August 12, 2015 / 10:54 AM / 2 years ago

Ford targets emerging markets with frugal India build

Customers inspect Ford's new Figo Aspire car on display at a showroom in New Delhi, India, August 11, 2015. REUTERS/Anindito Mukherjee

NEW DELHI (Reuters) - Ford Motor Co plans to use low-cost engineering it learned in India to develop compact models for other emerging markets, executives said, emulating a strategy used by Asian rivals that outsell it in the world’s fifth-largest auto market.

The U.S. automaker has struggled to compete in India, a market where small, inexpensive yet powerful cars are popular and which is dominated by brands from Maruti Suzuki India Ltd and Hyundai Motor Co.

Ford last fiscal year sold just 75,000 cars, a figure dwarfed by top selling brand Maruti, which sold 1.2 million, and its 3 percent share of the overall passenger vehicle market is one of the smallest among foreign automakers.

Ford aims to expand market share with its first India-specific small car, the budget Figo Aspire. It said at the car’s launch on Wednesday that the starting price would be 489,990 rupees ($7,557) - undercutting rivals like Maruti Suzuki, Honda Motor and Toyota Motor.

“2015 is going to be a real turning point for Ford in India. We are calling it growth 2.0,” Nigel Harris, president and managing director of Ford India, told reporters.

A fuel-efficient engine configured for the Aspire will also be fitted into other vehicles Ford plans to export to Africa and Southeast Asia, executives say, as it eyes the small cars it expects could make up 60 percent of global sales volumes.

A view of Ford's new Figo Aspire car on display at a showroom in New Delhi, India, August 11, 2015. REUTERS/Anindito Mukherjee

“We are being challenged to find engineering solutions at lower costs than we have traditionally been able to do,” John Lonsdale, head of Ford’s B-car program in Asia Pacific, told Reuters in a recent interview in the western city of Udaipur.

“This market, probably even more than Brazil, is demanding cost strategies and cost structures that are lower than anywhere else,” he said.

Customers sit near Ford's new Figo Aspire car on display at a showroom in New Delhi, India, August 11, 2015. REUTERS/Anindito Mukherjee

B-cars, loosely defined as compact cars, are key to the growth of automakers like Ford in India and beyond: global sales of such cars are expected to rise by more than a third to 11.4 million by 2020, according to IHS Automotive.

India is expected to become the world’s third-largest market by 2020, when sales of B-cars are expected to double to around 1.73 million, IHS added.

Analysts, however, said that despite selling cars in India for more than two decades, Ford faced an uphill battle against more established Asian rivals in the compact car segment.

“Ford is following a tried and tested approach... but it is late in implementing it,” said Puneet Gupta, senior associate at IHS.

($1 = 64.8400 rupees)

Editing by Miral Fahmy and Muralikumar Anantharaman

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