Despite exit, Ford gives a tough ride to peers in the used car market

For Abhimanyu Deepak Agarwal, a Ford India dealer from Ghaziabad, September 9, 2021, began on a high note. Sales were at an all-time high at his dealership, Adiv Ford. Demand was so strong that the waiting period for the EcoSport was around six months, and the Endeavour had a similar waiting time. However, the day ended with shocking news for him: the US automaker announced its exit from India.

Now, three years since Ford's exit, the used car market is seeing higher demand for Ford vehicles. Unlike its peers that left the Indian market, some Ford models, like the EcoSport, are even experiencing an increase in prices compared to last year. This comes at a time when nearly all of the top ten cars in the used car market have seen a 3 to 9 per cent decline in average prices for five-year-old vehicles in September, except for Maruti's Dzire and Baleno, which increased by 7 per cent and 8 per cent, respectively, according to the Shriram Mobility Report, a monthly data report on the Indian vehicle market.

"Although sales declined from FY23 to FY24, the Ford EcoSport continues to show relatively strong demand in FY25. If this trend continues, total sales for FY25 could reach close to last year's figures. The Ford Endeavour too, demand remains steady," said Sameer Malhotra, chief executive officer of Shriram Automall India, which deals in pre-owned vehicles.

Take the case of the EcoSport: its average price for a five-year-old vehicle was Rs 5.55 lakh this year, up 3 per cent from Rs 5.4 lakh during the same period in FY24, according to Shriram data. As for the Endeavour, its average price was Rs 18.8 lakh, down 3 per cent compared to last year. Despite higher sales volume in the used car market, Figo's prices dropped by 14 per cent compared to last year.

This includes popular models like the Maruti Swift, which saw a 6 per cent dip in average prices, the Tata Nexon (down 8 per cent), Tata Harrier (down 3 per cent), Tata Altroz (down 7 per cent), Maruti Brezza (down 3 per cent), Maruti Ertiga (down 9 per cent), and Mahindra's Scorpio and Bolero (both down 7 per cent) compared to September last year, according to the Shriram Mobility Report.

However, not everyone agrees with this perspective. "I don't think demand has increased as portrayed. Demand for any vehicle that has exited the market will only decline," said C S Vigneshwar, president of the Federation of Automobile Dealers Associations (Fada).

Reasons for the higher demand

A key reason for the continued demand is the service assurance the company is offering to its customers for ten years. Service operations in most of the 258 cities that Ford was present in during 2021 are still functioning as before. Additionally, Ford fixed the prices for consumables and spare parts for five years.

According to reports, Ford parts, including even small components, are still available in its stores. "Ford did not face the same fate in the used car market as GM. The main reason is that Ford sold quality products in India. The vacuum created by a vehicle like the Endeavour has yet to be filled in the Indian market," said Agarwal of Adiv Ford.

A classic example of Ford's role in shaping the Indian SUV market can be seen in the Draft Red Herring Prospectus for Hyundai Motor's IPO. "The launch of the Ford EcoSport provided a significant thrust to the compact SUV sub-segment in India around FY14," the Hyundai Motor DRHP noted.

"In the 25 years of Ford's presence in India, the year they quit was perhaps their best year. That's the irony. I hope they realise that," said Agarwal when asked about the possibility of Ford returning to India.