Despite signs of a slowdown in the once-booming market, Ford this week laid the cornerstone of what will be a new $1 billion assembly plant in India.
It’s a critical part of the U.S. makers plans to become a major player in emerging markets – where it has lagged behind key competitors such as Volkswagen and General Motors. Among other things, Ford plans to launch new products in India by the middle of the decade to appeal to the country’s fast-growing and increasingly mobile middle-class.
“We are committed to significantly increasing our manufacturing output and aggressively expanding our business in India,” Michael Boneham, Ford India’s managing director, said in a statement.
The question is whether Ford’s investment is ill-timed. India – one of the so-called BRIC markets, along with Brazil, Russia and China – has shown unexpected weakness in new car demand lately, some analysts fretting that the bloom is off the automotive rose after steady, double-digit growth.
But Ford appears to be siding with other analysts who feel the slowdown is temporary, and that India will resume its fast pace of automotive growth in short order. A new study by IHS Automotive predicts India will surge past Japan by 2016, to become the world’s third-largest national market, behind only China and the United States. (For more on the new study, Click Here.)
Indians bought 2.91 million new vehicles last year and IHS anticipates that growing to 4.88 million in 2016 and 6.73 million by 2020.
Ford hopes to take a larger share of that growth with the addition of the new plant in Sanand, which will have the capacity to produce 240,000 cars and 270,000 engines.
Unlike some plants the maker put up in emerging markets in the past, the Sanand facility will resemble those in Europe and North America in terms of complexity, flexibility and efficiency, the maker said. That includes an environmentally friendly paint process, called 3-Wet.
The new products Ford is developing will reflect the maker’s One Ford strategy. That means they will use the same platforms as vehicles sold in other parts of the world – though there will be customization to reflect local market demand.
With the completion of the plant, Ford will have invested $2 billion in India.