Ford Motor Co. (F) Friday began producing its first small car in India and its engines as the U.S. auto maker tries to challenge Suzuki Motor Corp. (7269.TO) and Hyundai Motor Co. (007380.SE) in this growing market for automobiles.
The car, named Figo, is being manufactured at a factory in the port city of Chennai with an annual capacity of 200,000 cars, Ford India Ltd. said. The facility also includes a plant with a combined capacity of 250,000 diesel and gasoline engines each year.
Ford, Volkswagen AG, Nissan Motor Co. and Toyota Motor Corp. are among auto makers who this year plan to start selling small cars in India, where total annual car sales are projected to climb to 3 million autos by 2016. Suzuki's local unit, Maruti Suzuki India Ltd. (532500.BY), which sells seven small car models, currently controls more than half of the local car market.
“This car (Figo) is set to transform Ford from a niche player in India to vehicle for the masses,” said Raj Nair, vice president in charge of operations at Ford Asia Pacific and Africa. “It's going to be very competitive with the current market leaders.”
Ford India, which began operations in 1995, currently produces the mid-sized entry-level Ikon sedan, the Fusion crossover, Fiesta sedan and the Endeavour sport-utility vehicle in Chennai.
The company sold 21,733 cars and SUVs during April-December 2009, up 7.3% from a year earlier. That compares with a 24% rise in total industry sales to 1.37 million vehicles.
The Figo was developed as part of Ford's nearly $500 million investment in India. It will be offered with a 1.2-liter gasoline engine as well as a 1.4-liter diesel engine.
Ford said it will buy nearly 85% of the parts for the Figo from Indian suppliers as part of its effort to price the vehicle competitively.
“While Figo will be manufactured primarily for Indian consumers initially, the new model will also be exported to other countries including South Africa as early as middle of 2010,” the company said.
In addition to the current line of engines, Ford will produce four-cylinder engines in various displacements up to 1.6 liters at the new 40,000 square meter engine facility for exports from 2011.
Ford has hired more than 700 employees in the past year to cater to the expanded assembly and engine facility.