Ford Motor Company (F, Financial) opened a new plant in Sanand, Gujarat in India aiming to triple exports from India. The plant is the company’s second in India after Chennai, which opened in 1998. The project is worth $1 billion spread on a 460 acre site and the US based motor giant expects to achieve the target within next 5 years.
Ford’s plans for India
The Ford Motor Company, the multinational automaker company headquartered in Michigan, USA was founded in 1903 by Henry Ford. In 1998, Ford first entered the Indian market by opening a plant in Chennai, Tamil Nadu. The first car introduced was Ford Escort which was later replaced by locally produced Ford Ikon in 2001. Other cars added to the portfolio since then are Fusion, Fiesta, Mondeo and Endeavour.
Later in October 2010, Ford launched the very first Indian-made compact car for Indian consumers called Figo. The car was priced at INR. 349,900. At present, Ford India’s Chennai plant exports approximately 60,000 to 70,000 units annually to over 35 global markets. With the new project in Gujarat, the company is targeting to increase it to 50 export markets globally.
The Sanand project was a MoU signed between Ford and Government of Gujarat in 2011 to be used for construction of an assembly and engine plant. Ford has plans to make India an exports hub and will use the Sanand is to triple it. The first cars to be produced at the facility will be the compact car Ecosport which is a sub-four meter SUV, and Ford Figo Aspire which is company’s newly launched compact sedan. The Aspire model is expected to be out in market by late 2015. The increased demand and popularity of compact sedan cars in Indian market lead the company to plan in total 4 vehicles under the category in next one and a half year. The company is hopeful of doubling its current production capacity to 610,000 engines and 440,000 vehicles a year with the launch of the new facility in India.
Ford has also created numerous job opportunities with its new plant and over 4000 people will be directly working with the company, whereas almost 2000 more will work from ancillary units around the facility.
India’s motor market
India is one of the largest automotive markets in the world and a lucrative export hub for manufacturers across the globe. Reason why the big names have set up their plants in India among which Chennai tops the list with 35% market share accounting for 60% of the automotive exports in the country. The western cluster contributes 33% and whereas northern cluster contributes 32%. Gujarat is an emerging cluster with General Motors (GM, Financial) and Tata Motors (TTM, Financial) already running a plant in the state. Currently, India is the fifth largest producer of passenger cars in the world.
Within the Indian automobile market, the compact sedans are gaining popularity fast due to which leading car makers are focusing their strength to manufacture different models in the segment. Market leader Maruti Suzuki India Ltd. designed the Swift Dzire keeping in mind the mass demand. Working on similar theory, Honda Motor Co. (HMC, Financial) launched its Amaze model while Hyundai (HYMTF, Financial) and Tata Motors brought their Xcent and Zest models to increase competition. Ford’s aspire model will also be added into the category of compact sedans.
Conclusion
Ford’s officials are very hopeful of leveraging increased profits from the Indian market through this new plant. They expect to become a major manufacturer of high quality small passenger vehicles to serve both local as well as global markets.
