Ford To Boost Production In India For Exports Amid Surging Demand For Smaller Cars

Ford Motor Co. (NYSE:F) will accelerate production in India, to increase exports to more than 50 markets around the world, and expects demand for small vehicles to surge to more than 60 percent of the automobile market globally by 2020, the company announced on Wednesday.

Ford said it expects industry demand for B-segment vehicles -- subcompact cars with high mileage and low prices -- to double in India, and demand for sport-utility and multi-activity vehicles to triple, between 2012 and 2017. And, markets in Asia-Pacific and Africa will account for about 50 percent of global industry volume for small vehicles, the company said.

“Despite current macroeconomic factors and ongoing market challenges, India is a big part of our global strategy,” Dave Schoch, Ford group vice president and president of Asia Pacific, said at an automobile convention in New Delhi, according to a press statement.

The announcement followed the launch of Ford’s EcoSport compact sports-utility vehicle, or SUV, in India in June, which the company expects to perform well as the country's rapidly growing middle class warms up to SUVs.

Over the past year, there has been a 52 percent surge in the sale of SUVs, compared to a 6.7 percent dip in passenger-car sales, which is the first automotive sales decline in a decade, according to a Wall Street Journal report.

Ford has bagged more than 40,000 orders since the launch of its EcoSport SUV, following the success of its hatchback Figo, which sold 300,000 units.

The automaker plans to export the EcoSport, including to European markets, from its Chennai factory, which can roll out 200,000 vehicles and 340,000 engines a year. In the fiscal year ended March, Ford sold 77,225 vehicles in India, accounting for a 17 percent dip in sales, however it exported 29,319 vehicles, marking a 15 percent growth in exports.

In India, Ford produces the Classic and Fiesta mid-size cars; the Endeavour SUV; and the Figo, which is exported to 38 countries from its Chennai facility.

Ford is also planning to set up a $1 billion facility in Sanand, in the western Indian state of Gujarat, to supplement its exports from the Chennai plant, and both facilities will boost the automaker’s annual production capacity in India to 440,000 vehicles and 610,000 engines.

“An estimated 25 per cent of vehicles that roll out from our two plants and 40 per cent of engines put together in India is what we envisage for exports, as part of our long-term strategy,” Ford India’s President and Managing Director Joginder Singh said, in April.

The Asia-Pacific region contributed to less than a fifth of Ford’s global sales volume -- 282,000 vehicles -- in the first quarter of 2013.