Ford furthers Asia push with new India cars and a $350M investment with Mazda in Thai plant

By Yuri Kageyama, AP
Thursday, August 26, 2010

Ford furthers Asia push in India and Thailand

MUMBAI, India — Ford Motor Co. is furthering its push into Asia, announcing plans for eight new vehicle models in India and a $350 million investment with partner Mazda Motor Corp. in their pickup truck plant in Thailand.

The Dearborn, MI based automaker says Asia will account for 70 percent of the company’s global growth in the next decade, most of it from China and India.

“We have massive expansion across the region,” Joe Hinrichs, president of Ford Asia Pacific and Africa, said in an interview Thursday. “We believe the Indian market at the end of the decade will be the third largest auto market in the world behind China and the U.S.”

To meet growing demand, Ford said it will launch eight new models in India by the middle of the decade, adding to the $500 million it has already invested in India. The company declined to say how much it plans to spend, but said “investments will be significant.”

Hinrichs said the new vehicles will be in India’s high-volume, compact car segment — where Ford has excelled with its 2010 Figo model — as well as more luxurious segments.

“We’ll have different products to broaden our showroom appeal,” he said.

Unlike China, where consumers buy all kinds of vehicles, Indians overwhelmingly prefer tiny, affordable cars.

Hinrichs said that would change as Indians get richer and the market matures.

India is at a sweet spot of growth — what Hinrichs calls the “take-off stage” — where average incomes in major cities are finally high enough to afford a vehicle. China is ahead, with consumers in secondary cities also able to buy cars.

“It’s a broader base and a larger market,” he said. “India is going to go through the same cycle.”

Ford belatedly stormed India’s fast-growing car market in March, with the launch of the Figo, its first made for India compact. In the first 25 weeks, Ford sold over 30,000 Figos, with year over year sales tripling in most months and quadrupling in July.

Ford, which began exporting the Figo to South Africa in May, announced plans Thursday to export the car to 50 new markets, including Mexico, North Africa and the Middle East. The first batch of 10,000 should leave India early next year, Hinrichs said.

Ford has no immediate plans to export from India to the U.S. or Europe.

In July, Ford doubled production, to 200,000 units a year, at its factory in India’s southern auto hub of Chennai, where it also has an engine plant. Ford is building one new factory in Thailand and two new factories in China, which should open in 2012, Hinrichs said.

On Thursday, Ford also said it and joint venture partner Mazda would pour another $350 million into their pickup truck plant in Thailand to revamp production.

The investment at AutoAlliance Thailand, a 50-50 joint venture, underlines that four years of political upheaval has not yet deterred automakers from expanding their manufacturing in the Southeast Asian nation, which offers incentives such as tax breaks to foreign manufacturers.

Most auto plants are located in the eastern seaboard province of Rayong and haven’t been directly affected by the unrest, which has centered on the capital Bangkok.

The U.S. and Japanese automakers also run plants in China and the U.S. together. The latest investment won’t increase production capacity at the plant from the current 275,000 a year but will focus on revamping the facility, said Mazda spokesman Kotaro Minagawa.

The investment, which will bring the total at the Thai joint venture since 1995 to $1.85 billion, will also go into work force training, the companies said.

The Thai plant now exports Ford and Mazda pickup trucks to more than 130 markets around the world. The plant also makes passenger cars, mainly the Mazda2, sold as the Demio in Japan, and the Ford Fiesta.

Thailand is a popular place to manufacture cars not only for the Thai market but also for the Southeast Asian and European markets because of government incentives, well developed industrial infrastructure and relatively affordable labor costs.

Nissan began making the March subcompact in Thailand for Japan sales last month — the first such major move among Japanese automakers in response to soaring labor costs and the yen’s rise against foreign currencies.

Kageyama reported from Tokyo.

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