Companies

Local sourcing puts Ford India back on the black after 2 decades of operations

Varun Aggarwal Mumbai | Updated on January 09, 2019 Published on January 09, 2019

Profits were at ₹525 crore in 2017-18 as against a ₹520-crore loss the previous fiscal

Sustained efforts to cut down overall ownership cost has finally started to show results for Ford India, which booked profits for the first time in its two-decade-old history in the country.

Ford India profits were at ₹525 crore in financial year 2017-18 as against a ₹520-crore loss in the previous financial year, according to data from Registrar of Companies.

Revenues for the fiscal were up a modest 15 per cent at ₹25,550 crore compared with ₹22,238 crore in the FY 17, as per data accessed by business intelligence platform Tofler. A bulk of these revenues, however, are still dependent on the company’s exports from India.

Ford India, like any of its American and European peers has been struggling to turn profitable in a market highly dominated by Maruti Suzuki, which has managed to sustain over 50 per cent market share since inception.

Parts, servicing

The Detroit-based firm has been taking several cost cutting measures to turn a corner in India and develop low-cost platforms especially for the Indian market.

The biggest challenge faced by auto-makers in India is their ability to offer affordable and durable parts. But, Ford has been able to change that image through its efforts in service where people can access the website to figure out the exact costs of routine repairs and maintenance even before they walk into a dealership.

Ford has been working on improving the overall value and cost of ownership across its product portfolio.

During old classic days, like every other manufacturer, Ford practised the same principle of cars being serviced every six months. But then the company evolved its functioning resulting in delayed customer visits to workshops as much as possible.

The new cars launched in the last couple of years now require a service interval of one year compared with a six-month service interval that was previously there.

Localisation pays off

The company has also started localising its cars heavily wherein most of its products are over 80-85 percent localised. The company is also trying to expand its service network in the country, which includes an extended sales and service dealership, which can offer basic services in relatively remote areas.

Ford is following a Emerging Market Operating Model for India, which involves its efforts to cut costs in every possible area, right from local sourcing, platform sharing, local alliances and technology partnerships. The model is being tested in India before the company takes it to other markets.

Published on January 09, 2019
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