'Indian market is very important for Ford'

Q&A: Michael Boneham

In spite of a severe cash crunch, the US automobile giant Ford Motor Company did not file for bankruptcy. Meanwhile, its Indian subsidiary, Ford India, got a go-ahead for investing $500 million here as part of its expansion programme. In an interview with Swaraj Baggonkar, its managing director, Michael Boneham, highlights the company’s eagerness to mark their entry into the small car segment, where they have no presence currently. Edited excerpts:

Were you forced to change any of your India plans due to the financial instability of the parent company?
We announced a $500-million investment plan for India. I have not received a single call from either the US or Bangkok (Ford’s Asian centre of operations) asking me to freeze the investment programme or to scale it down. Ford is passionate about India. We are maximising the investment efficiency.

So there is no impact whatsoever?
We must understand that in India, there has been a slowdown but not a meltdown. We have not changed any of our original plans. We will stick to them. Although, we have become more cautious about what will happen in the market.

India hasn’t seen too many of new car launches from Ford. One reason could be the sale process of Jaguar and Land Rover (JLR) in between. What can be expected from the company now?
The sale of JLR was not related to Ford’s other worldwide operations, so there wasn’t any impact on us. We have adopted a three-pronged strategy, wherein the capacity of the vehicle assembly plant will be increased to 200,000 units per annum. We will also hike the engine production capacity to 250,000 from 60,000 currently and, lastly, continue with investments in the small car project.

How much of your company’s future is dependent on the small car?
The new small car is a critical part of Ford’s future in India. We are non-existent in a market (the compact car one) which controls 70 per cent of the entire Indian automotive market. You are not in the game unless you are in that segment. For Ford, it is important to retain its brand image in India.

Can you share a few details about the car?
It will be launched in early 2010. However, I can’t say much about its pricing. It will be a sub-4 metre long car with a sub-1.2 litre petrol and diesel engine — essential for gaining the excise duty benefit. We have already started with the early build plans for the car. The Indian market is so important for Ford that whatever launch you will see in Europe and the US (henceforth) will be launched in India too, if we find it applicable.

How financially sound is the company, given that it has made a sizeable investment only recently?
All I can say is that we have a robust balance sheet. I don’t have any level of discomfort.

What do you expect from the budget this year, for the auto industry?
Our investment decisions are based on robust policies of the government. We are looking forward to the budget for that. The recent election results have put one party at the centre. Probably, the extra excise duty on bigger cars like sedans may come down.