Ford India to benefit from economies of scale

Tue, Sep 20 2011 12:27 IST | 279 Views
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Chennai, Sep 20

The eight new car models Ford Motor Co plans to roll out of its two Indian plants will be on global platform and will have several common parts, reducing costs, a company official said.

"The new models will not (be) designed for any specific market. But there will be lot of common parts to cut down on our costs," said Michael Boneham, president and managing director of Ford India.

He said a decision was yet to be taken on the models the company would produce in its two Indian plants -- one existing and the other coming up in Gujarat.

"We decided to have a second plant in Gujarat mainly to save on logistics costs and have a plant near the National Capital Region (NCR) that (accounts for) 20 percent of the sales," he said.

He said in Gujarat the engine plant would first go on stream followed by the car plant in 2014.

"The new plant can make six different models in a single production line,"

he added.

Ford India is building an integrated vehicle manufacturing facility and an engine plant at Sanand in Gujarat at an outlay of $1 billion.

The vehicle plant will have an initial annual capacity of 240,000 units. The engine plant will have an initial annual capacity of 270,000 engines.

Ford India's plant at Maraimalai Nagar near here has a vehicle plant with an annual capacity of 200,000 units.

The company is also investing $72 million to expand its engine plant near here to take the annual production capacity to 330,000 from the current 250,000 units.

"We will be crossing 100,000 units production at our Chennai plant this year. Three years back the production was just 30,000 units. The growth is good," Boneham said.

Boneham said India will be the third largest car market after China and the US by 2020.

"The car plants will be domestically driven while the engine plants would cater to both domestic and overseas (markets).

"While Hyundai ships out cars, we will be shipping out engines. We will be shipping out over 60,000 engines this year."

Terming Asia a major market for Ford, Boneham said the company had to fundamentally change itself to cater to these markets - "rolling out small cars as perceived by the buyers in these markets and not what we termed as a small car".

"We want sales to come equally from the US, Europe and the Asian regions, and small cars have a large share in that," he said.

Speaking about the company's sales, he said: "Figo is doing well. We have over 1,000 bookings for our new Fiesta and nearly 80 percent of that is for diesel variant. Seventy-five percent of Figo sales are diesel variants and this is expected to go up to 80 percent.

"When sales of petrol version went down here, we saw demand for petrol variant in South Africa and shipped the models there."

He said over 800 Figos have been exported to Saudi Arabia.

Boneham said demand was expected to surge from tier 2 and 3 cities. "We are profitable at all the product levels."

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