The Hindu Business Line : Ford's small car plans `await Govt definition'

MR ARVIND MATHEW, Managing Director and President, Ford India, at the inauguration of Metro Ford's new facility in Bangalore on Friday. — G.R.N. Somashekar

Bangalore May 12 Ford India has said with the Government still not being able to freeze the parameters for a small car, it could impact several carmakers' production plans for future models.

"The confusion over the definition of a small car has still not been resolved. It could impact the production of other car models and even SUVs," Ford India's President and Managing Director, Mr Arvind Mathew, told Business Line. There could even be differential pricing for petrol as well, he said. "Don't keep changing the rules. Have a clearly defined policy and stick to it," he added.

Mr Mathew had earlier said that his company's plans for launching a small car depended on how the Government resolves the issue of definition of a small car.

He said the automobile industry could not afford to keep its plans in abeyance for long. "Our business cannot run like that," he added.

Policy requirements

The auto policy of 2002 clearly states that the growth of small cars with length not exceeding 3.8 metres should be encouraged. But during the Union Budget of 2006, while the excise duty for small cars was reduced to 16 per cent from 24 per cent, the sop came with a rider: only those small cars not exceeding 4 metres but with engine capacity of up to 1200 cc for petrol and 1500 cc for diesel would be eligible for the concession.

Auto loans

Mr Mathew said even in the case of interest rates, a customer may tend to postpone his plans to buy a car as loans on electronic items and home loans too, have gone up simultaneously.

"As loans on other goods too have gone up, a customer tends to prioritise his needs," he said.

He, however, pointed out that there was still no cause for worry as far as growth of the passenger car market is concerned even though auto loan rates have gone up.

"We will however, have to watch out for another quarter before we can take a call on the market," he said.

Mr Mathew said Ford plans to consolidate its operations during the current year. He said during 2006, the company was able to register 87 per cent growth largely because of Fiesta's performance.

"We don't expect a similar growth this year though we will try to consolidate our gains," he added.

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