Chennai-based Ford India, makers of the Figo compact hatchback, is still to decide on the site for a new factory, despite talking to various state governments for several months, even as it faces output constraints.
Its present factory is near Chennai, with a peak capacity at 200,000 units yearly. The company has employed two shifts, utilising four-fifth of the capacity or about 160,000 units per annum. It has been facing shortage in the areas of powertrain and components for the Figo, its largest selling model, leading to lesser production than it wishes. From a peak of nearly 10,000 units every month, the car’s output recorded 5,700 units last month.
Michael Boneham, managing director said, “We wished to produce more units of the Figo but the problem is constraint-driven. The auto component-making cluster is struggling."
With new models due for a debut in the coming months, the new Fiesta premium mid-size sedan launched yesterday going under production and a gradual increase in exports, Ford will face capacity issues in the coming quarters. The minimum period required for a new facility to be set up and become operational is 18-20 months in India. Ford teams have scouted for land in Tamil Nadu, Gujarat and Maharashtra, among other places.
While officials in the Gujarat government say Ford has given a preference for a location in the Sanand area, near Tata Motors' Nano plant, senior officials at Ford have refused to come on record.
“We have utilised 90-95 per cent of our engine capacity and 100 per cent of our vehicle capacity, working in two shifts. We are not talking about our expansion plans right now, as it is something which is yet to be finalised. But we can say that we are prepared to make huge investments in India for expansion,” added Boneham.
Officials in the Gujarat government say Ford had asked for about 400 acres in that state, offering an investment of about Rs 5,000 crore. Ford did not confirm this.
Besides serving the domestic market, Ford has bigger plans for the export segment, too. The company has already begun exports in increasing volumes of the Figo to 14 countries, including South Africa, the largest market in the African continent. About a fifth of the company’s total production goes to the export market. India is the only country where the Figo is made.
Market leader Maruti Suzuki faced a similar situation after demand in the domestic market rose to unexpected levels in recent months, making the company struggle to match with equivalent supplies. It had to expedite construction on a new plant, managing to bring down the opening date by six months, by October this year as against March 2012 in the earlier schedule.
