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By 2020, 75% Of Ford India’s Output Could Be Shipped Overseas

Ford India’s FY 2017-18 sales in the domestic market remained flat though it scored well on exports that enabled the company realize $3.4 billion in revenues vis-à-vis $2.8 billion in 2016-17. While the domestic market accounted for 33% of sales, exports accounted for 66% of the total volumes during the same period.

Photo Credit :

1542976834_n53Kem_fordecosport.jpg

Ford EcoSport

Ford Motor Company, which forayed into the Indian market nearly two decades back, is likely to deploy three fourth of its overall output for exports in the next couple of years.   The US car major, which has recently ended Korean carmaker Hyundai Motor's more than a decade-long dominance as the largest exporter of cars in India, would increasingly zero in on exports to get stability in demand as the domestic market is riddled with volatility.  At present, 60-65% of Ford India’s production is shipped out to 55 to 60 countries in Europe, Africa, Gulf and the ASEAN. Last financial year, the company exported 175,196 units out of which its compact SUV EcoSport (at 90,599 units) accounted for the major chunk of the pie.


When queried about its business plans Ford India managing Director Anurag Mehrotra recently told BW Businessworld, “I think we are at an optimal point and again it will be a function of whether we are able to find and create products which will find resonance with the market. It will all be a function of that, whether in domestic market or export markets.  Finding the right product segments that you want to participate in and once you decide you want to participate, what should be the reason to win that segment. You have to make choices about which segments you want to participate (in) and what is your offering which is unique or differentiated which will allow your consumers to actually fall in love with your products."


It is to be mentioned that Ford India has a portfolio of five products-Figo, Aspire, Freestyle, EcoSport and Endeavour- which are manufactured at its plants in Chennai and Sanand (Gujarat).  With a total manufacturing capacity of four lakh units per annum between the two plants, the company's production volume was 2.5 lakh units in one-shift operation. The company's domestic sales are almost half of its exports at 87,588 units for FY 2016-17 as against 86,460 units a year ago.

A leading national daily has recently reported that Ford India’s FY 2017-18 sales in the domestic market remained flat though it scored well on exports that enabled the company realize $3.4 billion in revenues vis-à-vis $2.8 billion in 2016-17. While the domestic market accounted for 33% of sales, exports accounted for 66% of the total volumes during the same period. 


When quizzed on the speculation on Ford India’s near-term plans to bring in all-new car or whether it will be launching only those products that will be jointly developed with Mahindra and Mahindra (M&M), he maintained, “All manufacturers, including Ford, have a cycle plan which means product programmes.  We are very clear on how we play and where we play and how we win is our go-to-market. So we have identified segments that we want to play in and we are clear that we will want to participate by winning in those segments.  I cannot tell you how many products by when. But what I can tell you is will I bring more products. Absolutely! If you look at India- 5-10 years from now, there will be a shift in the segmentation of the market.  As that segmentation moves or consumer demand shifts towards different body styles, different powertrain combinations. Absolutely! We are here to serve the customers. If customers tell us this is what we want, there is no reason why we should not be giving it to them."

Below are Ford India’s domestic and overseas sales over the last 5 years.


Calendar Year

Domestic Wholesales

Exports

Combined Sales

2013

80,431

39,284

119,715

2014

77,140

76,981

154,121

2015

77,715

99,143

176,858

2016

86,460

151,638

238,098

2017

87,588

175,196

262,784

Jan-October 2018

85,589

135,800

221,389


Puneet Gupta, South Asia Vehicle Sales Forecast, IHS stated, “Ford is realigning their India strategy. It is expected that going forward Ford will keep on using the art of Frugal Engineering which they have learned in India in last few decades. However we may not see the same level of investments, New Platforms, New products from Ford Global for Indian consumers. Ford may focus more on Engineering/IT center in India for their Global activity. However, using India as manufacturing hub for export may not be on their agenda going forward.  Ford existing cars and platforms may continue and may be modified to push excitement in their dealer network. Ford may also use India as hub to import components for their global plants.”


“Ford India has been facing a sales slowdown in the Indian market. The Figo and the Aspire have not worked well in the Indian market and sales have been slow. Meanwhile, the EcoSport is reaching the end of lifecycle and there is a natural sales slowdown, further compounded by the Vitara Brezza's success. The Endeavour is doing okay but it is not a mass market product. Barring the Figo twins and the EcoSport, Ford India does not have any other mass market products. Adding to the problems, the company has two production plants in the country and that means a significant idle capacity. Exporting from India is a natural fit. The success of the EcoSport in global markets and its introduction in the US means that there is a significant export volume that Ford India can cater to. Hence the focus on exports,” said Deepesh Rathore, Director - Emerging Markets Automotive Advisors.



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