Despite just a three per cent market share here, Ford Motor Co has various growth plans. Kumar Galhotra, vice-president, product development, Asia-Pacific and Africa, tells Sharmistha Mukherjee the Indian market will become their third largest market, after the US and China, by 2020. Edited excerpts:
After scorching growth rates last year, the markets in India and China are now depicting signs of slowdown. How are the prospects for Ford in the region?
India and China are two of the fastest growing markets for us. Sales have slowed because of global conditions but they remain among the dominant growth nations for us. We believe 60-70 per cent of growth for Ford will come from Africa and the APAC region. A third of vehicle sales in absolute volumes will come from the region by the end of the decade. The situation now is short-term.
We are extremely bullish in the region. China should be 30 million units by 2020; India should sell nine to 10 million units. India will be our third largest market after China and the United States by that time. We are setting ourselves up with the right product portfolio and the right capacity to cash in on the growth potential when the industry recovers.
Ford has on offer four products in India and five vehicles in China. What are your plans to expand the line-up?
We have scheduled 50 launches in Africa and the APAC region by 2015. This includes vehicles and transmissions. We will introduce eight new products in the Indian market, which has started with the global Fiesta. Seven more products will follow in the next four years.
Global auto majors such as Toyota and Honda have developed products exclusively for the Indian market. Will Ford do likewise?
The vehicles we introduce can be global products but they must meet customer requirements in the places where they are launched. Increasingly, styling and consumer needs are converging. Consumers are well-connected globally; they are aware of products introduced across the world. The platform, powertrain and body can be common; the interiors have be tailored to suit local taste. The suspensions have to be adjusted according to road conditions of the area.
The market for diesel cars in India has seen a sudden spurt in the past six months. Did you have to alter the product line-up to respond to this?
The plan has always been to satisfy needs for both diesel and petrol variants. It’s a question of the mix. Earlier, the diesel to petrol sales ratio in India was 55:45. In the last six months, this has shifted to 75:25.
The capacity for manufacturing diesel engines at our plant is based on our requirements and can be adjusted. The demand for diesel cars will stabilise, as people get used to the price differential between the fuels, but diesel will continue to dominate in many segments.
How is the sales split between urban and rural markets?
We will continue to grow in the metros. But tier-II, III and IV cities are increasingly becoming significant. As many as 60 cities in India will have a population of over a million people by 2020. Our strategy from a distribution, sales and service perspective is to grow aggressively there. On an average, we are opening new sales and service outlets every week. We will have 200 sales outlets by the end of 2011. We are investing close to Rs 4,000 crore to put up additional capacity, by setting up a new plant in Gujarat.
Would the capacity at Gujarat be only to cater to demand in the domestic market?
Our strategy of introducing global products in India is very important. We will have global products and high-scale manufacturing centres. Our business is extremely capital-intensive. Some markets may be very small but have to be served. We have four key manufacturing centres in the region: India, Thailand, China and South Africa.
All products we will launch in India are global products and can be shipped to multiple destinations. Where we will ship the products depend on forex rates, market needs. Our Gujarat plant will play a major role in our exports’ operations. But, the focus will remain on the domestic market as well.
