Ford India plans over 90% localisation

Ford India, the domestic arm of the US-based carmaker, plans to raise local content in its products to over 90% in future in order to pare costs.

The company, which has two manufacturing plants in the country - at Chennai in Tamil Nadu and Sanand (Gujarat), has increased localisation from 60-70% in 2013 to 85% now.

"Electronics and transmissions are a big component, it's still not localised. The ability to get right technology at right price is still limited. But in future, who knows? We have been able to bring down costs because of increased localisation," Ford India president and managing director Anurag Mehrotra told DNA Money in an interview.

The carmaker, in 2013, created a roadmap to enhance localisation. "There is a roadmap even now to go further to beyond 90%, which is our goal. With the right set of consumer insights, a right understanding of what features consumers want and at what price point, localisation can be pushed to much higher levels", he added.

However, Mehrotra could not give a timeline for reaching 90% goal. "It is a journey," he said.

Ford India recently launched the updated version of its compact sedan Aspire. It has about six products across segments.

Talking on strategy for the Indian market, Mehrotra said, "The starting point is our strategy based on four pillars -- strong brand, right product, competitive cost and effective scale. One of the tenets is right product, the question which we ask ourselves every time is where to play and how to win. Playing for the sake of playing is not relevant. We are constantly identifying segments, sub-segments where we believe we want to participate in and then we also answer what would be the reason for the consumer to buy us."

The sub-compact sedan segment, which used to comprise 20-21% of the passenger vehicle industry and came down to 17% two years ago, is now back to 20% this year and is to grow further, he said.

For the financial year ended March 2018, Ford India's revenues, including exports, stood at about $4 billion last fiscal. Domestic revenues crossed $1 billion for the first time and the topline has been growing in the range of 15-20% a year in the last two years.

The company signed an agreement with Mahindra & Mahindra earlier this year to work together in areas including products, electrification, connected cars, mobility solutions, development of two SUVs and an electric vehicle. We will share updates soon from this partnership, he said.

Though the festive sales for the auto industry started on a sombre note because of floods in Kerala, the company is hopeful of a good season around Diwali and New Year despite the rising fuel prices. "Pent-up demand won't be impacted by petrol and diesel prices as people look for fuel economy and other factors," he said.

"The start of the festive season was low key but October, November are the biggest months. Consumers will come and buy, the product timings have to be right. We also have to keep in mind that the auto industry India is growing at 9-10% rate, which is faster than most of the markets and expected to grow 10-12% next year," Mehrotra added.

RUNNING IN THE FAST LANE

• The company, which has two plants in India, has increased localisation from 60-70% in 2013 to 85% now; In last fiscal, Ford India’s revenues stood at $4 billion
   
• Pent-up demand won’t be impacted by petrol and diesel prices as people look for fuel economy and other factors, a company executive said

...& ANALYSIS

• $4 bn - Ford India's revenues, including exports, for the financial year ended March 2018
   
• $1 bn – Its domestic revenues crossed for the first time last fiscal
   
• 15-20% - Topline has been growing year in the last two years