Companies

‘Any small car being developed will have India in mind'

Roudra Bhattacharya New Delhi | Updated on November 20, 2017

Mr Alan Mulally, President & CEO, Ford Motor Company.





There are a few men who become celebrities in the corporate world, but very few are revered as legends. In the automotive sector, Ford Motor Co's President and CEO, Alan Mulally is a name that commands immense respect from colleagues and rivals alike. Credited with scripting Ford's turnaround story in 2007-08, the ex-Boeing Commercial Airplanes CEO helped the once bleeding automaker return to profitability by focussing on the core brand and selling off others such as Jaguar, Land Rover and Aston Martin. This, even as the other two big rival American auto giants, General Motors and Chrysler, headed for bankruptcy.

In an interview with Business Line, Mr Mulally explained why its new ‘One Ford' platform strategy, and markets such as India are very important for the future success of the company, as well as the industry.

Excerpts from the interview:

What kind of a role will India play in your platform strategy going forward?

The requirements in India for vehicle sizes are kind of a surrogate for the entire world. One of the reasons why India is so important for us, is that the vehicles we make — the Figo, Fiesta, small SUVs — are at the centre of the market worldwide. That is why you see us making such a focussed investment in balancing our portfolio to have such smaller vehicles.

When you look at the requirements for vehicle size worldwide, nearly 60 per cent are for the smaller size, the B and C size, about 25 per cent is medium size and 15 per cent is for bigger vehicles. That's worldwide. The US prefers bigger vehicles, such as pick-ups, because of the American lifestyle.

The B and C segments are going to be the majority of the vehicles, but they will all be on global platforms. 70-80 per cent of the parts will be exactly the same. 20 per cent will be customised as per the tastes of the customer. The vehicles will be made the same way around the world, giving us the scale with our suppliers so that we can bring these vehicles, with all the features people want, at a more affordable price.

By 2020, 70 per cent of your growth is expected be generated from Asia and Africa. Isn't that a major realignment in your global strategy?

Customer's requirements from vehicles have come together around the world. They want a full family vehicle, a commitment that every vehicle, no matter what size, will be the best in quality, fuel efficiency, safety and smart design. So the transformation (at Ford) is driven from that point of view, to have a balanced portfolio across markets we serve. This, really, was Henry Ford's original vision.

Any small car developed now will start with India in mind. Asia-Pacific is sitting at the big-boys table now, because the market is so big. Not only is it the future of growth, but the future of product size. Also, the same requirements are coming from the Americas and Europe. As fuel gets more expensive, even the US is feeling the pinch. No more ‘small is cheap and cheerful', because people are making a lifestyle choice.

The world economy is slowing down again and the crisis in Europe is threatening to spill over to the Asia-Pacific. Are you worried about that?

We see around five per cent compounded annual growth in automobile sales worldwide, going forward. At Ford, we're positioned with our investments to accelerate our growth in the developing markets, because we're already established in the mature markets. Asia-Pacific is just exciting — most countries are in the take-off stage, especially for the auto industry.

America is a tremendous market — relatively flat growth now, but still huge at 15 million vehicles. Economic growth worldwide is so important for all of us. The US is recovering from a very severe recession, probably the worst since the Depression (of 1930s). With the fiscal and monetary policy in place, the economy is expanding — though at a relatively lower rate. We're all concerned about Europe, mainly driven by the sovereign debt.

With one product across market, do you plan to significantly increase parts sourcing from India?

We have multiple suppliers and we source mostly from where we operate. We're going to see significant growth in the supply base in India as we grow with the investments we're making. Gujarat will bring a lot of capacity for Ford, and for suppliers as well.

The EcoSport is the first global platform vehicle to come to India with fully integrated manufacturing. That brings with it a global supplier base, and it gets only better from here for the other new products we launch.

General Motors' tie-up with SAIC in India gives it access to many low-cost platforms for the market. Will Ford look for such an opportunity as well?

While in China we have a partner, I don't think in India we need one. With our scale and the number of vehicles we're bringing in, I think we will be very competitive.

Our small-car strategy on global platforms is still in early stages. The Fiesta was the first one and now the Ecosport. There will be more coming from Ford on the small car side to demonstrate the capability of being developed in house.

Till now, the cars developed for the US weren't really on global platforms. When you design a global platform, you really look at the requirements for every market. With our One Ford plan we can deliver a car to customers with all they want at an affordable price.

If you start with the Western European market in mind, you have a different cost base, but for the EcoSport, we started with South America and India in mind. You can still bring that vehicle up market and give it more features and content. If you design it like that, you can take it up. But, it's much harder to bring it down.

Many luxury car brands are coming to India. Any plans for the Lincoln?

As we develop the Lincoln, it is going to be asked for around the world. But, we're focussed on the US market right now. The new Lincoln line-up really is the luxury line-up it used to be. A few years ago it used to be the number one luxury brand and then we bought others like Aston Martin, Jaguar and starting investing in those. There's no reason why we can't bring Lincoln back in a big way.

>roudra.b@thehindu.co.in

Published on January 19, 2012

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