From The Editor's Desk: Ford Should Stay In India, But For the Right Reasons

Will Ford exit India? Well, I sure hope not, and frankly it would be the most ill-advised and immature move from the Blue Oval, if it were to. And by the way, this is not just about me greedily wanting all car brand to sell in India! For its part Ford has dispelled the rumours of an India exit and says it is here to stay. Ford India President and Managing Director Anurag Mehrotra has said, "We would not like to comment on market speculations and remain committed to serving customers in India. We assure you that our customers will continue to receive world-class sales and service support from Ford, not today or tomorrow but into the future as well." Interesting (and worrying) how that statement spoke of sales and service, but left the word 'products' out of it. But knowing how interested Jim Farley - the current Ford global CEO - has always been in India, I would be surprised if there was ever any discussion of leaving India, back in Dearborn. I don't contest that such a discussion may well have happened under previous CEO Jim Hackett - who was keen to take a relook at India and other operations. This must have especially picked up steam when General Motors exited India in 2017. But Farley is an Alan Mulally pick - another former Ford CEO who was famously bullish on the Indian opportunity. So I do believe in him and his acumen to play the long game.

The Ford Bronco Sport as the desirable, aspirational product at the Rs 20-25 lakh price point could do very well in India

A good business case is a must for any business to prosper - and hence all decisions are naturally taken with that view in mind. But let's consider the 'stay' argument. India already went past Germany to become the world's fourth largest car market in 2018. And that is not all. A report by Goldman Sachs has projected that India will surpass Japan to take the third spot in annual global automotive sales by 2025. The report projects annual sales to breach 7 million units (they are currently at just about the 4 million units mark). Of course as the report states, this will come on the back of increased demand, due to per-capita income moving into the $10,000-20,000 range for the first time. And that is true of many developing countries, not India alone. I will acknowledge though that this projection came pre-covid and so a lot of the economics we took for granted may have been derailed over the past 18 months.

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We believe Ford must also consider bringing in the seventh generation Fiesta hatch

That said, the potential does not go away, does it? And so for Ford to give up on that opportunity would be nothing short of foolish. Ford has taken many a stab at India since liberalisation. It entered India through a joint venture with Mahindra in 1995. By 1998 Ford had increased its stake, and soon went solo. Memories of that JV were revived when the two carmakers began talks for a potential alliance redux in 2018.

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A localised version of the Ford Kuga, which is also sold as the Escape in certain markets, should ideally be introduced in the Rs. 15-20 lakh price band

The rumours of Ford's exit stem from two things: that the above-mentioned talks fell through with M&M and Ford walking away in Dec last year. It had seemed for a while that things would progress smoothly. So concrete steps like sharing of platforms and the product strategies that emerged from that were already put into motion. The fact that the alliance did not fructify has meant huge delays for Ford India's product pipeline, as it has just been a mere six months since it had to go back to drawing board. We are desperately in need of a credible premium hatchback, subcompact, and compact SUV from Ford. The EcoSport is ageing, the current Figo twins (or should I say triplets - given the Freestyle) never took off, and the Endeavour alone cannot keep the flag flying given its limited volumes potential anyway.

Ford mus also consider launching a new-gen model for the ageing EcoSports, which would have to be a rebadged Puma

So what should Ford do? Two things. The first should be to give us a blockbuster global product line. The Mustang was a flash in the pan. I am talking about something like the Bronco family. The full-fledged Bronco can be the brand shaper that Mustang was - and can remain niche and expensive. But Ford must also finalise localise its C2 platform in India and bring us two products on it - the Kuga (Escape) at the Rs 15-20 lakh price band, and the Bronco Sport as the desirable, aspirational product at the Rs 20-25 lakh price point. Both can share engines and transmissions - besides their platform. And the Kuga can also have lower variants sharing the same with the next gen EcoSport. The trick will be to also productionise its smaller turbo charged (ecoboost) engines in India. Then throw in the fact that the B-car platform that would be needed to spawn the EcoSport (which would have to be a rebadged Puma by the way), can also bring us the seventh generation Fiesta hatch - and you have a plan.

Ford has two manufacturing sites in India, one is Sanand and one in Chennai, along with ample capacity which can be utilised to service the African and Latin American markets

All sounds simple, doesn't it? I assure you it is not. In fact it will take a lot of serious commitment and big spends. But look at the fact that Ford has two manufacturing sites and ample capacity in India Said capacity can well be utilised (as it has been in the past) to service the African and Latin American markets. The real key is not whether Ford does this, any of this or indeed something different altogether. It will all come down to how quickly Ford takes and implements such decisions. I believe the brand belongs in India, and must never leave. But it should stay for the right reasons, and give the many who have trusted it in the past - and the millions waiting to give it that chance in the future - the right products that respect their needs, surpass their expectations, and honour the hard-earned money they choose to spend on them.