UPDATE 1-Ford to put $500 mln in India; make small car, engines
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MUMBAI, Jan 8 (Reuters) - Ford Motor Co (F.N) said on Tuesday it plans to invest $500 million in India to double manufacturing capacity by 2010 and make a small car and engines, making the fast-growing market a key production hub in Asia-Pacific region.
The investment, which takes Ford's commitments in India to more than $875 million, comes on the heels of similar moves in Thailand and China, the other markets the U.S. car maker has identified as key to its regional growth strategy.
"We see China, India and ASEAN as three important markets for increasing our Asia-Pacific footprint," said John Parker, executive vice president for Asia-Pacific and Africa, referring to the south east Asian region.
"We're intent on developing these three markets with viable scale and critical mass," he said over telephone from Bangkok.
Ford, which last week named India's top vehicle maker, Tata Motors Ltd (TAMO.BO) (TTM.N), as the preferred bidder for its luxury Jaguar and Land Rover brands, will double its capacity in India to 200,000 vehicles a year by 2010, the company said.
Within the next two years it will begin production of a new small car for a bigger share of the dominant segment, and build an engine plant adjacent to its existing car plant near Chennai in south India.
Ford India will have an annual capacity to make 250,000 petrol and diesel engines, with the first diesel engines for its local Fiesta and Fusion cars rolling out in April, Parker said.
AFFORDABLE CARS
India will become a strategic production hub for small cars at Ford, which joins a growing list of carmakers focusing on small cars as oil topped $100 a barrel and the move to fuel-efficient "green" cars gains momentum.
Tata Motors will unveil on Thursday what could be the world's cheapest car, priced at $2,500.
Nissan Motor Co (7203.T) and Renault (RENA.PA), which has made a big success of its no-frills Logan sedan, is developing a $3,000 car with Bajaj Auto Ltd (BJAT.BO), while Volkswagen (VOWG.DE), Toyota Motor (7203.T), Honda Motor (7267.T) and Fiat (FIA.MI) have also said they are looking to build low-cost cars.
But Ford will not compete at the low end of the price spectrum because it expects India's booming economy will quickly increase the purchasing power of consumers, Parker said, without giving more details about the planned car.
"We're not going to be in that area (of $2,500-$3,000). We're focused on the heartland of the market, the 300,000-400,000 rupee ($7,600-$10,100) range," he said.
"With the continued movement of people away from motorbikes and as the Indian GDP strengthens, people will move up."
Ford, which also assembles the Endeavour sport utility in its Chennai plant, sold about 40,000 vehicles in the domestic market in 2007, down from about 42,000 units in 2006, as higher interest rates on loans dampened demand for cars.
Ford's Volvo Car unit recently began importing its S80 sedan and XC90 SUV into India, and Ford will support its operations, Parker said, while also stepping up exports and sourcing of components, particularly for powertrain and chassis manufacture.
Ford's new facilities and capacity expansion will create more than 9,000 direct and indirect jobs, it said. It also added 20 new dealers in 2007, taking the total to 130 in the country. "Our objective is profitable growth and focusing on the right brand, product and distribution strategy, which will also give us a respectable market share," Parker said.
Annual passenger vehicle sales in India are forecast to nearly double to 2 million units by 2010. ($1=39.3 rupees) (Editing by Ranjit Gangadharan)
