Ford's India exit: What went wrong and who would benefit from it
Ford became the latest automobile brand in India to call quit. The US-based auto major has announced that it will quit local manufacturing and only sell high-end models in India through the import route. This came as a shocker and created quite some ripples.
Also Read: Ford EcoSport is set to exit this market too after India
It is clear that the American presence in the Indian car industry is only limited to Jeep that has a minuscule market share here. A host of factors have played crucial roles in Ford's exit from India, claim experts. They also say Ford's absence will help the rival automakers in India who are present in the utility vehicle segment.
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Ford became the latest automobile brand in India to call quit. The US-based auto major has announced that it will quit local manufacturing and only sell high-end models in India through the import route. This came as a shocker and created quite some ripples.
Also Read: Ford's decision to stop manufacturing doesn't reflect on Indian biz environment
It is clear that the American presence in the Indian car industry is only limited to Jeep that has a minuscule market share here. A host of factors have played crucial roles in Ford's exit from India, claim experts. They also say Ford's absence will help the rival automakers in India who are present in the utility vehicle segment.
What went wrong?
According to industry experts, Ford didn't read the Indian market properly. The carmaker didn't customise the car platforms and the product strategy too was not correct.
For a quite long time, small cars have ruled the Indian market. While Maruti Suzuki and Hyundai aced the market by focusing on small cars, Ford or General Motors failed to do so. None of these car brands had small cars in their global portfolio. They didn't customise their India product strategy according to the local market preference as well.
Also Read: After Ford shuts India shop, FADA wants Centre to pass law to protect dealers
Ford tried to look at the Indian market through the US prism. While the country was obsessed with the mileage of vehicles, Ford focused on engine power and performance. The other car brands, on the other hand, especially Maruti Suzuki, Hyundai, Tata Motors served the right ingredients to the consumers.
While other foreign automakers first draw out a product plan for India, then it becomes part of the Asia Pacific product strategy and then the global plan, Ford tried another way round. It viewed the Indian market from a global level.
Lack of varieties in models is another reason that resulted in the brand's lacklustre performance. While other car brands continued to introduce new models, Ford focused on Ikon for a long time. It later brought models like Figo, Fusion, Aspire, EcoSport, Endeavour and Freestyle. But it was late already and Ford was lagging behind in the race.
In FY2000, Ford sold 8,000 PVs in India, which increased to 93,000 units in FY2019. However, market share growth for the brand was negligible from 1.1% in FY2000 to 2.8% in FY2019. In FY2020 and FY2021, the automaker sold around 66,000 and 48,000 units respectively. Clearly, the number of vehicles sold in India by Ford increased over the last two decades. But that didn't help much in terms of capturing market share.
As the brand claims, its accumulated operating losses over the 10 years was more than $2 billion. Besides this, a $0.8 billion non-operating write-down of assets in 2019 too resulted in its decision to shut down the two Indian plants.
Who will benefit?
Ford India has never been a major player in any segment of the Indian market. Hence, its absence will hardly result in any substantial windfall for the other car brands in the market. However, Ford offers two popular models in the utility vehicle segment - EcoSport and Endeavour.
Nearly half of the cars Ford sold in India were utility vehicles. During FY2015, Ford's share in the UV segment peaked at 9.5% but dropped in successive years. In FY21, the company had a 3.3% market share in the UV segment. With Ford's exit, other car brands will try to grab that part with their offering in the UV segment.
Maruti Suzuki, Hyundai and Tata Motors have been keenly focusing on the UV segment for the last couple of years and tasted success as well. Maruti Suzuki has seen its market share in the UV segment grew from 12.4% in FY2015 to 21.6% in FY2021. Hyundai's market share grew from 0.3% in FY2015 to 20.2% in FY2021. Kia too has a good chance to grab this vacuum with its popular models such as Seltos and Sonet.
(With inputs from IANS)
