India May Miss EcoSport Drive to US Ford likely to give mandate to export the compact SUV to the North American market, including US and Canada, to Thailand unit
Internal competition at Ford Motor is likely to rob its Indian unit of an opportunity to export the EcoSport to North America, where the US automaker plans to launch the compact sports utility vehicle in the first half of 2016, people familiar with the matter said. Ford Motor is likely to make its Thai unit responsible for supplying the SUV to the North American markets, including the US and Canada, said three people. What was on offer for Ford India was a likely order to manufacture 55,000-70,000 units of a face-lifted version the model in 2016, they said. For Ford, India is already a major export hub — it shipped 35% of the more than 1.3 lakh vehicles manufactured in India in the last fiscal year ended on March 31 — and Europe is the main destination for India-made Ford vehicles. An order to export vehicles to North America would have helped the local unit improve capacity utilisation at its Chennai plant and achieve breakeven sooner than expected now. “But then it is good news for the waiting Indian customers, who are already facing a waiting period of 5-6,” said one of the people, as the company still plans to run the factory at higher utilisation levels. “The idea is clear, instead of shipping more out of the country, Ford would like to satiate the demand of Indian customers first.” The EcoSport is the most popular among Ford’s offerings in India and because of demand far outpacing supply, customers have to wait for months to get the delivery of the SUV. A Ford India spokesperson said the company’s policy is not to “comment on speculations related to future programmes or product strategies”. The India market too will get the face-lifted variant of the EcoSport in 2016. India is the base for Ford to serve the local market and Europe. Ford’s Thai unit serves that market and its facility there will likely be used for shipping the EcoSport to North America. Ford wants better capacity utilisa-
For Ford, India is already a major export hub — it shipped 35% of the more than 1.3 lakh vehicles manufactured in India in the last fiscal year
tion at its Thailand plant and EcoSport volumes will help in achieving that, people close to the company said. Also, noise, vibration and harshness levels of cars produced in Thailand are better than those made in India, a crucial factor when selling a vehicle in the demanding markets of North America.
Ford posted a nearly 24% jump in vehicle production in India in fiscal 2014. Exports rose more than 60% from the previous year, while local sales — EcoSport accounted for most of that — grew 9.4% with 84,469 units.
Though Ford India is unlikely to get the order to ship the SUV to North America, it plans to crank up utilisation of the Chennai plant because of its commitment to export vehicles to more than 50 countries and sustained demand for the EcoSport in the domestic market.
In 2014, Ford India is targeting production of 1.6 lakh units — as many as 1.19 lakh of those will be EcoSport. The plant is expected to run round the clock starting the second half of 2014, a first in Ford's 17-year presence in India. Its plan is to take production to the facility’s installed capacity of two lakh cars a year, if vendors can spruce up supplies. The scenario before the EcoSport launch was very different. Ford’s market share was languishing at around 3%. The Chennai plant was operating at half its capacity and Ford India was sitting on an accumulated loss of .` 1,374 crore. But a lot has changed over the past
to crank up utilisation of the Chennai unit due to its commitment to export vehicles to more than 50 countries two years. Its engine exports strategy has offered a good revenue stream and the plan to make India an export hub for cars made on the B platform — a compact car platform — is helping it improve profitability.