Ford sees China, India fuelling auto market growth

NEW DELHI Wed Jan 4, 2012 6:51pm IST

Alan Mulally, President and CEO of Ford Motor Company kisses the newly launched EcoSport vehicle, in New Delhi January 4, 2012. Ford Motor Co on Wednesday launched the EcoSport, its new global compact sports utility vehicle, and said it will invest $142 million in the company's Chennai plant in south India to manufacture the model for the domestic and export markets. REUTERS/Adnan Abidi

Alan Mulally, President and CEO of Ford Motor Company kisses the newly launched EcoSport vehicle, in New Delhi January 4, 2012. Ford Motor Co on Wednesday launched the EcoSport, its new global compact sports utility vehicle, and said it will invest $142 million in the company's Chennai plant in south India to manufacture the model for the domestic and export markets.

Credit: Reuters/Adnan Abidi

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NEW DELHI (Reuters) - The global automobile market is likely to grow by 5 percent a year for the next two years, led by China and India, Ford Motor Co CEO Alan Mulally said, after the U.S. automaker launched a global compact sports utility vehicle in India.

The EcoSport is the second of eight new global models that Ford plans to launch in India, the company said in a statement earlier, as it targets Asian and African markets in a push to increase annual global sales to 8 million vehicles by 2015.

"The global automobile market is expected to grow by 5 percent in the next two years and most of it will come from the Asia Pacific region," Mulally told reporters in Delhi after unveiling the EcoSport.

"There is some slowdown in Asia Pacific but it is a very good market with a huge potential. In the Asia Pacific market, China and India will drive the growth," he said.

Ford, which sold just under 100,000 cars in India in 2011, a rise of 15 percent from the previous year, has said it expects Asian sales volumes to double to account for a third of the carmaker's global sales by 2020.

"The Indian market will be the third largest by the end of the decade behind the U.S. and China," Joe Hinrichs, group vice-president and Asia Pacific and Africa president told reporters.

"We are still bullish on India and we expect significant growth as per capita income rises in tier-II and -III cities."

India's car sales, which grew 30 percent in the year that ended in March 2011, are expected to be flat in the current financial year, an industry body said last month, as high interest rates and rising input costs bite.

Despite slowing economic growth, India's young population, rising salaries and low penetration makes it a key market for global carmakers such as Ford as economic turmoil continues to keep developed markets sluggish.

Renault said on Tuesday it would announce plans for low-cost cars in India this year with Japanese affiliate Nissan, after weighing the alliance's technologies against those of potential partners.

Ford will invest $142 million in its 200,000 vehicles-a-year plant in Chennai, where the carmaker builds its Figo and Fiesta models, to buy equipment to manufacture the EcoSport, said Michael Boneham, managing director of Ford India.

Ford, the only U.S. automaker not to take a federal bailout in 2009, said it will make the EcoSport for the domestic and export markets. It, however, did not disclose the price of the vehicle.

The car was launched a day ahead of the start of India's Auto Expo where fuel-efficient cars and a slew of new SUV models will be unveiled as global carmakers continue to rev up their activity in one of the world's few growth engines.

The 2012 India Auto Expo, held once every two years, begins on Thursday in New Delhi.

For the Expo minisite, click here

(Writing by Henry Foy and Sumeet Chatterjee; Editing by Rajesh Pandathil and Aradhana Aravindan)

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