Ford Launches Figo, A Small Car Made In - and For - India

Posted by: Mehul Srivastava on September 23, 2009

After years spent trailing Japan’s Suzuki, South Korea’s Hyundai, and India’s own Tata, Ford decided to make a real go for Indian consumers, launching a small car called Figo.

It’s about time. Ford has pledged to spend as much as $500 million building a car plant in south India, but hasn’t gained much traction in the Indian car market, which saw sales of 1.5 million passenger vehicles last year. Car sales were up 13% this April-August from a year earlier, but Ford’s sales fell 2.5% to 10,128 cars, according to the society of Indian Automobile Manufacturers.

The reason why Ford was 7th in one of the few fast-growing major car markets in the world had to do with its line-up. Even though the south India plant has a capacity of some 200,000 cars, most of the cars made there were sedans like the Fiesta and Ikon, large hatchbacks like the Fusion, and expensive SUV’s like the Endeavor.

Indians, meanwhile, have a penchant - and a budget - for small cars. About 70% of last year’s sales were small cars, led by the Maruti Suzuki Alto, a $3800 car that’s is a reinvention of an even cheaper Maruti 800, the first foreign car to be manufactured in India. Tata has started deliveries of its $2500 Nano, and Hyundai and Suzuki have created a new segment of premium hatchbacks like the Hyundai i20, the Maruti Swift and the A-Star, with power-steering, automatic transmission and ritzy interiors that sell between $10,000-$14,000.

For Ford, which avoided bankruptcy last year in the U.S., India is a key market as U.S. sales continue to remain unsteady - the Figo, for which Ford did not reveal a price, is the first serious step into that market. Sales could begin by 2010, said Alan Mulally, Ford CEO, in a press conference in Delhi. “Our exciting new Ford Figo shows how serious we are about India,” Mulally told reporters. “It reflects our commitment to compete with great products in all segments of this car market.”

For Ford, there’s a lesson to be learned from Suzuki. As car sales crumpled around the world in late 2008 and early 2009, Suzuki’s 54% stake in Maruti Suzuki in India propped the company up, contributing nearly half of Suzuki’s top-line. If Ford can gain a foothold in India, it may be able to level out the dips in the U.S. and European car markets with more predictable growth in India, where car sales could touch 3 million by 2015

GM plans to showcase a small car at the January Delhi Auto Show - its Chevrolet brand has had a lackluster performance here, releasing a car called the spark, which is a revamped version of Daewoo’s Matiz, which sparked, then flickered in India’s car market in the early 2000’s. Its other cars, some of which are hatchbacks, have yet to impress customers the way the Japanese, Korean and Indian cars have.