Ford Asia Pacific and the Roman Coliseum: The Indian Auto Market

Ford Asia Pacific, a major player in the fierce battlefield that is the Indian auto market, signed a memorandum of understanding with the Indian Government to build a new manufacturing plant in the Western State of Gujarat.  This plant, intended to house assembly operations as well as to produce engines, will become Ford Asia Pacific’s second plant within India.  This is an important investment as India is currently the second fastest growing domestic auto market in the world.  India also serves as a major export hub; in 2009, India was Asia’s fourth largest passenger automobile exporter.

The new manufacturing plant, expected to be fully operational by 2014, is projected to manufacture approximately 270,000 engines and 240,000 automobiles annually.   This move fits Ford’s overall goal of increasing sales around the world by 50% over the next four years.  Further, the company has begun to shift the bulk of its focus away from the US market and towards Asia Pacific.  Though the US still represents its core strategy, Ford Asia Pacific is now becoming a key strategic component.

The intensity of the competition and the stakes involved is quickly turning the Indian auto market into a veritable win-or-die clash.  However, as GM has seen with the sales its Chevrolet autos in India, the Indian auto market is truly unique.  This one-of-a-kind auto market is driven by fuel efficiency and the use of alternative fuels, both of which are subordinate to affordability as the most important factor.  The Indian auto market also favors much smaller vehicle than most other countries. 

GM made the mistake of applying a generic strategy to all of the BRIC auto markets (Brazil, Russia, India, and China).  And though GM by now has altered its approach, precious time has been lost.  Ford Asia Pacific, however, has been operating within India since 1998 and built incredibly powerful brand awareness within the market.  More than simply being present within the market, Ford Asia Pacific has tailored its approach to India’s auto market preferences. 

Ford Asia Pacific also plans to utilize its new Indian manufacturing plant as a base for exports for the entire region.  This will become vitally important as Ford Asia Pacific plans to introduce 50 new models to the region by 2016.  Ford is also projecting that more than 50% of its total global sales will come from the Asia Pacific region.

The Indian auto market, perhaps the most competitive in the world, is growing extremely rapidly and is projected to become the world’s largest domestic market by the middle of the century.  Ford Asia Pacific has made clear that it will become a major player in this gladiatorial contest, and will devote a large amount of resources to dominate the market.  Ford Asia Pacific, led by its captainJoe Hinrichs, is poised to become the most successful foreign automaker within India.