Ford eyes bigger global role for India

Ford Motor Company is set to kick off a new chapter in India with the inaugural of its second plant next week.

Present on the occasion will be its President and CEO, Mark Fields, who took over from Alan Mulally last July. He will naturally be keen on seeing India play a far more proactive global role for Ford and this is where the new facility in Gujarat will be critical.

The location, Sanand, is home to Tata Motors and nearly bagged another high profile resident, PSA Peugeot Citroen, which subsequently shelved its India plans. Fields will be quite aware that China and India are relatively today’s fastest growing global economies as Russia and Brazil grapple with a host of internal problems. South Africa is not in the best of shape either and Ford, therefore, has to leverage growth opportunities in this part of Asia.

And even while the company has been in India for nearly two decades now, Gujarat will spawn a different roadmap for Ford taking into account changing market realities. Global dynamics have changed since 2008 when the Lehman crisis first broke out and saw the West virtually implode.

This is when automakers realised that it was imperative to look beyond Europe and the US as part of their survival strategy for the future. This is how BRIC (Brazil, Russia, India and China) economies took centre-stage with South Africa now part of the list too.

Ford had managed to weather the 2008-09 crisis relatively better (compared to General Motors and Chrysler) but its top management knew that the time had come to chalk out a far more durable global strategy. This was when Mulally kicked off the One Ford plan which would see the company focus on greater commonality of spare parts and reduce the number of global platforms.

The Gujarat facility will be an important part of One Ford and the compact car (Ka) codenamed B562 that is scheduled to roll out from here is also part of the American automaker’s Brazil plan. India will gradually become a manufacturing powerhouse which will see a host of cars and components shipped out to other parts of the world.

It would only be logical for Ford to make India is central global point for compact cars/SUVs. Not only is the domestic market relevant but smaller vehicle options are gaining ground in other parts of the world where fuel efficiency has become priority for customers. Cars shipped out of India could then find their way to markets in Africa, ASEAN and parts of South America.

Ford’s Chennai plant is already doing its bit as an export hub but Gujarat, with its access to ports, will take the momentum to the next level as cars and engines will be produced for both India and the rest of the world. It makes perfect sense from the viewpoint of competencies, costs and logistics.

Even while it has put out successful products like the Ikon, Figo and EcoSport, observers believe Ford could have done a lot more during its two-decade stint in India. Perhaps, it had to do with the fact that there was no compelling reason to step up the gas when its traditionally strong markets in the West were doing well. Things have changed dramatically since and Ford’s Asia-Pacific operations will now be more directly involved with the India story.

For Fields, this will be an interesting challenge as he scripts a bigger role for the country. Less than three months after he took charge, he outlined Vision 2020 for Ford last September which targeted a near 50 per cent increase in global sales to 9.4 million units. The significant part of this strategy was the company’s confidence in its global product plans which would deliver a full family of vehicles expected to ‘meet and exceed customer expectations’.

Fields also spoke of a shift in customer and regional trends which meant small vehicles would play a larger role in Ford’s product portfolio. Global models like the Fiesta, Focus and EcoSport, and regional nameplates such as the Figo, Ka and Escort, would make up a greater percentage of Ford’s sales.

According to Fields, Ford was on course to have 99 per cent of its global sales volume built on nine platforms by 2016 and, going forward, this would be further consolidated to eight (platforms).

Eventually, the company intends to refresh its global product portfolio one-and-a-half times through the end of the decade.

Vision 2020 also factored in the reinvention of Lincoln as a ‘world-class luxury brand’ in North America and China. By 2020, it targets a three-fold increase in sales to 300,000 units driven by its entry in China with the MKZ sedan and new MKC luxury utility. The MKZ and MKC are the first of four new vehicles Lincoln plans to introduce globally by end-2016.

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