Ford's summer sales under shadow, Ecosport launch delayed to 2013
The highly-anticipated Ford EcoSport's launch has been delayed.
Five months after its global unveiling in India, the highly-anticipated Ford EcoSport's launch has been delayed.
Now, it seems, it will only be launched next year. "Early next year is the target we are looking at," says Michael Boneham, president and managing director, Ford India. " This is a global product and we are looking to launch it in a number of countries. It's a vehicle developed in Brazil with support from India and we are looking at launching this product in China, Brazil, South American countries and in India. The sequence of launches we have to follow from the Global perspective but the Indian customers can be excited that it will be here soon. I am sure it will be a real winner in the country."
Retail sales of the EcoSport in India were to start later this year. The company is investing $142 million to build the EcoSport at its plant near Chennai. A compact sports utility vehicle (SUV), the EcoSport will feature, for the first time, Ford's 1-Litre Ecoboost engine. It is expected to have similar performance to the 1.6-litre four-cylinder engine used in the Fiesta and is expected to churn out power of about 120 PS and a torque of 170 NM.
"The car would be sub-four meters and this is important because of the benefits it delivers. But it will be class leading in terms of interior space and exterior design. One of the big learnings we took from Figo is that one needs to be completely immersed in customer research data before you design a product," says Boneham.
While the company plans to launch eight new vehicles by 2015, Fiesta being the first and Eco Sport, the second, Boneham refuses to comment about bringing Ford Focus into the country. "No product will be specifically made for India anymore, and Indian customers are global in their expectations," he says. "The Focus has a four-engine delivery system from hybrid, electric, petrol to diesel. This kind of flexibility is essential to reduce ambiguity that exists around us."
New products are essential to Ford's India strategy and in a sluggish market, more so than ever. While exports and total sales for Ford have increased from a year ago, month-on-month sales have declined. In April, Ford's domestic sales totalled 7,201 units, while exports stood at 1,167 units against 9,026 units sold domestically and 3,122 units exported the previous month.
According to Boneham, the market is still skittish and the company has been constrained by the swing from petrol to diesel. The supply base has not been able to supply the company with the parts to cater to that swing. "I think there is a lot of uncertainty in the market, interest rates are relatively high, confidence is low and we will have to wait and see if people will feel more comfortable making these purchases," he says. "For us, it is more to do with constraint as the Rs 23 difference between the prices of petrol and diesel has led to something unexpected."
While Ford has flexibility in its manufacturing system and understands that markets will not be this way forever, dealing with the ambiguity is a challenge for the company.
"In my industry and for many businesses leaders, uncertainty in government policy has been much higher than ever before," says Boneham. "The only way to handle this is through flexibility and by responding quickly."
The Ford plant in Chennai was the first worldwide to build both diesel and petrol engines on the same line, giving it tremendous flexibility. "What it did not do was get down to Tier I, II and III component suppliers to have the same flexibility. As we move forward, this is one aspect we will have to tackle. We have to expect the unexpected now in the form of government policies, customer behavior as well as macro-economic policies," Boneham says.
On the recent Reserve Bank of India rate cuts, Boneham says things are still not clear and would prefer to adopt a wait and watch approach. "The rate cut came around the same time we placed an additional 2 percent burden on customers because of the excise duty hike. The two percent hike in excise has been relatively offset by the half a percent reduction in interest rates. I would like to see a little bit more in terms of reduction of rates to build more confidence. Industrial production is still a matter of concern in the country and we have to find a way to restore confidence in the community," says Boneham.
The writer works for Entrepreneur magazine.
Almost every major auto company is gearing up to elevate sales and clear inventory by offering year-end discounts on petrol and diesel cars.
Volkswagen today reported a 67.30 percent year-on-year increase in its India sales to 7,266 units in October.