After nearly doubling its capacity, Ford India has its sights set on stable growth in the face of tough competition as it prepares to launch a new car later this year, its managing director said on Tuesday. "Ford has been deliberate in its pace of growth for good reason - the company world-wide has been through a rough patch in the North America market, so it was a difficult time to look at making new investments elsewhere," David Friedman told Reuters in an interview.
"At the same time, competition has heated up here and margins have been squeezed, so we've been deliberate about rolling out new models."
The Detroit-based car maker's subsidiary, which began selling cars in India in 1996, assembles the Ikon sedan, the Endeavour sport utility vehicle and the Fusion mid-size at its plant just outside Madras. It also imports the fully built Mondeo saloon.
Rapid growth in India's car market, helped by reduced excise duties and cheap loans, has led to higher customer expectations and created opportunities for new model launches, Friedman said.
But he declined to comment on the new car Ford is developing in India, which is expected to be unveiled later this year.
Last month, India's top car maker, Maruti Udyog Ltd, started selling its new Swift compact on the heels of launches in Japan and Hungary by majority shareholder Suzuki Motor Co, a departure from Suzuki's earlier strategy of only introducing older models in the emerging markets.
"The traditional markets are stagnating, and if you look at where there is growth, it's in Asia specifically," Friedman said. Currently the Asia-Pacific region accounts for around 7 percent of the company's global Ford brand sales.
Friedman expects India's car market to grow at about 10-15 percent this year, slower than the past couple of years due to pressure from high prices for steel and petroleum-based inputs.
The 18-year Ford veteran, who holds a University of Chicago MBA and is married to an Indian, moved to Madras in 1998 and became managing director in 2001.
Ford India sold about 27,000 vehicles locally last year, and exported nearly 24,000 Ikons to South Africa and Latin America.
It added a second shift at its plant last August to nearly double capacity to 50,000 units a year. Capacity could be doubled again, said Friedman, who expects that to happen over the next 5-10 years.
Rivals are doing likewise. Hyundai Motor India Ltd, a unit of South Korea's Hyundai Motor Co, is spending $450-500 million on a second plant next to its first one in Madras, to take total capacity to 400,000 cars per year by 2007.
The Indian unit of Honda Motor Co is raising annual capacity to 50,000 units from 30,000 by the end of 2005, at a cost of $33 million.
And General Motors Corp has more than doubled capacity in its Gujarat facility to 60,000 units at a cost of $69 million, and can step up to 80,000 units if needed.
Ford also extracted itself from a nine-year-old vehicle financing partnership with the Kotak Mahindra group last week.
The company aims to focus more specifically on its own dealers and customers, which has become more important as Ford loses share to Asian rivals in the US market and beyond.
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