Monday, March 04, 2013

FORD INDIA: VANTAGE POINT

From a company that was normally counted as an interesting niche player in India, Ford has suddenly become the flavour of the season with the Figo. Our editorial team member walks through Ford one fine lazy afternoon and gives ‘the scoop’ by Sanchit Verma

He proved to be right on the money, as the Figo has changed the entire status quo for the company in just about three months. Thanks to Figo, Ford now stands about neck-to-neck with GM (19,964 units) in the compact car segment with sales of 18,495 units in the April-June period (compared to just 221 units last year). The first ever compact car by Ford India sold more than 17,000 Figos and over 24,000 purchase orders in place already and that's within its first 16 weeks in the market. In fact, advance bookings are touching the 6,000 figure, which creates a different set of problems for the company. Figo's fuel efficiency and highly competitive price have given Ford the momentum it needs to potentially disrupt the market dynamics in the automotive sector. Great start. But as the Honda tagline goes (changed to my choice): Why so late? It must be my imagination, but I can almost feel a bubbly new-found energy on this visit to the Ford plant. A senior worker tells me that the plant is based on the One Ford strategy initiated by Mulally, which is aimed at better use of common Ford design platforms globally and greater integration of production & purchase teams. I nod away; I’ve read it somewhere already.

"The engine plant was created with a 'best of the best' approach," says Michael Boneham, President & MD, Ford India, when he meets me. He seems a picture of exuberance and optimism – competitors tell me that that’s been the case since the success of the Figo (but again, read his interview to me in the latter section of this story). As I walk through the stamping, body and paint shop, I get a better view of the all new revamping being done to transform a manual assembly hub into a globally standardised and technologically advanced manufacturing hub, which will have over 4,000 employees working in-and-out. Along with them, a team of 92 robots (imported from Korea) also work round the clock to achieve production efficiency and quality paint jobs with high degrees of accuracy and quality, applying the new three-step wet solid paint and giving the glossy finish. The plant is poised for big volumes as it has doubled its capacity since renovation. As I move on, I come across the flexible assembly line, which assembles both of the 1.4 litre diesel and 1.2 litre petrol engines. I reach the TCF part where the interiors, chassis, engines and wheels are fitted, before it passes onto quality testing. Here it passes environment tests as per emissions norms – I look and marvel at the car as it is rolled out, giving out an impression of being an advanced engineering graduate; I’m not, but what the heck.

I’m told Ford has finally gone the way of localisation to reduce total cost of ownership. Add to this the investment, led by Ford Motor Company, in Figo – and the combination is apparently winning. It has led Ford India to take a new route and has given it capital leverage to rapidly build up a dealership network. Ford has a current network of 166 dealers, which it plans to expand to 200 by the end of this year. On a competitive basis, Indian consumers are known to be very particular about ease of serviceability – at least my dad is – and this gives brands like Hyundai and Maruti an exceptional advantage. If Ford manages the same, it would potentially be a good push for their up-market portfolio too.


Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).

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