Ford to start production of a new car in India next year

Ford Motor Co will start production of a small car in India early next year, and its chief executive said the U.S. market was showing signs of recovery and he expected industry sales to rise in the next two years.

The No. 2 U.S. automaker is focusing on small cars, which it feels will increasingly drive sales, and chief executive Alan Mulally said the fast-growing Asia Pacific market will play a bigger role in Ford's global sales. "We expect the small car segment will double in the next 10 years," he said at the launch of the Figo, Ford's new small car, in New Delhi. "When you look at vehicle size, about 60 percent of the vehicles worldwide would be smaller vehicles like the new vehicle here."

The company did not disclose the Figo's price, but Mulally said Ford was not looking to directly compete with Tata Motor's Nano, the world's cheapest car which costs around Rs1 Lakh. The Nano hit Indian roads earlier this year. Ford will make the Figo at a plant in Chennai, which it plans to make a global production hub.The company is investing $500 million in the plant, which will have annual capacity of producing 200,000 cars. India's domestic auto market is relatively small, especially considering a population of more than 1.1 billion, with only about 1.5 million passenger vehicles sold last year.

It is however a fast-growing market, even in a global auto downturn. For the first four months of the 2009/10 fiscal year, domestic car sales rose nearly 10 percent from a year earlier.