EXECUTIVE SUMMARY

The Indian passenger car industry is growing rapidly due to the entry of car companies from all over the world in India. Car companies have eyed India as a potential market for sales due to growing purchasing power among the India masses. Also India is a developing country with lot of potential for companies to invest. It is one the largest market in the world. This is evident by the entry of various world class automobile companies entering the country. Ford India Limited is a subsidiary of Ford Motor Company, USA. Established in 1995, Ford India is headquartered in Maraimalai Nagar near Chennai. Currently there are over 20 car companies in the Indian car market, with many more planning their entry. The company has been undertaking good market strategies to sell its cars, and also attracting the attention of potential buyers through effective advertisements on television, newspapers, auto magazines and other forms of media. The company paid more importance to the newly developed DURA technology currently used in the Ford Fiesta which is a world-class revolutionary petrol and diesel engine technology patented by Ford. Lastly the project is an effort to analyze, the automobile industry as in India with special emphasis on Ford India.

INDIAN BACKGROUND FOR PASSENGER CARS

The passenger car industry in India grew at a nominal CAGR (Compound Annual Growth Rate) of approximately 3.6% during the 1960s and the 1970s. Sales of passenger cars were limited by supply. There were only two manufacturers in the market, Hindustan Motors and Premier Automobiles, and they had limited production capacities. The import of passenger cars was restricted to the State Trading Corporation (STC) and foreign diplomats. There were quantitative restrictions on imports. The rate of customs duty levied on cars was 225%. Since, 1991 opening of the economy has changed the face of auto industry. Today, it is amongst the main drivers of growth of Indian economy with an output multiplier of 2.24(for every Re.1 invested, auto sector gives back Rs.2.24 to the economy. In recent years we have seen increasing number of global players entering Indian market by way of Joint ventures, collaborations or wholly owned subsidiary. Sudden interest of major global players has made Indian auto industry very competitive as India provides twin benefit of ready market and Low cost manufacturing base for them.

Moreover, the liberalization steps, such as, relaxation of the foreign exchange and equity regulations, reduction of tariffs on imports, and refining the banking policies, initiated by the Government of India, have played an equally important role in bringing the Indian Automotive industry to great heights. It is estimated that the sale of passenger cars have tripled compared to their sale in the last five years. Thus, the sale of cars has reached a figure of 1 million users and is expected to increase further. Its also to be noted that the demand for luxurious models, SUVs, and mini-cars for family owners, have shot up, largely due to increase in the consumers buying capacity.

Indian Automobile sector is high on growth trajectory. Based on estimates, the total sales (domestic + exports) for FY06 will touch 10 million marks of which Commercial Vehicle Segment will contribute maximum. According to auto industry experts Indian Automobile sales will grow at a CAGR of 9.5% to 13008 million by 2010 from current 8.45 million units in FY05. To tap this large opportunity, Indian Automobile companies and global automotive giants have announced huge expansion plans

Implications of Global Trends for the Indian Passenger Car Market

The Indian automotive industry has flourished like never before in the recent years. This extra-ordinary growth that the Indian automotive industry has witnessed, is a result of a two major factors namely, the improvement in the living standards of the middle class, and an increase in their disposable incomes. The increased demand for Indian automobiles has resulted in a large number of multi-national auto companies, especially from Japan, U. S. A., and Europe, entering the Indian market and working in collaboration with the Indian firms. Also, the institutionalization of automobile finance has further paved the way to sustain a long-term high growth for the industry. As a result of rising household income and decline in interest rates, along with current low passengers car ownership density, many global manufactures have entered the Indian market. According to the central statistical organization, India had a GDP growth rate of 6.1 %, 4.4% and 5.6%in fiscal 2000, and 2001 and2002, respectively. India is generally believed to have high GDP growth potential aided by low cost of production and availability of skilled man power. The high rate of growth in the sales of passengers cars in India is driven primarily by growth in the sales of passenger cars priced below Rs.5 lakhs which constituted over 84% of total sales volumes in fiscal 2003

HISTORY OF FORD
The Dream Becomes a Business Ford Motor Company entered the business world on June 16, 1903, when Henry Ford and 11 business associates signed the company's articles of incorporation. With $28,000 in cash, the pioneering industrialists gave birth to what was to become one of the world's largest corporations. Few companies are as closely identified with the history and development of industry and society throughout the 20th century as Ford Motor Company. As with most great enterprises, Ford Motor Company's beginnings were modest. The company had anxious moments in its infancy. The earliest record of a shipment is July 20, 1903, approximately one month after incorporation, to a Detroit physician. With the company's first sale came hopea young Ford Motor Company had taken its first steps. Mass Production on the Line Perhaps Ford Motor Company's single greatest contribution to automotive

manufacturing was the moving assembly line. First implemented at the Highland Park plant (in Michigan, US) in 1913, the new technique allowed individual workers to stay in one place and perform the same task repeatedly on multiple vehicles that passed by them. The line proved tremendously efficient, helping the company far surpass the production levels of their competitorsand making the vehicles more affordable. The First Vehicles Henry Ford insisted that the company's future lay in the production of affordable cars for a mass market. Beginning in 1903, the company began using the first 19 letters of the alphabet to name new cars. In 1908, the Model T was born. 19 years

and 15 million Model T's later, Ford Motor Company was a giant industrial complex that spanned the globe. In 1925, Ford Motor Company acquired the Lincoln Motor Company, thus branching out into luxury cars, and in the 1930's, the Mercury division was created to establish a division centered on mid-priced cars. Ford Motor Company was growing. Becoming a Global Company In the 50's came the Thunderbird and the chance to own a part of Ford Motor Company. The company went public and, on Feb. 24, 1956, had about 350,000 new stockholders. Henry Ford Seconds ( IIs) keen perception of political and economic trends in the 50's led to the global expansion of FMC in the 60's, and the establishment of Ford of Europe in 1967, 20 years ahead of the European Economic Community's arrival. The company established its North American Automotive Operations in 1971, consolidating U.S., Canadian, and Mexican operations more than two decades ahead of the North American Free Trade Agreement. Ford Motor Company started the last century with a single man envisioning products that would meet the needs of people in a world on the verge of high-gear industrialization. Today, Ford Motor Company is a family of automotive brands consisting of: Ford, Lincoln, Mercury, Mazda, Jaguar, Land Rover, Aston Martin, and Volvo. The company is beginning its second century of existence with a worldwide organization that retains and expands Henry Ford's heritage by developing products that serve the varying and ever-changing needs of people in the global community.

THE FORD FAMILY

Ford Mercury

Mazda

Volvo

Jaguar

Land Rover

Lincoln

Aston Martin

CURRENT SCENARIO
Ford Motor Co. plans to cut up to 30,000 jobs and shutter 14 plants in a sweeping restructuring that the nation's second biggest automaker hopes will tackle declining market share and rising costs that led to hefty losses in its North American operations. Ford shares rose on, indicating some investors were pleased with the long-awaited "Way Forward" plan as well as the company's larger-than-expected $124 million overall profit in the fourth quarter. Union leaders called the planned cuts "extremely disappointing." Ford shares rose 42 cents, or 5.3 percent, to close at $8.32 on the New York Stock Exchange. Ford said the plan will restore profitability by 2008. But some analysts said the plan was short on details, leaving them uncertain if it would boost Ford profits as the company struggles with aggressive competition, higher gasoline prices, rising costs for labor and raw materials and a junk credit rating. Ford named only five of the plants it plans to close. "It's a step forward in the culture of Ford. Whether it translates into increased profits remains to be seen," said Brian Johnson, an auto analyst with Sanford Bernstein. The cuts represent up to 25 percent of Ford's North American work force of 122,000 people. Ford has approximately 87,000 hourly workers and 35,000 salaried workers. In addition, Ford plans to cut 12 percent of its corporate officers in the next two months.

Ford's St. Louis plant will be the first plant idled, in the first quarter of this year. A plant near Atlanta will close at the end of this year and a plant in Wixom, Mich., will close in the second quarter of 2007, according to Ford Americas President Mark Fields, the architect of the plan. Other plants to be idled and eventually closed through 2008 are Batavia Transmission in Ohio and Windsor Casting in Ontario. Ford will choose later this year two more plants to be idled. The company also will reduce production to one shift at its St. Thomas assembly plant in Ontario. All of the plant closings and job cuts are scheduled to be completed by 2012. "These cuts are a painful last resort, and I'm deeply mindful of their impact," Chairman and Chief Executive Bill Ford said in announcing the cuts. "In the long run we will create far more stable and secure jobs. We all have to change and we all have to sacrifice, but I believe this is the path to winning." In addition to the facilities named Monday, analysts also have predicted assembly plants in St. Paul, Minn., and Cuatitlan, Mexico could be at risk for closure because of the products they make. Under the company's existing contract with the United Auto Workers, workers at the idled plants will continue to get most of their pay and benefits until a new contract is negotiated next year. Ford also plans to build one plant in North America. UAW President Ron Gettelfinger and Vice President Gerald Bantom expressed disappointment over the plan. "The impacted hourly and salaried workers find themselves facing uncertain futures because of senior management's failure to halt Ford's sliding market share," they said in a statement. "The announcement has further left a cloud hanging over the entire work force because of pending future announcements of additional facilities

to be closed at some point in the future." The pair said Ford should be trying to gain market share, rather than aligning production capacity with shrinking demand for the company's vehicles. Fields said Ford's North American plants have been operating at about threequarters of their full capacity. "That is clearly unsustainable," Fields said. He said Ford's actions will reduce assembly capacity by 1.2 million vehicles, or 26 percent, by the end of 2008. In addition to the job cuts, Ford said it plans to achieve $6 billion in material cost savings by 2010 as part of its restructuring. It also plans to revitalize its Ford, Mercury and Lincoln brands by giving them more distinct identities and relying less heavily on costly incentives. Earlier , Ford reported earnings of $2 billion in 2005, down 42 percent from last year's profit of $3.5 billion. It was the third straight year the automaker has reported a profit, but gains in Europe, Asia and elsewhere were offset by a loss of $1.6 billion in North American operations. The latest results included a 19 percent increase in its overall profit to $124 million, or 8 cents a share, in the fourth quarter thanks to the sale of its Hertz Corp. rental division and improved profits for its luxury brands. That was despite a loss of $143 million in its North American operations, an improvement from a loss of $470 million the same period a year ago. Ford said it would no longer provide earnings guidance beginning in 2006. "We can't succeed in the long run if we're focused only on the short term," Bill Ford said. Ford Chief Financial Officer Don LeClair said employee buyouts and other elements

of the restructuring plan could cost the automaker around $500 million this year. Fields said half the jobs Ford is cutting will be through attrition, while the rest will be through layoffs. He said the company plans to help workers using buyouts and possible placement in other plants. In Wixom, 18-year veteran James Crawford said he is too young to retire and might not have enough seniority to get hired at another plant. "This really hits me hard," said the 39-year-old car painter, who listened to the announcement on the radio in a white Ford Probe parked across the street from the plant. "It looks like I'm starting over." During the 2007 labor negotiations, Ford will almost certainly try to eliminate the unparalleled job protection that lets hourly workers continue to collect wages and benefits when there is no longer any work for them, said Gary Chaison, a professor of industrial relations at Clark University. The UAW has vowed to keep those protections in place. "The announced plant closings and future announcements are the subject of ongoing discussions with Ford," Gettelfinger and Bantom said. "Certainly, today's announcement will only make the 2007 negotiations all the more difficult and all the more important." Ford and its larger rival, General Motors Corp., have been hurt by falling sales of profitable sport utility vehicles, growing health care and materials costs and restrictive labor contracts. GM announced a similar restructuring plan in November that will shave its work force by 30,000 and close 12 North American facilities. Ford also has seen its U.S. market share slide as a result of increasing competition from foreign rivals. The company suffered its tenth straight year of market share losses in the United States in 2005, and for the first time in 19 years, Ford lost its crown as America's best-selling brand to GM's Chevrolet. Ford sold around 2.9

10

million vehicles for a market share of 17.4 percent in 2005, down from 18.3 percent the year before and 24 percent in 1990. "It's a competitive shootout like we've never seen before," said Fields, who said the number of vehicle nameplates in the U.S. market will reach 300 by the end of the decade, up from 215 in 2002. The restructuring is Ford's second in four years. Under the first plan, Ford closed five plants and cut 35,000 jobs, but its North American operations failed to turn around. Bill Ford said this plan makes far more dramatic changes, including changing a stifling corporate culture and focusing more heavily on consumer demands. "We're going to be a big company that thinks like a small company," he said.

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TIME LINE 1903 1906 June 16 - Ford Motor Co. founded by Malcomson group; Model A produced in rented Mack Ave. plant. Ford overtakes Olds, Buick and Cadillac combined to become Number One automaker in U.S., a position it holds for 20 years; Henry Ford becomes company president and majority owner. October - Introduction of legendary Ford Model T which puts the world on wheels. First overseas assembly plant in Manchester, England; Ford wins Selden patent suit. Five-millionth Ford built. First pickup truck introduced; Production of Ford Tri-Motor aircraft begins; Ford of Germany established. Ford falls to third place after General Motors and Chrysler. Introduction of 1936 Lincoln-Zephyr, Ford's first medium-priced car.

1908 1911 1921 1925 1933 1935

1947 1951 1966 1967 1976 1980

April 7 - Death of Henry Ford Automatic transmission available in Ford products Introduction of 1967 Mercury Cougar, a Mustang spin-off Ford of Europe formed Introduction of sub-compact front-wheel-drive Ford Fiesta in Europe Introduction of 1981-model Ford Escort "world car" built in North America and Europe of mostly different components

1983 1987

Introduction of Ranger-based 1984 Bronco II compact SUV Ford acquires a majority of Aston Martin Lagonda, limited-

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production British sports car manufacturer; Death of Henry Ford 1993 1996 1999 II. Introduction in Europe of Ford Mondeo mid-sized "world car" Introduction of Aeromax heavy-duty truck; Two-hundred-fifty millionth Ford vehicle built -Acquisition of Volvo Cars and TH!NK electric car; Introduction of 2000 Ford Excursion SUV based on Super Duty F-250 -Ford India was established and launches Ford Ikon. -Ford will make small car -Ford India plans 1.3-litre version of Ikon -Ikon to be a precursor of things to come, says Nasser -Is Escort on way out? -Ford hires Dilip Chhabria to style its cars -Ford launches Quality Care 2000 -3 Ikon versions will be out in November Ford announces record $7.2 billion earnings for 1999; Acquisition of Land Rover from BMW. 2001 -Ford Mondeo was launched in India. -Ford India launches Mondeo -Ford conservation grants announced -Fords Mondeo to cost Rs 16 lakh -Ford Mondeo set to overtake Mercedes -Ford unveils new-look Ikon ZXi 2003 -Ford Endeavour was launched in India. -Ford unveils Ikon NXT SXi -Ford to launch Everest, Ranger -Ford to buy $40-m components from Indian auto ancillaries -Ford India plans to launch five new passenger vehicles this year 2004 -Ford Mondeo, Bajaj Pulsar bag ICICI Bank Overdrive Awards -Ford Fusion was launched in India. -Ford positions Fusion as 'urban activity vehicle' -Fusion comes conditioned for success 2005 -Ford India launching special Ikon variant -Ford Fiesta was launched in India.

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-The 1,00,000th Ford Ikon rolls out -M&M, Ford India untangle holdings 2006 -Ford launches new version of Mondeo Ford India Launches all-new Fusion

FORD IN INDIA
Ford India Limited is a subsidiary of Ford Motor Company, USA. Established in 1995, Ford India is headquartered in Maraimalai Nagar near Chennai. Ford's commitment to India is demonstrated through its present investment of Rs 1700 crore and has the capacity to manufacture over 50,000 vehicles per annum. In October 1995, Ford and its joint venture partner, Mahindra & Mahindra (M&M), received government approval to establish a joint venture company, Mahindra Ford India Ltd (MFIL.) MFIL assembled and distributed Ford Escorts in India. Just ten months after approval, the first Ford Escort rolled off the line at an existing M&M facility in Nashik. In March of 1998, the equity pattern changed from 50:50 to 70:30 with Ford having the majority stake. The company was renamed Ford India. With a steady increase of Fords investments, the equity level stands presently at 85:15. In 1999, Ford India inaugurated the fully integrated manufacturing facility in Maraimalai Nagar and launched the IKON. The IKON is exported, in CKD (completely knocked down kits) form, to other countries from India. Ford India Limited (FIL) is catching up fast with the Indian consumer. Looks like FIL is all set to conquer the Indian market like rest of the world. Among the other initiatives launched by the company, it unveiled Ford Assured in 2000 to buy, recondition and sell various models of used cars. It introduced Quality Care, a branded service initiative in India, the first country outside of the United States to implement this initiative. Ford Credit has been set up to provide financial solutions and services to consumers of Ford cars. The Ford Business Services Center services the accounting requirements of Ford Motor Company globally.

Ford India

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Opened Ford Credit Kotak Mahindra Finance ltd. in November 1996 in Mumbai 55% Ford Credit joint venture with Kotak Mahindra Finance (35%) and M&M (10%) Finances Ford vehicles through Ford India's distribution system Opened Ford Business Services Center in November 1998, at Chennai Commenced in 1999 Located in Maraimalai Nagar, Tamil Nadu Local content currently over 90% Ford will make small car - 1 April 1999 Ford launches QualityCare - 9 September 1999 Ikon to be a precursor of things to come, says Nasser - 23 November 1999 No used car imports please - 27 November 1999 Exports began in October 2000 Ford Mondeo set to overtake Mercedes - 2 November 2001 Fords Mondeo to cost Rs 16 lakh - 9 November 2001 Ford conservation grants announced - 30 November 2001 Ford India launches Mondeo - 17 December 2001 Ford India aims for 20% market share; January sales double - 6 February 2003 Ford Mondeo, Bajaj Pulsar bag ICICI Bank Overdrive Awards - 7 February 2003 Ford to buy $40-m components from Indian auto ancillaries - 5 June 2003

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Ford to launch Everest, Ranger - 4 July 2003 Ford India to make Q1 tag compulsory for vendors - 3 February 2004 Ford Motor's new cars debut at Geneva Motor Show - 5 March 2004 Fusion comes conditioned for success - 1 September 2004 Ford, Hindustan Motors provide super-ambulances for NH45 - 29 March 2005 M&M, Ford India untangle holdings - 1 April 2005 Arvind Mathew takes over as MD at Ford India - 7 July 2005 New Fiesta from Ford India - 29 September 2005 Ford launches retouched-up Ikon Flair - 21 February 2006 Ford Motor Company to use IIT Chennai for emission R&D - 16 March 2006 Ford gives the Endeavour a posh look - 20 July 2006 Ford India Launches all-new Fusion - 10 August 2006

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CURRENT KEY GLOBAL PLAYERS IN INDIA

The principal global car manufacturers who actively compete in the Indian market are listed below: Toyota Kirloskar Motors India Ltd. Maruti Udyog Ltd.

Fiat India Automobiles Pvt. Ltd.

Opel Motors.

Honda Siel Cars India Ltd.

Hyundai Motors India Ltd.

Daimler Chrysler India Pvt. Ltd

Skoda Auto India Pvt. Ltd.

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Chevrolet

Porsche

Mahindra and Mahindra

Hindustan Motors

Tata Motors

General Motors India Ltd.

San Motors

Audi

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BMW

Rolls Royce

Force

Reva electric car

Lamborghini

Nissan

Mitsubishi

Daewoo

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CARS FOR INDIAN ROADS

Ford Endeavour
Brakes

Rear Type Fuel Tank capacity

Self Adjusting Drum Variable Power Assist 0.71 L 24.99 cc 4 cyl in-line,SOHC, 16V 110PS/3500rpm 27.9kgm/2000rpm Tubular Double Acting Type Composite Oil/Gas Filled Independent Double Wishbone with Torsion Bar Spring, Stabiliser Bar Progressive Linear Rate Leaf Springs with Low Friction Pads 265/70 R15 (Tubeless) 5.5J x 15

Engine

Displacement No. cylinders / arrangement / Valves Max. Power Max. Torque Type

Performance Steering Suspension

Front Rear Tyres & Wheels Tyres Tyres

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The key features of Ford Endeavour Multi-reflector headlamps, clear lamps, large chrome grille, and bumper styling 2-wheel and 4-wheel drives and is powered by the 2.5L inter-cooled turbo diesel engine Petrol in an automatic - and a manual version Dual control air-conditioning system comes with two additional sets of vents for the rear seat Individual cup-holders, creative storage room and front seat back map pockets equipped with smaller cell-phone Dual airbags for driver and passenger, individual seat belts in all seating positions Childproof rear door locks, and fuel tank shields

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Ford Fusion
Brakes Dimension & weight Engine

Front Rear Fuel tank capacity Fuel type Construction Displacement Emission level Fuel system No. cylinders / arrangement / Valves Final Drive Ratio Max. Power Max. Torque Reverse Gear Ratio

Ventilated Disks Self-Adjusting Drums 45 litres Unleaded Petrol All Aluminum 1596cc Euro 3 SEFI 4 cyl./ Inline 4.25 . 101 at 6500rpm 146 at 3400rpm 3.66 . "Independent MacPherson Struts with ofset coil spring/damper units,dual path body mounts and stabiliser bar Semi-independent twist-beam, low package coil springs & twin-tube dampers.

Performance

Suspension Front

Rear

Shock Absorbers (Front Gas Filled & Rear) Transmission Transmission type 5-speed manual

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The key features of Ford Fusion are

Signature 3-bar chrome grille with integrated "Ford" oval Four wheel power assisted disc brakes and 16-inch wheels with all- season Continental "ContiProContact" tires AM/FM stereo with single CD/MP3 player with four speakers Power door locks with remote keyless entry and power windows with driver's door one-touch down function Five-passenger seating with rear 60/40 spring-assisted fold-down seats Air conditioning, speed control and tilt and telescoping steering wheel Enhanced side impact intrusion protection system and Ford's exclusive A top-of-the-line Fusion SEL adds fog lamps Automatic temperature control Upgraded wood or piano black interior trim and a leather wrapped steering wheel with redundant audio and climate controls. Optional 5-speed automatic transmission

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Ford Ikon
Brakes Antilock brake system Front Rear Front track Fuel Tank capacity Engine Bore x stroke Brake Horse Power Compression ratio Construction Displacement Fuel Type Ignition Layout Torque Valve gear Fuel consumption City Highway Overall Transmission Type Type Front track Rear track n.a Disc 240 mm Drums 180 mm 1429 mm 45 litres 73.96 x 75.48 mm 70 PS @ 5500 RPM 10.2 : 1 SOHC with Aluminum Alloy head 1299 cc Petrol SEFI 4 cylinder in line front, Transverse mounted 105 Nm @ 2500 RPM 2 valves 9.5kmpl 16.5kmpl 13.0kmpl Manual 5 speed Front wheel drive Power assisted Rack & Pinion McPherson struts Heavy duty twist beam system

Dimension & weight

Power train Steering Suspension

The key features of the Ford IKON are

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Power steering Power windows Seat belts in the front and rear Central locking Electric fuel cap release Electric boot release Full wheel covers Body-colored bumpers Body-side protection molding CFC-free air-conditioning Euro II compliant

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Ford Mondeo
Brakes Antilock brake system Front Rear Front track Fuel Tank capacity Bore x stroke Brake Horse Power Compression ratio Construction Displacement Fuel Type Ignition Layout Torque Valve gear Overall Transmission Type Steering Suspension Front Type Available Ventilated, Disc 300 mm Solid, Disc 280 mm 1522 mm 58.5 litres 87.5 x 83.1 mm 143 bhp@6000 rpm 10.8:1 Alluminium alloy 1999 cc Petrol Sequential Electronic fuel injection 4 cylinder in line, Transverse mounted 190 Nm@4500 rpm 4 valves per cylinder 9.7 kmpl. Manual-5 speed Front Wheel Drive Rack & Pinion, Power Assisted Mcpherson strut with angled coil spring/damper units & Antiroll bars Independent quadralink system with strut type coil spring/dampers unit & Antiroll bars, 2 transverse & 1 trailing arm with passive rear wheel steering

Dimension & weight Engine

Fuel consumption Power train

Rear

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The key features of Ford Mondeo are -Body kit that includes a rear spoiler, side skirts, mesh grille and distinctive front and rear bumper styling Climate Control CD player Cruise control ABS Electric windows HF Screen P/d/mirrors

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Ford Fiesta
Ford launched the new Fiesta, a car slotted in the C segment that will compete with likes of Chevrolet Optra and the Honda City. The good this is that there is a Diesel option available and this car is actually made for India. Right from the 13 engineers, who helped design and develop it at the Ford research center in Melbourne, to the building of the first conformation prototype in Chennai and mid-2004, the Fiesta was build keeping mostly Indians in mind. There was also another thing that influenced the way the Fiesta was build lessons learnt for the Ikon. When launched, the latter had cheap plastics, even cheaper door trim, no internal boot release, no anti - rolled bar and just 1 reversing light. No such mistakes with the Fiesta, which has all the basics in place. The Fiesta also conforms to enhanced requirements, like an ability to wade through water better. It also has a dog bar behind the bumper designed to limit the damage caused by small animals on our countrys unpredictable highways. The sharp, new edge design that characterized Fords has been watered down and the Fiesta looks more Asian than European. But, the large sweeping headlamps gleam with attitude and give the Fiesta a certain presence. The big grille with Fords typical diamond mesh design and the strong chin with a wide air intake and circular fogs, again typically Ford, are the only aggressive bits of styling in an otherwise tame shape. The rear is dominated by large, very Mercedes tail lamps. The conventional looking boot lid cuts into the bumper for better access into the trunk. Fords designers took care to avoid the high boot design of the Ikon, which seriously hampered rear visibility. Other components have also been designed specifically for India. The air-con system is all new and

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Ford is using a powerful 160cc scroll type compressor. The steering has been refined, and special attention has been paid to reducing the steering effort at low speeds. The upshot of narrower tyres is better fuel economy and in this case, Ford has traded aesthetics for practicality. The 68bhp 1.4 DuraTorq TDCi (turbo direct common rail injection) motor, developed jointly by Ford and PSA (Peugeot-Citoren), was refined. When idle, the DuraTorq engine is incredibly refined when warmed up, with vibrations and noise levels lower that any other diesel vehicle. Performance, similar to the Fusion is more that adequate. The 0 100 kms per hour should be under 12 seconds, which will make it among the fastest cars in its class. The Fiesta also achieves and optimum compromise between ride and handling. The handling inspires confidence and low speed ride trumps the city many times over. The same applies to the breaks, which backed by ABS; provide progressive retardation, unlike the Ikon. Ford plans to launce the car by mid November. THE FORD FIESTA RECORDEDTHE LONGEST DISTANCE EVER TRAVELLED ON A FULL TANK AT THE AUTO CAR MAX MILEAGE MARATHON. THE PETROL CAR AVERAGED 22.43 KMPL, AND THE DIESEL CAR 31.48 KMPL. SETTING A WHOLE NEW STANDARD OF FUEL EFFICIENCY DRIVEN BY DURA TECHNOLOGY.

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GETTING THE CUSTOMERS

International Ford model hunt comes to India Ford believes that "India is a brand," and thats the main reason for bringing the contest to India and it also thinks that the next supermodel will be from India. The hunt began in the month of July and was spread across four major Indian cities - Mumbai, New Delhi, Bangalore and Kolkata. Here the company would shortlist 1525 finalists who will participate in the national finals to be held in November. The organizers are keeping strictly to international criterion: minimum height required for participation is 175 cm. The only consideration for India has been to raise the age cut-off. Around the world Ford is willing to look at girls from 14 years but here, in keeping with local sentiments, they have brought up the age cut-off by two years. The finale of the Indian round would be held either in Mumbai or New Delhi. The India winner will join representatives from 50 countries to compete for a $250,000 modeling contract with Ford Models, which is associated with names like Stephanie Seymour and Patricia Velasquez. The agency has also discovered talents like Sharon Stone and Naomi Campbell. The final model hunt will happen in New York in January next year, apart from the winner, the first runner-up gets $150,000 and the second runner-up contracts worth $100,000. In a now famous quote, Eileen Ford once said: "You will never know where or when you will find the next new model but you can bet that someone from Ford will be looking."

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Vintage Car Rallies In another of its promotional activities, Ford India Limited, in association with Autocar India and Karnataka Vintage and Classic Car Club, had held the "Ford Centenary Celebration Rally" on the 29th of June 2003, in Bangalore. This anniversary was a celebration of ford and its accomplishments over the past 100 years. It's an opportunity to look forward with pride, by growing with new products that stir passion," said David Friedman, Managing Director and President, Ford India Limited. The rally showcased - Model A Fords, Vintage Fords (1932-1939), Classic Fords (1940-1959), WWII Classics (Jeeps and Special Vehicles), Modern Classics (19601989), and the modern day Indian Fords (Ikon, Mondeo and Escort). The rally was flagged-off from the Palace Grounds, Bangalore encompassed a distance of approximately 25 kms for Vintage and Classic Fords cars and 70 kms for Modern Ford cars on a predetermined route through the arterial roads of Bangalore. The Vintage and Classic Fords was rated on a judging system as per their class/category while the Modern Fords would compete in a time-speed-distance (TSD) format Rally. The Ford Centenary Celebration Rally will showcase Ford vehicles in India from 1915 onwards demonstrating a 100 years of ownership pride with Ford products in India," said David Friedman. Eat pizza and win a Ford Ikon Ford India in association with Pizza Corner launched a campaign called "Eat A Fortune" offering gifts to consumers. As per the offer, a person buying a combo meal for Rs 170 (Rs 85 per head), consisting of one medium vegetarian pizza, two glasses of Coke and pineapple banana fudge, will get a scratch card. By scratching the card the consumer can win guaranteed gifts.

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In addition, there will also be weekly prizes consisting of mobile Phones. But the bumper draw will be on May 30 wherein three Bumper prizes will be announced consisting of Ford Ikon car for the winner. The combo meal could be purchased by customers at the company's `dine-in' restaurants and delivery outlets across the country and he/she would be applicable to the contest.

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Advertisements

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Ford effectively communicates to the consumer through its print advertisements, which are placed strategically in leading magazines, newspapers and automated hoardings. Also it has come up with television advertisements that communicate not only about its products features, but also the luxury the car offers and what people look for most in the car that they buy today, i.e. status. Above were some of the print advertisements of Ford India.

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Ford Fusion Anthem Album Hum to anything karega, duniya se nahin darega. This is Ford India's anthem (based on the popular Kishore Kumar number Hum to mohabbat karega, duniya se nahin darega) for its recent launch, Ford Fusion. As the title suggests, it claims to be able to do anything from negotiating the busy city traffic to taking on the unfriendliest of terrains at ease. Ford's research into consumers' habits and car usage patterns revealed that there are a significant number of mature car consumers for whom the car is much more than a means of transportation or a status symbol. It is a tool that lets them pack more into their life, discover new places and share moments together. One clear direction consumers vibed very well with was the thought of `a car that never says no' whatever the need of the hour, whatever your desire, the car will deliver. And the clear winner was the concept of `Anything Karega,' which indicates versatility; that makes it deliver to this family like no other vehicle can.

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BOSTON CONSULTANCY GROUP MATRIX

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Dogs These are products, which have low market shares and low market growth rates. The options for many companies is to phase these products out, however some organization do go for the strategy of re-inventing and injecting new life into the product. Ford Mondeo is in this stage of the BCG Matrix. Question Mark/Problem Child These are products with low market share but operate in high market growth rates. The company puts a lot of resources in this product in the hope that it will eventually increase market share and generate cash returns in the future. Ford Endeavour is in this stage of the BCG matrix. Star Stars have high market shares that operate in growing markets. The product at this stage should be generating positive returns for the company. Ford India has no star product in this product mix as yet. Cash Cow Cash Cow are products at the mature stage of the lifecycle, they generate high amounts of cash for the company, but growth rate is slowing. There are chances that the product may slip into decline; appropriate marketing mix strategies should be employed to try to prevent this from happening. Ford Ikon is a cash cow for Ford India.

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PRODUCT LIFE CYCLE

The product life cycle of any product goes through the following four stages: Introduction The need for immediate profit is not a pressure. The product is promoted to create awareness. If the product has no or few competitors, a skimming price strategy is employed. Limited numbers of product are available in few channels of distribution. Both Fusion and Fiesta are in this stage. Growth Competitors are attracted into the market with very similar offerings. Products become more profitable and companies form alliances, joint ventures and take each other over. Advertising spend is high and focuses upon building brand. Market share tends to stabilize. Maturity Those products that survive the earlier stages tend to spend longest in this phase. Sales grow at a decreasing rate and then stabilise. Producers attempt to differentiate products and brands are key to this. Price wars and intense competition occur. At this point the market reaches saturation. Producers begin to leave the market due to poor margins. Promotion becomes more widespread and use a greater variety of media. Ford Endeavour and Ikon are in this stage. Decline At this point there is a downturn in the market. For example more innovative products are introduced or consumer tastes have changed. There is intense pricecutting and many more products are withdrawn from the market. Profits can be improved by reducing marketing spend and cost cutting. Ford Mondeo is in this stage.

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SALES
50000 45000 40000 35000 30000 25000 20000 15000 10000 5000 0

Product Life Cycle of Ford India.

1999

2000

2001

2002 YEARS

2003

2004

2005

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PRODUCT INTRODUCTION MATRIX

Rapid Penetration According to this matrix Ford uses Rapid Penetration strategy for the new Fiesta and the Ikon models as the car is priced low, but the company undertakes high promotion for the sale of the car.

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Slow Skimming The company is using the Slow Skimming Strategy for the Mondeo and Endeavour models as it is priced very high, but the promotion undertaken for the cars are very low. Rapid Skimming In the case of the Fusion the company is using Rapid Skimming strategy, as the car is priced high in its segment, at the same time the company uses a very high promotion strategy. Slow Penetration Ford does not use Slow Penetration strategy for any of its cars as no Ford car has a low promotion strategy and is priced comparatively lower to the other cars in its segment.

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GENERAL ELECRTIC MODEL

Business strengths Market Share Product Quality Brand Reputation Distribution network Promotional effects Production Capacity Product efficiency R&D performance Managerial Personnel Styling Total

Weight 0.2 0.08 0.16 0.06 0.1 0.08 0.06 0.10 0.06 0.1 1.00

Rating 4 3 3 2 3 3 2 2 2 3

Total 0.8 0.24 0.48 0.12 0.3 0.24 0.12 0.2 0.12 0.3 2.92

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Market Attractiveness

Weight

Rating

Total

Market size

0.17

0.51

Market Rate

growth 0.15

0.45

Profit margin

0.1

0.3

Competitive Intensity

0.2

0.8

Technological requirements

0.15

0.3

Environmental impact

0.10

0.2

Social responsibility

0.13

0.26

Total

2.82

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Selectively / Manage for earnings The above is the strategy for Ford India as the plotting comes in the Medium Market Attractiveness and Medium Business Strength grid. The strategy is to protect existing program and concentrate investments in segments where profitability is good and risks are relatively low.

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S.W.O.T. ANALYSIS
Strength 1. Second Largest Automotive Company : Ford Motor Company (FMC) is the worlds second largest automotive company after General Motors. 2. Awards : Ford ranked highest in the J.D. Power Asia Pacific 2003 Sales Satisfaction India (SSI) survey. In the J.D. Power Asia Pacific 2002 India Initial Quality Study (IQS) Study, Ford Ikon ranked the highest in the entry mid-size segment as it did in 2001. Ford India was awarded a trophy for the Top Exporter in 2001-02, and highest export performance in 2002-03, both by the Engineering Export Promotion Council.

108 106 104 102 100 98 96 94 92 90 88 Sales Satisfaction Level

Ford Hyundai Maruti Average Toyota Tata

The J.D. Power Asia Pacific 2003 sales satisfaction survey 3. Wide product portfolio : To improve the appeal for its products and maintain product differentiation, Ford introduced new products in various segments as well as variants for existing products.

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4. High degree of localization : A high degree of localization has enabled Ford to keep its manufacturing costs low. Ford Indias localization programme has crossed the 90 per cent mark. 5. Maintaining quality and customer satisfaction : Ford India is a customercentric company and has launched various promotion programmes to increase its brand recall and customer satisfaction among Indian consumers. 6. Constant monitoring of its supplier base : Ford uses a monitoring system to ensure that suppliers adhere to high quality standards and deliver shipments on time. This gives it an assurance of the inventory management. Ford Indias purchasing policy requires that all primary suppliers achieve TPM, TQM, ISO 9000, ISO 14000, QS and TS 1649 certifications. 7. Excellence in manufacturing : Ford Indias facility is designed with a focus on scalability and speedy expansion in the future. With a unique plant design of an inverted E, the facility is capable of supporting volumes both for the domestic and the export markets. Weakness 1. Weak Distribution system : Ford India needs to improve its distribution system as in the whole of Mumbai it has only 3 dealers and India has 82 dealer outlets in 67 cities. Another problem, which is caused by a weak distribution system, is that the company cannot reach out to the untapped markets, which are mainly the smaller towns like Gwalior. 2. No car in the B segment : Another weakness of Ford is that currently in Indian the company has no car to cater the needs of the B segment customers. As the B segment comprises of a large number of customers Ford can get a boost in its sales levels if it launches a good car in the segment.

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Opportunities 1. Leveraging Indias IT advantage : Ford can use the IT advantage India has and can build a IT unit. This IT unit can caters to the software requirements of Ford Motor Company in the region and around the world. For example, the IT unit can develop a web-based customer relationship service for Ford India, Australia and South Africa which can be of great benefit to the companies wide operations. 2. As a back office hub : Ford can also develop a unit which fulfills the accounting requirements of Ford Motor company worldwide. 3. The A and B segment : Ford has a car for all segments except the A and the B segment. The A and the B segments are great opportunities which can be tapped by the company as the customer base is wide and there are ample opportunities for the company to grow with developing a car for that segment. 4. Distribution system : By improving there current weak distribution system the company can not only increase their accessibility but it can also help them tap the untapped markets of the smaller towns in the countries, for example places such as Gwalior and Allahabad. A stronger and better distribution system can also increase the sales of the company by approximately 20 25 %. Threats 1. The unauthorized market for spares and accessories is getting stronger : In India the unauthorized spare parts and accessories market is getting stronger because of the price factor and easy availability in the open market. 2. Reluctant passengers : Another area which can be a threat for the company is that the Indian passengers are reluctant to try any thing new due to the loyalty and security factor and would possibly not try the new Ford car models. This can lead to big problems for the company such as low sales volumes etc.

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3. External factors : Demand for passenger cars can be affected by factors such as an increase in fuel prices, macro- economic performance, and competition from alternative modes of transport. 4. Competition :Competition is a threat to any company, which in the case of Ford would be from companies like Toyota, Chevrolet, Daimler Chrysler, BMW, Skoda, General Motors and other car companies having a strong global presence and are rapidly entering the Indian market.

WHAT FORD CAN DO

Looking at the current marketing strategy we recommend the following for Ford to become a leader no only in the sales context but also with respect to the market share value : The A and B Segment Ford should shift their focus to the B segment, where there exist lot of potential buyers who want first time small cars. Ford is not new to this market, as Ford has been producing small cars internationally that are very successful internationally. Price Factor Reduce price, and produce cars of lower versions to cater to the middle-income group, which form a large part of the Indian population. Incentives Ford should provide better and competitive incentives for their dealers along with benefits on the paid up stock. They should give a competing edge to the dealers so the can compete among themselves for better sales.

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Distribution By improving there current weak distribution system the company can not only increase their accessibility but it can also help them tap the untapped markets of the smaller towns in the countries. A stronger and better distribution system can also increase the sales of the company by approximately 20 25 %. Service Station The number of Ford service stations should be increased along with a high level of promotion of their service stations so that they could be recognized. Each of the service stations of the Ford should be at appropriate distance on highways, which is already being implemented in competition with Maruti. Spares As the penetration level of Ford is not very good in India in the rural sector the availability of spares is difficult so the company should concentrate more on the rural sector. The cost of the spares is also costly than some of its competitors. Products Ford should introduce new and better variants in the markets in various segments to give the customer added reason to purchase a Ford car. Othe car companies are also undertaking a similar path and thus it will be highly important for Ford to undertake this activity to be competent enough in the market. Warranty Ford should extend the warranty period for its cars as this would give a competitive advantage and also encourage people to give the brand Ford and added thought or a priority while making the purchase decision. After Sales Service Ford should look at providing valuable after sales service to its customers, through the means of hassle free insurance covers, easy and quick on the road registration procedures and on call response to customers needs etc.

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Social Responsibility Ford should look at providing environment friendly and social friendly business solutions. These can be in the form of environment friendly factories, sustainable development practices, fair and equal treatment to all sectors of the society. This will help Ford create an image of trust, loyalty and concern in the society which can act in its favor.

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ROAD MAP TO THE FUTURE

Investments Days after Ford Motor chairman and CEO Bill Ford promised fresh investments for India, the company said it would be pumping in $75 million (around Rs 330 crore) for expanding operations. To support the aggressive growth strategy, Ford India will be augmenting its subscribed capital. Ford India has received approval from Ford Motor company for an additional equity infusion of $75 million to meet the needs of our future plans. Ford India, which has its plant near Chennai, has invested around $375 million in India so far. The company began operations in 1996 in a joint venture with Mahindra and Mahindra and became a fully owned subsidiary in 2005. Bill Ford, on his maiden visit to the country, had promised further investments in the market. "This market (India) is critical to our plans for building a Ford Motor Co for the 21st century," Ford India currently sells four models in India, including the flagship 'Ikon', SUV 'Endeavour', premium sedan 'Mondeo' and the recently launched 'Fusion'. Hybrid and Concept Cars US auto giant Ford expects to have five hybrid gasoline-electric vehicles on the market within three years. Its only one of the fuel efficient technologies Ford are working seriously on, Fords commitment is clear they are planning to be a leader in bringing their customers with technologies that makes a difference in their life and in their world. Ford was the first US automaker to introduce a hybrid vehicle, the Escape sport utility vehicle that runs on either its gasoline engine or on its electric motor depending on driving conditions, and incorporates regenerative braking technology, which funnels energy generated from the brakes into the battery.

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Ford said more hybrids are coming from the company, including new versions of its Mercury Mariner compact SUV later this year a Mazda Tribute by next year, and hybrid versions of its new sedans, the Ford Fusion and Mercury Milan by 2008. According to Mr. Ford, his great-grandfather's vision was to provide affordable transportation for the world and he wants to expand that vision for the 21st century and provide transportation that is affordable in every sense of the word, socially and environmentally, as well as economically. That means vehicles that are safe, clear and energy efficient. Concept cars play an important role in the automobile industry. These exercises are great opportunities to test potential designs. Originally, these were pure explorations in style, but over time the ideas have developed into a combination of exploration and show. Sometimes the original intention to explore design themes has been taken over by the public relations crew, so the result is an attempt to impress the car-buying public, the press, the executive suite, and, just perhaps, rival designers at competitive companies, which especially means designers of different models within the same company. Fords plans to develop on the ideas of Concept Cars and build a suitable customer base for them.

Exports and Production Capacity Ford India now plans to increase exports from its Indian manufacturing plant. The company also plans to double its production capacity in India to reach a target of 100,000 cars a year and simultaneously expand the distribution network across the country. Ford India today has the capacity to manufacture 65000 vehicles per annum. Ford India exported 28,000 units of Ford Ikon in completely knocked down (CKD) form to South Africa, Mexico and Brazil in 2003. Ford has also exported Ford Ikon components worth over US$ 10 million per annum to China since 2002.

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NEWSPAPER ARTICLES
NEWSPAPER: The Economic Times HEADLINE: Ford's Q3 losses mount to $5.8bn DATE: October 2006

DEARBORN: Struggling US auto giant Ford Motor posted a mammoth thirdquarter net loss of $5.8bn as restructuring costs hammered its earnings. Ford also revealed it would restate results from 01 through to this years third quarter, to correct the accounting for certain derivative transactions by its consumer credit division. Fords newly-appointed chief executive, former Boeing executive Alan Mulally, said the results were clearly unacceptable and vowed to make more of the smaller, fuel-efficient vehicles pioneered by Japanese automakers. Mulally, in an interview, ruled out an alliance with Renault-Nissan in the near term. The Ford CEO was quoted as saying that such a partnership would send Ford in the wrong direction as it would distract the company from its restructuring plan. Mulally said he has had no contact with Renault-Nissan CEO Carlos Ghosn but Ford could consider alliance talks in the future but right now I like our focus. His comments came in the wake of Renault-Nissans collapsed alliance talks with General Motors earlier this month. After that collapse, the French and Japanese partners said they were open to an alliance with another North American partner. Fords loss for the third quarter ended September 30 included heavy provisions

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for its hard-hitting restructuring plan, which foresees 16 plant closures in North America and the elimination of 45,000 jobs by 08. Excluding those provisions, its loss came to $1.2 bn, compared to $191m before exceptional items a year earlier. That translated into a loss of 62 cents per share, a penny more than Wall Streets average forecast of 61 cents.

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NEWSPAPER: The Economic Times HEADLINE: Ford may drive Mazda into the small car market DATE: September 2006

MUMBAI: Ford Motor may make its debut in the small car market through its Japanese subsidiary Mazda Motor. Though Ford has remained tightlipped on its plans for the sub-Rs 5 lakh car market, sources in the know say that Ford has roped in Mazda to aid its foray into the segment. Though it is not known what model the two companies will choose to launch in India, industry sources say the two companies are jointly developing a car for India which will be based on an existing Mazda platform and will be manufactured in Ford's Maraimalainagar plant. When contacted Ford India president and managing director Arvind Mathew said, The Indian auto market is growing rapidly, and the Ford Motor continues to explore all opportunities for growth. However, we have no firm plans at this time." Mazda Motor which manufactures over 1.25 million vehicles a year and sells them in Japan, Europe and North America is no stranger to the Indian market. The company has been a long-time partner of Punjab Tractors in its Swaraj Mazda venture for manufacturing light commercial vehicles. The 10-year technical agreement between the two companies came to an end in October 2004, and Mazda opted out of the JV in August 2005 selling its stake to Sumitomo Corporation. At the time of exiting the JV, Mazda said its focus had shifted from commercial vehicle to cars so it had no option but to sell out. "Mazda has been preparing to enter the car market for some time now and discarding the CV maker image was the first step in that direction.

56

The company is likely to make a backdoor entry as Ford already has an established presence in India and is a much stronger brand in the market," said an industry analyst. Ford has a 33.4% stake in Mazda. The two companies entered into a strategic relationship to enhance each others competitive strength through marketing and distribution alliances and 'badge engineering' rebadging one model of a car as another.

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NEWSPAPER: The Economic Times HEADLINE: Fiesta time for Ford DATE: August 2006 CHENNAI: Ford India continues to have faith in big cars, as it has done so far here in India. Even though it is working on all options by keenly watching the developments in each segment, it is clearly prioritising them as per the market requirements. The company is also enthused by the market response to its latest offering, the diesel Exi variant of the Fiesta, launched in July, with a price tag under Rs 7 lakh. We keep an eye on developments in all segments and have action plans worked out for each one of them. However, we prioritise these plans based on market requirements, Arvind Mathew, president and managing director, Ford India told ET.

Mr Mathew said each of the Ford models launched in India is based on market requirements. Be it the Ikon an entry level sedan, the urban-utility vehicle Fusion, the high-end Mondeo, the SUV Endeavour or the Fiesta, which was specifically designed and launched first in India. These products are the most suited for India and Indian conditions, including the roads. And we will always keep our models relevant for customers, Mr Mathew said. According to him, the Fusion continues to do well and notches up sales of about 300 units a month in big markets like Delhi and Mumbai, besides Kolkata and Guwahati. We are sure the market exists for this segment and it will grow faster in the future, Mr Mathew pointed out. Ford India seems to be having a busy year. In the first seven months of 07, it has

58

sold 26,775 vehicles, including 3,019 units in July. The plant is operating around the 55,000-60,000 units per annum level. It is working constantly on the localisation programme for Fiesta. When we launched Ikon, it had local content around the 75% level and we increased it gradually to well over 90% now. A similar trend can be seen for Fiesta too and the programme is on target, he observed. Meanwhile, the company is enthused by the response for its latest launch, the diesel Exi variant of Fiesta, priced at Rs 6.85 lakh (ex-showroom Delhi). It has opened a new market for us and we were able to breach the sub-Rs 7 lakh barrier to reach out to more customers. However, it is still early and we have to observe over the next couple of months to study its success, Scott McCormack, the companys new vice-president marketing, sales and service said. He said there is a definite trend in the Indian market towards diesel. Two factors high fuel prices and the new hybrid diesel engines that compete with petrol variants on performance and are less noisy. While Ford India sources its petrol engines from within India, it imports the diesel engines from Europe. Mr Scott has also drawn up a slew of priorities for the Indian market. These include introducing more products, which are right for the local market, growing the sales and service network and enhancing the reputation of the primary brand the Blue Oval. Other priorities include further enhancing the ownership experience to improve customer satisfaction and build the talent competencies of individuals within a team.

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NEWSPAPER: The Economic Times HEADLINE: Toyota, Ford get moving with small car plans DATE: May 2006 MUMBAI: The big guns of the auto industry have, after their initial reluctance, realised the small car is a money-spinner they cannot miss out on. Ford and Toyota have decided to roll out India-specific models that will race with rivals in a segment of the market they had deemed cluttered not long ago. Toyota, which had plans to introduce a small car from subsidiary Daihatsu, will develop a new model, exclusively for India. Previous discussions between the two had failed because of disagreements on price sharing, sources said. The debut, earlier planned for August 07, has been pushed back to late 08. It will be a B+ segment car, with a price tag of Rs 5-5.5 lakh, but dealers are insisting that the range be set at Rs 3.5-Rs 4.5 lakh, the sources added. Ford India, another company that carries its premium-car-maker cache with pride, is revving up to take on Japanese and Korean rivals, whose small cars have driven profits. The US giant had stayed off this segment, saying it was overcrowded. The small-car segment has witnessed frenzied growth after the excise duty cut in the budget and the launch of Swift. If the growth momentum continues for the next few months, we will firm up our decision on the small car, Arvind Mathew, president and MD of Ford India, told ET. Asked if an existing model from sister brands such as Mazda would be brought in, Mr Mathew said, It will be a car exclusively developed for the Indian market. General Motors, which had delayed the small car because it did not have enough

60

capacity, has decided to start producing the model at its Halol plant in Gujarat. The production will later be shifted to another location where the global auto giant intends to set up a greenfield facility.

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NEWSPAPER: Mumbai-Mirror HEADLINE: Fiesta pricing may hurt DATE: November 2005 New Delhi: Its Fiesta times ahead for car buyers who want to buy a mid-size sedan and for those who wish to upgrade to the luxury segment, thanks to Ford India which has introduced Fiesta with a competitive price tag. But the pricing may not be good for the US car major itself which is keen to play the volumes game in India with its latest offering. The competitive pricing of Fiesta may get customers in large numbers but at the cost of its own siblings Ikon and Fusion which also come within the same price bracket. Besides the entry level 1.4 litre petrol version Fiesta at Rs 5.59 lakh (exshowroom), Fiestas other two petrol variants 1.6 litre ZXi and SXi models are priced at Rs 6.29 lakh and 6.89 lakh, respectively. Its 1.4 litre common rail diesel variant sports a price tag of Rs 6.99 lakh. Entry level sedan Ikon and urban activity vehicle Fusion are priced at Rs 4.97 lakh and 6.23 lakh, respectively. We do not think that the aggressive pricing of Fiesta will hit the sales of Ikon and Fusion as the three are positioned on different platforms with distinct features. It will expand the market for mid-size sedans and contribute to the continuing growth of the segment, Ford India Vice-President (Marketing and Sales) MV Sivaramakrishnan told Mumbai Mirror. In India, the car buying pattern is based on prices, space and fuel economy and not on positioning, auto expert Rajiv Mitra said. Such close pricing always affects sales of vehicles coming under the same price range and segment, he said Asked what the company will do if Fiesta eats into the share of Ikon - the hugely popular Ford model though its sales have been dwindling over the past few months

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 Sivaramakrishnan said the company will continue to produce Ikon on demand. Fiesta pricing may trigger a price war in the sedan segment and force Maruti (Esteem Rs 4.42-Rs 5.07 lakh) and Baleno (Rs 5.80-Rs 6.62 lakh), Hyundai (Accent Rs 5.29-7.14 lakh) General Motor (Optra Rs 8-10 lakh) and Honda (City models Rs 6.71-7.99 lakh) to revise their prices. Recently, car-makers increased prices of their vehicles due to rising input costs. Hyundai India Executive Director (Sales and Marketing) WS Min admitted that such pricing will hit the sales of vehicles in the sedan category. Initially, people go by novelty factor and they prefer the new car over the existing models in the same segment. It affects sales but ultimately performance counts, Min said, clarifying that Hyundai will not go for any price corrections because of the Fiesta pricing. Abhishek Bachchan to endorse Fiesta Company sources have revealed that Ford India has signed Bollywoods latest super star Abhishek Bachchan to endorse its mid-sized sedan Fiesta. It has also been reliably learnt that Abhishek has given about 7 days in a year for shooting Fiesta commercials. It may be recalled that the Jr Bachchan, along with his father Amitabh, had promoted Marutis multi purpose vehicle Versa though the duo failed to light up its sales.

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NEWSPAPER: The Economic Times HEADLINE: Ford rides on Fiesta for more josh DATE: November 2005

Fords India story is so far just hazy. Its been almost a decade since the Indian arm of the over 102-year-old Ford Motor Co entered the country through a JV with Mahindra & Mahindra in late 1995. It had everything going its way. A globally recognised Blue Oval brand. A market that was just opening up for international passenger car brands. The stage was well set for Fords entry. In fact, Ford adopted a twin location strategy. An assembly plant at Nashik that gave it the much-needed headstart to hit the Indian roads with its product, and a greenfield facility near Chennai, in which it pumped in Rs 1,700 crore to give the car-major the much-needed elbow room to scale up operations in the long-run. Starting with the assembled Escort, Ford India soon cleared this make way for an India-specific mid-size sedan, Ikon. The Ikon remains an aspirational car with its unique style and attractive entry level pricing. It has retained its Josh since it was launched in November, 1999, Arvind Mathew, MD and president, Ford India said recently. In fact, it is attracting a lot of first-time owners, especially from the IT and BPO sectors. Still, 10 years later and a handful of models, the annual production capacity at its Maraimalainagar facility near Chennai is still less than 50,000 units in two shifts. On a capital base of Rs 850 crore, Ford India had an accumulated loss of Rs 629.9 crore as of March 31, 04, while its topline was Rs 1,109 crore that year.

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NEWSPAPER: The Economic Times HEADLINE: India cruises to top spot on Fords growth list DATE: October 2005 Hes known in Detroit as Mr Nice Guy. He has none of his predecessor Jacques Nassers ruthless reputation, but this fourth-generation scion means business all the same. In his maiden trip to India, William Clay Ford Jr turned on some of the charm that has helped him win over naysayers on Wall Street. And, he explained why the India story is so critical to a beleaguered Fords future survival. In the capital to launch the latest offering from the blue oval the Ford Fiesta Bill Ford put India right at the top of the companys growth list. When we talk about optimising our global footprint we mean investing in areas that are growing, he said. This market is critical to our plans for building a Ford Motor Company for the 21st century. Fords India plans are part of its Asian test drive. Ford is moving fast to accelerate growth throughout Asia, said the 48-year-old chairman and CEO of Ford Motor Company. We are especially excited about the potential we see here in India. As one of the fastest-growing markets in the world, India is a top priority for us. A new economic order is developing here, with growing purchasing power and a strong desire for personal mobility. Although he refused to mention specific amounts of investment in India, Ford was candid about why the company needs the Asian growth pill. Ford, on a whole, is profitable but we have an issue with our US operations and are dealing with it, he said. The growth rates in developed markets are modest, whereas here, the y-o-y is growing at a double-digit clip. So we need to restructure our US business and grow elsewhere in the world. Already, we are growing in every part of the world, except the US, and we are profitable everywhere except in the US, he added.

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NEWSPAPER: Hindustan Times HEADLINE: Ford India to double sales with launch of new luxury car DATE: September 2005 Mumbai: With the global launch of a luxury car in India by the year-end, Ford India expects to double its sales to 50,000 units next year. "We will double our sales to 50,000 units next year. We are hopeful that the launch of the new premium car will help us increase our sales," Vice President, Sales and Marketing Ford India V Sivaramakrishnan said. The world premiere of the next new Ford car fitted with turbo diesel common-rail injection (TDCi) technology in India would enable Ford compete more aggressively in the Indian market, he said. The luxury car would be available in both petrol and diesel versions. The diesel engines "might be initially imported, petrol engines would be assembled by HM," he said. The company has invested around 100 million dollar in the new car, which is being developed by Ford's global engineering and design team supported by a specialized team of Indian engineers. With a "very high local content" it will contribute to growth in the 'C' segment cars. "We are doing a sale of around 24,000 units this year," he said, adding that the company sold 27,000 units last year. Sivaramakrishnan attributed the almost flat sales of Ford India to the increase in input costs and fuel prices. He felt that improvement in road conditions and infrastructure development would boost automobile sales. Ford has so far invested around $470 million since its foray into India nine years back.

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NEWSPAPER: Business Line HEADLINE: Ford sales likely to cross Rs1000 crore mark DATE: March 2005 Bangalore: Ford India's revenues are expected to cross the Rs 1,000-crore mark while it is on target to post net profit in what is turning out to be its best year since it set up its operations in the country in 1999. "We should do more than Rs 1,000 crore this fiscal, which is 30 per cent growth over last year," Ford India Managing Director, David Friedman, told Business Line. Terming 2004-05, as Ford's `best year yet' in India, Friedman said the volumes have grown 30 per cent over the previous year. He said 2004 saw record sales of Ikon and its utility vehicle, Endeavour. "We are already cash flow positive and we have a full-fledged factory in place now," he said. Ford is also expected to launch a new vehicle this year, probably in the mid-size segment, though Friedman did not confirm the news. "Keep watching this space," he said. For 2004, Ford sold a total of 24,536 units of Ikon, about 32 per cent more than last year while it sold 2,240 Endeavours during the same period. Fusion sold about 330 units in December, its first month of sales and in the first two months of 2005, it has sold about 650 units. The current capacity of the Ford plant near Chennai is about 50,000 units per year. Friedman said the company was extremely happy with the sales of Fusion. "The sales are as per our expectations," Friedman said. The company expects sales to touch about a 1,000 units per month sooner than expected. It sells about less than half of that currently. He said Fusion was creating a new segment in the market. "Fusion's positioning is unique. It is a lifestyle kind of vehicle and combines the functionality of an utility vehicle," he said.

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He said currently there were no plans to export Fusion because the focus was on domestic sales. "But if we can get it right for India, we can get it right for other emerging markets as well," he said. Friedman said the country's passenger car market was going through further segmentation where personal needs of a customer was taking precedence over price and the size of the car. "There are two things which are happening in the industry. Firstly, the market is growing in absolute terms and is shifting in terms of segmentation. The lines are blurring," he said. This was largely because of the more number of models hitting the market. He said certain models may not sell heavily but they cater to the specific needs of the customer. "There is a car for every need. There is a focus on features and not on the size of the car," Friedman said.

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NEWSPAPER: Business Line HEADLINE: Ford keen to double outsourcing from India DATE: February 2005 New Delhi: Ford Motor Company expects its sourcing of components from India to double or even treble in the next few years, a top official of the company's Indian subsidiary said on Wednesday. Currently, $40 million worth of components are being sourced from India for Ford Motor's global requirements, Arvind Mathew, vice president and executive director (programmes implementations and supply), Ford India, told reporters in Chennai. Mathew was speaking after presenting the Ford Motor Company's highest supplier honour, the Gold World Excellence Award to Chennai-based Cooper Tire and Rubber Company India Pvt Ltd. Cooper Tire and Rubber Company India is the first Indian company, which has won Ford's recognition, along with 41 other global suppliers from 13 countries, he said. The award reflected the success of Ford India's supplier support programme and marked a major milestone for the Indian automobile industry, Vinay Piparsania, vice president, external affairs and director, sales operations, Ford India, said. Cooper Tire and Rubber Company India, a 100 per cent subsidiary of the US based Cooper Tire and Rubber Company, is supplying brake tubes, fuel and brake bundles, clutch tubes and power steering hoses to Ford India, Ford China, Ford South Africa and Ford Mexico. K K Tiwari, managing director of Cooper Tire and Rubber Company, India, received the award on behalf of his company.

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CONCLUSION
The Indian Automobile Sector is not without its problems. The Government is striving to fill the potholes at the legal level. Day by day the rules and regulations are becoming less stringent providing unsurpassed growth in the sector. Ford are committed to operating in a socially responsible manner, they are transparent about their successes as well as areas for further development and are continuing to make efforts to fulfill the expectations of the society in which they operate. Ford accelerate their effort to meet the global challenges of business, and have emphasized on the importance of optimizing their global footprint by investing in areas that are growing. According to Ford India is right at the top of the list of growing areas and avenues. This market is critical to their plans for building a Ford Motor Company for the 21st century.

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BIBLIOGRAPHY

Sites: www.mumbai-mirror.com www.india.ford.com www.mid-day.com www.hindustantimes.com www.businessline.com www.indiacar.com www.quickmba.com Magazines: Auto car Over drive Business week Auto motor & sport Books and newspapers: Philip Kotler The Times of India The Economic Times Mumbai - Mirror

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