Ford enters small car race

Ford India is investing $500 million (about Rs 2,000 crore) to double manufacturing capacity and build a new small car that will roll out of a new facility in Chennai within two years.

At present, the company makes only mid-size cars but aims to break into small cars.

Volkswagen, Toyota Motor Corp, Honda Motor Co and Fiat have also said they are looking to build small cars that will increase their sales volumes in India.

Ford's fresh investment will increase its production of cars from 100,000 to 200,000 by 2010. It will also include a new engine factory that will start operating in 2010 with an initial annual capacity of 50,000 engines.

This is Ford's second big investment in India after the $375 million it pumped in initially to build its factory in Chennai and comes in the wake of similar announcements in Thailand and China.

"Most growth over the next decade will be in this region in key markets in China, India and the Association of South East Asian Nations," said Arvind Mathew, president of Ford India.