US car giant Ford said on Wednesday it is accelerating its drive to make India its global export hub amid strong demand in Asia and Africa for small cars and sports utility vehicles.
Ford, whose cars in earlier years in Asia were nimbly outmaneuvred by rivals with smaller, cheaper vehicles, is revamping its strategy with a shift to smaller cars and SUVs.
Even with a sharp car market downturn in India, Dave Schoch, Ford Asia Pacific president, said on the sidelines of an auto conference in New Delhi the company is looking at the subcontinent as a “long-term investment.”
“Despite current macroeconomic factors and ongoing market challenges, India is a big part of our global strategy,” he said.
Ford is carrying out its biggest industrial revamp in half a century, building plants in India, China and Thailand, as it leverages a lower cost base and skilled manpower to boost output and meet demand in what it sees as an increasingly vital part of the world.
By 2020, Ford expects demand for small vehicles will account for 60 percent of the market globally and Asia and Africa will represent half the global volume.
Ford said it aims to be able to export from India to more than 50 markets globally within the next five years, up from 37 now.
“We’re significantly increasing our Asia-Pacific production capacity to meet the growing demand in this part of the world,” Schoch said.
Ford is one of several companies using India as an export base.
South Korea’s Hyundai is the biggest exporter of cars from India. Others include Nissan, which in July resurrected its iconic budget Datsun marque to woo a new generation of cost-conscious buyers in emerging markets.
Franco-Japanese auto alliance Renault-Nissan are planning to double investments in India to US$5 billion over the next five years as it seeks to grab market share.
Ford projects sales of 120 million units globally by 2020, up from 82 million now.
“Exports from India will help us to stay on track for growth in the region,” Schoch said.
India’s car sales contracted last year for the first time in a decade as an economic slump and high fuel prices and interest rates kept buyers out of showrooms.
The Indian market’s downturn is in sharp contrast to the previous decade when car sales grew up to 30 percent — prompting foreign giants from Ford to Volkswagen to make a beeline for India as they sought to boost sales globally.
Yet even with the slowdown, Ford India’s sales grew by 7 percent last month to 11,065 vehicles, helped by success of its compact SUV EcoSport. Ford’s plant in the southern city of Chennai can produce as many as 200,000 vehicles and 340,000 engines a year.
Ford is also building a US$1 billion plant in the newly emerging auto hub of Sanand, in western Gujarat state, which will have capacity for 240,000 vehicles and 270,000 engines annually when it opens next year.