Bloomberg News

Ford Unveils Compact SUV in India Ahead of Global Introduction

January 04, 2012

Jan. 4 (Bloomberg) -- Ford Motor Co., the second-largest U.S. automaker, unveiled a compact sport-utility vehicle in India ahead of introducing the model in about 100 markets across the world.

The automaker plans to target production of more than 2 million units of so-called B-segment small cars, including the EcoSport SUV, by the middle of this decade, Ford said in a statement as Chief Executive Officer Alan Mulally introduced the vehicle in New Delhi today. Ford will manufacture the EcoSport at its plant in Chennai, in southern India, the company said.

The South Asian nation may become one of Ford’s three biggest markets by 2020, Joe Hinrichs, president for Asia- Pacific, said in New Delhi today. Mulally, who has revived Ford by focusing on quality and fuel economy in new models such as the Fiesta subcompact and redesigned Explorer SUV, expects the EcoSport to win it more customers.

“The Indian market is a tremendous market for us,” Mulally said at press conference. “This vehicle offers the flexibility, reliability and quality of a compact car with the gait and roominess of an SUV.”

Ford’s India unit will have a capacity to make 440,000 vehicles annually by 2014, Hinrichs said. The local unit will spend $142 million on making EcoSport available in India, he said, without providing the price of the SUV or saying when sales will start.

Eight New Models

Ford will be showcasing the EcoSport at the New Delhi auto show this week. This is the second of eight new models the Dearborn, Michigan-based automaker plans to introduce in India by 2015 in a bid to boost its presence in Asia’s second-fastest growing major economy.

The EcoSport will feature a 1-liter, three-cylinder direct- injected EcoBoost engine, according to a statement.

Ford, which got 58 percent of its third-quarter revenue from North America, is adding more models and expanding its sales network in India to boost growth. The automaker has 220 outlets in the country, up from about 170 in June, Michael Boneham, the president of Ford’s India unit said today.

The company introduced its first small car in India in 2010. The 1.2-liter Figo helped almost triple deliveries to 95,395 in the year ended March 31. That ranked Ford behind Maruti Suzuki India Ltd., Hyundai Motor Co. and Tata Motors Ltd. in passenger car sales, according to data from the manufacturers group.

In 2011, Ford’s local sales rose 15 percent to 96,270 units, the company said Jan. 2 in an e-mailed statement.

New Factory

In July, Ford announced it would spend 40 billion rupees ($757 million) on a second car factory in India to cut shipment time to the northern part of the country and access ports on the nation’s west coast.

The factory, which will be ready by 2014, will have an initial capacity to make 240,000 cars and 270,000 engines annually in the western state of Gujarat. Ford has a plant near Chennai in the southern state of Tamil Nadu, where it makes the Figo hatchback, the Fiesta sedan and Endeavour SUV models.

Sales of cars in India have slowed as higher borrowing costs deterred buyers in a country where industry researcher IHS Automotive estimates almost 80 percent of car purchases are funded with bank loans.

The Society of Indian Automobile Manufacturers may cut its annual domestic passenger-car sales target as higher borrowing costs and fuel prices sap demand, Sugato Sen, a senior director for the group, said on Dec. 8. The group had earlier forecast sales growth of 2 percent to 4 percent, compared with 30 percent expansion in the year ended March 31.

--Editors: Subramaniam Sharma, Jamie Butters.

To contact the reporter on this story: Siddharth Philip in Mumbai at sphilip3@bloomberg.net

To contact the editor responsible for this story: Young-Sam Cho at ycho2@bloomberg.net


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