Ford Ditches Ultra-Low-Cost Car Market in India

Strategic Insights -

Ford Motor Company has announced plans to abandon the ultra-low-cost car market in India, a move that echoes General Motors and Renault-Nissan's decision to step back from the segment. The company's president, Michael Boneham, stated that more than half of Figo buyers are first-timers who prefer premium cars, while Joseph R Hinricks, president of Ford Asia Pacific & Africa, cited the failure of the Tata Nano to achieve expected volumes as a reason for the company's decision. Ford's shift in strategy comes as the market for ultra-low-cost cars appears to be losing momentum.

Key Takeaways:

  • Ford India president Michael Boneham noted that more than half of Figo buyers are first-timers, indicating a desire for premium cars over ultra-low-cost options.
  • Joseph R Hinricks stated that Ford no longer plans to build a car in the $3000-$3500 (sub ₹2 lakh) price range, citing the underwhelming performance of the Tata Nano.
  • Ford joins General Motors and Renault-Nissan in shelving ultra-low-cost car plans, a decision likely driven by the market's stagnation and the need for continuity in India.
  • The development of an ultra-low-cost car by Bajaj Auto for Renault-Nissan is also facing challenges due to difficulties in sourcing parts at low costs.
  • Ford is cautious about entering the luxury space, despite the growing market in China and India, focusing on rebuilding the Lincoln brand in the near-to-medium term.
  • The company's decision to abandon the ultra-low-cost car market marks a shift towards a more premium strategy in India.

Statistics:

  • More than 50% of Figo buyers are first-timers.
  • The Tata Nano failed to achieve expected volumes.
  • The ultra-low-cost car market is experiencing stagnation.
  • Ford plans to invest in rebuilding the Lincoln brand.
  • The worldwide market for ultra-low cost cars failed to meet Toyota expectations of achieving progressive market share in 2013.

Sources:

  • Diligent Media Corporation Ltd., DNA (Daily News & Analysis) - Article "Ford ditches ultra-low-cost car plans in India, no luxury play in the near term"