Is Ford Ready to Take Its Success Global?

The Cheat Sheet

On a visit to the southern Indian city Chennai, Monday, Alan Mulally, chief executive officer of Ford Motor Co (NYSE:F), made some important forecasts, Reuters reports.

View photo

.
Ford EcoSport

Consumers should expect to see more Ford vehicles exported from India, such as the EcoSport compact crossover, that is expected to be launched from Chennai in late 2013 for the European market.

The U.S. automaker is shifting its energy overseas where it is working to streamline efforts, accelerate product development, and cut costs by using global platforms. Its goal this year is to build more than 85 percent of its volume using these nine global platforms.

NEW! Discover a new stock idea each week for less than the cost of 1 trade. CLICK HERE for your Weekly Stock Cheat Sheets NOW!

It doesn’t come as much of a surprise that Ford its concentrating efforts in India, as the country’s auto market shows great promise for growth and is attracting more and more carmakers.  The country is expecting to see a growth of 3.76 million vehicles over the next ten years — something General Motors Co. (NYSE:GM) has also caught onto. GM has already announced plans to introduce new models in the region with Chinese partner SAIC Motor Corp.

Although Ford anticipates great growth figures for the region, it also will need to anticipate different drawbacks that will add to the difficulty of realizing the automaker’s full success there. One of these reasons includes hypercompetitiveness, as Ford not only competes heavily with GM in the region, but also with Suzuki and Hyundai who hold 54 percent of its new-car sales. What these two competitors have proven, however, is that major market share doesn’t necessarily translate to major profits, and, Ford, along with GM, must work to produce vehicles that cater directly to their Indian consumers if it wants to turn our larger profit margins.

Ford is also beefing up production in the Asia-Pacific, and expects the region to be responsible for 40 percent of the automaker’s vehicle sales in four to five years. This is certainly not new news for the automaker, which said back in October that it was working to meet increased demand in Asia-Pacific markets. It is in the midst of constructing new factories and cutting deals in the region that demonstrate Ford’s commitment to being in the market long term.

NEW! Discover a new stock idea each week for less than the cost of 1 trade. CLICK HERE for your Weekly Stock Cheat Sheets NOW!

Joe Hinrichs, group vice president and president-Asia/Pacific and Africa, told WardsAuto in October that the auto maker is planning to leverage its One Ford plan, which focuses on maximizing its global resources and leveraging global assets, to facilitate growth in the region. He explains: “In Asia/Pacific and Africa, as we have (already) outlined, we expect steady increases in the next year and for the next decade. The demand for world-class products is increasing in this part of the world and, as we do around the world, we will continue aligning capacity with demand. For APA, that means adding a significant amount of capacity the next several years.”

Will Supply Chain Issues Ruin Auto Industry’s Resurgence?

 

More Stories Recommended for You:

View Comments (0)