India Dispatch: Ford yesterday launched a highly anticipated compact sport utility vehicle (SUV) in India, as the carmaker pushes for returns on its US$2 billion investment in the country.
Ford unveils 'game-changer' Compact SUV in India
Ford yesterday launched a highly anticipated compact sport utility vehicle (SUV) in India, as the car maker pushes for returns on its US$2 billion investment in the country.
The move comes amid slumping car sales and increasingly fierce competition in the country.
The American company is hoping that the EcoSport,which is being produced at Ford's Chennai facility, will appeal to Indians amid growing demand for small SUVs in emerging markets.
"If you look at India … although the industry is highly competitive, but even with these issues that we have in the industry right now, the bright spark has been the compact SUV segment, which we believe will continue to grow as much as five-fold over the decade," said Joginder Singh, the president and managing director of Ford India. He described the car as "a game-changer" for Ford in India.
Ford invested US$142 million to manufacture the EcoSport in India. The vehicle is being sold at prices starting from 559,000 rupees (Dh34,006) for an ex-showroom car in New Delhi.
Small utility vehicle sales globally are the fastest-growing segment, increasing by 154 per cent between 2005 and last year, according to IHS Automotive. Sales are expected to grow by 51 per cent over the coming years.
Rivalry for customers has grown in India as foreign companies have entered the market and continued to expand their presence, competing with local manufacturers such as Maruti-Suzuki and Tata, which are well known for churning out small, inexpensive models that are popular among Indian consumers.
India's car market has suffered amid rising fuel prices, high interest rates and a slowing economy.
Car sales in India declined by 6.69 per cent in the financial year running until the end of March compared with the previous year, according to the Society of Indian Automobile Manufacturers.
Car sales last month fell by 11.33 per cent, data from the society shows.
Yaresh Kothari, a research analyst on the car industry at Angel Broking, said that Ford's launch of the EcoSport should help the company with a much-needed boost to its sales numbers. "At the moment, as far as the company is concerned, the passenger car sales have been declining continuously, largely because of a slowdown in the domestic market," he said. "Their popular model Figo, sales have come down very sharply for that segment in the last one year. Having said that, to some extent the poor consumer sentiment in the country is responsible for declining sales."
The growth in the compact SUV sales has largely been driven by new products being brought into the market. "The utility vehicle segment has been growing over the last couple of years," said Mr Kothari. "Last year, the domestic sales of utility vehicles were up more than 50 per cent and driven largely by new launches that happened. The entry level segment of the price came down and that helped."
But Ford's success would depend on continued growth in the segment, Mr Kothari added. Despite strong growth in the last financial year, he explained that SUV sales had slowed sharply in the past couple of months.
"Although the sales were coming down as far as Ford was concerned, with the launch of Ford EcoSport the momentum should be back," he said.
"However, with the diesel prices increasing, the price differential between petrol and diesel value is coming down. The cost of ownership of having a diesel car is also increasing, so there has been some slowdown in sales in the utility vehicle segment.
"But the attractive pricing of the company probably should help Ford gain market share from the competitors like Mahindra & Mahindra and Maruti."