Ford to Make India a Global Auto Manufacturing Hub
Jul. 24 – American automotive manufacturer Ford have announced plans to make India a central platform for their global vehicle production. The companies so-called “Project B562” will see the company move production facilities to its plant at Sanand, Gujarat, and commence manufacturing of three different vehicles from 2014. These cars will include a small hatchback, a new regular hatchback (replacing the Figo) and a mid-sized sedan to replace the Fiesta model.
Ford’s Global CEO, Alan Mulally, has been noted as previously saying that auto sales were down in the United States and Europe. India is currently the world’s sixth largest auto market and is set to become the third largest by 2020.
Of the planned India production, Ford expects to roll out 200,000 vehicles from 2015 (of which 50-60 percent are expected to be exported). The Indian facility is to be developed to turn out some 2 million vehicles per annum. Indian analysts have said that Ford’s move to India will support its global pricing strategy.
Mulally has also stated that Ford have moved decisively to enable them the ability to offer products to consumers which are affordable, as they now possess the scale of dynamics and volumes. Furthermore, the B562 project will enable them to tailor each vehicle for different tastes around the world.
Ford’s announcement marks them out as being ahead of the curve. India is now becoming a corporate game changer as foreign investment caps into numerous industries have been lifted allowing global businesses to fast track profitability against manufacturing investment in much the same way as China did before it.
Added to this, the Indian government has shrewdly announced luxury tax impositions on many imported products – including automotive. Ford have grasped the concept that to reach what is fast becoming one of the world’s largest consumer markets, positioning their manufacturing in India allows for both penetration in India’s domestic market and export driven manufacturing for the rest of the world.
Dezan Shira & Associates is a specialist foreign direct investment practice, providing corporate establishment, business advisory, tax advisory and compliance, accounting, payroll, due diligence and financial review services to multinationals investing in emerging Asia. Since its establishment in 1992, the firm has grown into one of Asia’s most versatile full-service consultancies with operational offices across China, Hong Kong, India, Singapore and Vietnam as well as liaison offices in Italy and the United States.
You can stay up to date with the latest business and investment trends across India by subscribing to Asia Briefing’s complimentary update service featuring news, commentary, guides, and multimedia resources.