Ford to sell first small car in India, taking on Suzuki, Tata

Ford Motor Co., the only major U.S. automaker to avoid bankruptcy, will sell its first small car in India next year, aiming to lure buyers in a country where hatchbacks account for about three out of every four cars sold.

Ford Chief Executive Officer Alan Mulally unveiled the Figo compact car in New Delhi today. A factory in Chennai, southern India will make the car for both domestic and overseas markets, the company said in a statement.

Toyota Motor Corp. and Volkswagen AG also plan to sell small cars in India, where Suzuki Motor Corp. controls more than half the market with its seven compacts. Rising disposable incomes in the world’s second-fastest growing major economy may more than double car sales to 3 million annually by 2015, in contrast to declining sales in the U.S., Japan and Europe.

“Anybody who wants volumes and better visibility for their brands will cater to the small-car market in India,” said Surjit Singh Arora, an analyst at local brokerage Prabhudas Lilladher Pvt. in Mumbai. “No manufacturer can afford to miss this segment.”

India’s April-August car sales rose 13 percent from a year earlier to 559,656, helped by the introduction of Tata Motors Ltd.’s $2,500 Nano, the world’s cheapest car. Ford’s sales fell 2.5 percent in the period to 10,128, according to the Society of Indian Automobile Manufacturers.

Suzuki had 53 per cent of the market, followed by Hyundai Motor Co. with 21 per cent and Tata with 12 per cent. Ford is seventh among the 15 manufacturers in the country, according to Society’s data.

Ford is positioning its Chennai factory as a “regional center of excellence for small-car engineering and production,” the company said in a statement. The automaker also plans to export diesel and petrol engines to Asia Pacific and Africa from India.

Ford said last year it will spend $500 million in India as it seeks growth in emerging markets to compensate for a slump in sales at home. The company has expanded capacity at its factory to 200,000 vehicles a year. It now makes Ikon and Fiesta sedans, Fusion hatchbacks and the Endeavour sport-utility vehicles.