



Varadharajan - 3 years ago    Report SPAM

This is classic case of sampling bias. Please look at Ford's numbers in India and you will find that the numbers that Ford got from Ecosport were more than wiped out from the decline in other models. Ford lost $ 100 Mn on a $ 1 Bn in sales in FY 2013 and the losses were up four fold from FY 2012.

Please check and validate the facts to validate the hypothesis. Ford has been in India for 20 years and their cumulative losses exceed a $ 0.5 Bn and a total paid up capital of $ 1 Bn.

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