Small is beautiful for Ford India

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Ford Motor Co will launch a new car model in India every 12-15 months over the next five years, with its new Figo small car is set to drive a tripling of sales in 2010, its India head said on Tuesday.

The No 2 US automaker by sales plans to use India as a global manufacturing hub for compact cars, eyeing the country's low-cost facilities to grow in a segment that it expects will make up 60 percent of all global car sales in 10 years.

The small-car segment makes up nearly 70 percent of the 1.5 million cars sold annually in India, a growing market which is one of the few bright spots around the globe for the auto sector.

"If you want to be in the game here in India, you have got to be in that segment. If not, you'll be an interesting niche player, not a mainstream player," Michael Boneham, Ford Motor India's president and managing director, told the Reuters India Investment Summit.

"And Ford wants to be a mainstream player here."

Half of the small cars on Indian roads are sold by Maruti Suzuki Ltd, which is 54.2 percent owned by Japan's Suzuki Motor Corp.

Apart from Ford, Toyota and General Motors have also lined up compact cars for the Indian market, and Volkswagen plans to launch a small car next year.

Growing market shares
Ford has just 2 percent of the Indian market, selling larger cars like the Fiesta, Ikon, Fusion sedans and utility vehicle Endeavour, but sees that increasing with its run of new launches.

Boneham said he expected to sell 31,000 cars in 2009, and it would be "a reasonable expectation" for this number to triple in 2010 when the Figo will hit Indian roads.

Figo and other cars will be produced at Ford's plant in the southern Indian city of Chennai, which is set to double capacity to 200,000 units annually at a cost of USD500 million.

Early next year capacity at the plant will be expanded to make 250,000 diesel engines annually.

"Within a five-year period, we should be expecting to fill up the capacity that we are installing," Boneham said at the Reuters office in the Indian capital.

Ford will not further expand capacity for the next three to four years, and would instead invest in developing products and upgrading technology, he added.

Vehicles and engines made in India would be exported to markets in Africa and Asia Pacific, and Ford would decide next year how much they would export, Boneham said.

"It's not going to be a story about the growth in India, it's a story about the growth in India combined with using India as an export base," Boneham said.

"(For) small cars, we're going to be the hub."