You can't build cars just on hope: Michael Boneham

Q&A with president & MD, Ford India

Ford India saw 6% fall in sales in the last six months to 41,364 units faring worse than the industry which grew by 7% in the same period. Michael Boneham, president and managing director, Ford India hopes to arrest that fall with the compact SUV Eco Sport due for launch a few months later and the new Figo launched today starting at Rs 384,999 (ex-showroom Delhi). Boneham shared his views about the industry with Swaraj Baggonkar. Edited excerpts. 

*You have a new plant coming up, are you going slow on that, looking at the broader slowdown we are witnessing?
A. Part of launching new cars has also got to do with the capacity to build them and Gujarat is the key part of that, it will come on-board in 2014 and hence our product strategy is driven also by capacity strategy. We have announced that the Eco Sport will be built in Chennai but obviously what is critical to us is that Gujarat come on-line and give us the opportunity to grow our product base and volumes. We are on track for the Gujarat plant, I went there three weeks ago with Joe Hinrichs (Group Vice President).

*So no relook or scaling back of investments from Ford?
A. We have over a billion dollars invested in Tamil Nadu and we have a billion dollars investment in Gujarat. We have got to take a long term view, I am a little bit more optimistic, we have seen some pent up demand and we are seeing more walk ins as we get into the festive season. That is why it was important for us to launch the new Figo along with the festive season to give it a nice push into the environment when people are feeling more confident. The government has started to take a stance that we needs to see if that gives confidence to business and individuals.

*What is the prevailing situation as far as demand in concerned at the retail level?
A. Its challenging. As a market we are going through those periods of time when the consumer is a little a bit unsure whether he should make a commitment to investment in a product like a car.

*Is the pent up demand seen only in some segments or the overall industry?
A. We have seen the SUV segment grow very well and we are very pleased about that because we have a new SUV coming in, the sub 4 meter Eco Sport. We are seeing small car segment interestingly where the Figo is competing, the segment is down year over year but Figo has actually has been up year over year. You have to look at the long term whilst adjusting production to demand all the time, you just can't be building cars on hope and we have done that.

*The build up to the launch of the Eco Sport looks very healthy. Do you believe its success will give you the confidence to have more products on the same platform?
A. What we have said about the eight new products is majority of them will be in that small car segment with different offers. Eco Sport goes into that small car segment essentially. We have all the eight coming by mid-decade and the Indian consumer will be spoilt for choice.

*Do you think the government needs to come out with some kind of incentive for the industry like it did almost four years ago?
A. If we don't see a significant improvement over the festive season then the government will have to step in because it is actually a difficult stage even versus the financial crisis period two and half years ago. A lot of petrol vehicles are sold on incentives that is not sustainable for the industry. So we have to wait and see what happens over the festive season and what happens globally during this period. Occasionally you do need support.

*Your competitors have raised their prices, do you have any similar plans?
A. Input costs are inputs costs and no one can avoid them or continue to not to pass them on (to the consumers) otherwise you go out of business. So we wanted to be aggressive as we moved in to the festive season lets wait and how we move forwards and what happens with inflation and diesel prices.

*With domestic demand hitting a downcycle have you increased your focus on exports?
A. We have 35 different markets for the Figo right now and yes we will continue to look at export markets. We think Figo can go to many more markets. Right now 75% of the Figo production is for the domestic market and the balance is for exports. We export 40% of our engines. So our startegy has been to have a strong export base but with domestic dominating. Figo commands 95% of the total export basket for us.