We sat down for an evening round table discussion with Mr. Nigel E. Wark, Executive Director (Marketing, Sales & Service), Ford India and Ms. Deeptie Sethi, Head of Communications, Ford India. The agenda was to discuss the launch of the 2012 Ford Fiesta line-up and the Ford Fiesta Powership Automatic. As we wound our way through an extensive two hour rundown on Ford’s operations in India, what came through very clearly was their commitment to the Indian market.
Ford is expecting an overall 10-12% growth for the industry in FY 2013. Whilst this is less than what they were hoping for, we believe that it broadly reflects the trends in the market and the difficulties that manufacturers are facing given the result government policies and the depreciating Rupee. June was a relatively good month for Ford with people advancing buying plans due to a fear of higher diesel taxes. Even so, June 2012 sales were roughly the same as June 2011.
The difference between a good and great market is primarily the confidence levels of buyers in the economy. Growth in sales is directly proportion to growing income levels i.e., the addition of new buyers in a segment rather than existing car owners buying more cars. The lack of general confidence in the economy is hurting as new buyers hold back their purchases. The depreciating Rupee is not making things easier for manufacturers as the market is not willing to take price increases especially for petrol cars. Something has to give as imports costs are rising and holding prices steady is not sustainable.
Ford expects the Indian car market to hit 5 million vehicles by 2015 and 9 million vehicles by 2020. These figures include sales of both passenger and commercial vehicles. A detailed breakup of past industry sales figures is available on the SIAM website. A good analysis of commercial vehicle sales is available on the ICRA website and also here.
Ford is in the midst of investing an incremental US$1 billion in Sanand, Gujarat by 2014 to hit a total India manufacturing capacity of 440,000 cars and 610,000 engines. India has also been designated a small car centre of excellence with Ford India currently exporting the Figo to 35 countries with plans to increase that to 50 countries in the near future.
Development of the used car market is an important area for Ford. In the more mature markets, used car sales can be twice the number of new car sales. In India, the infrastructure is still developing and most used car sales are informal i.e. outside the official dealer network. Ford has 5 dealers today which are a part of their certified used car sales program and they plan to take this up to 20 dealers by the end of this year.
Ford as of today has 230 sales/service/combination outlets across 123 cities in India and is on track to add approximately 30 sales and 50 service centres this calendar year. February 2012 was a big month when 46 sales and service locations were inaugurated. It takes Ford about 6 months to set up a brownfield location and about a year for a greenfield location. The ideal mix for them would be 2 service centres for every sales centre as people are willing to travel to buy a car but want a service centre close to where they live.
The ideal Ford dealer is not necessarily someone who has sold cars before but rather someone who is very focused on customer satisfaction. A dealership should ideally be able to display at least 4-5 cars and have space for 15 service bays and a body shop. As the business grows, the body shop could move to another location increasing capacity within the dealership.
Ford is intent on bringing down the cost of ownership for its vehicles. Apart from upfront purchase costs, cost of ownership is affected by the service schedule, cost of maintenance and crash repair. On this front, Ford claims to have equaled or bettered the best in its segment for the Figo. Steps it is taking to reduce cost of ownership include increasing service intervals to once a year especially as many petrol car owners don’t drive more than 10,000 kms per year. Thus people need only one service a year.
In certain locations, Ford is guaranteeing a 90 minute service centre turnaround and has also introduced 20 mobile service vans across India including in tier one cities. 24 hour service outlets could also be on the cards with the bottleneck to their introduction being the availability of skilled technicians to service the cars. Ford wants it customers to have a direct relationship with Ford and wants them to go to a Ford branded showroom. Unless third party service outlets can add significant value beyond what Ford is capable of offering i.e., a much more extensive service centre network, Ford wants to keep all servicing in-house.
On the marketing front, Ford believes that 70-90% of buyers are researching cars online before walking into a dealership. It believes that social media where live conversations are happening has a bigger influence in purchase decisions than a manufacturer website. And unlike past years when people would talk amongst themselves primarily of negative experiences, online social media has people talking about both their positive and negative experiences in a fairly balanced manner (60/40).
Ford India is allocating in excess of 10% of their media budget to digital this year as opposed to 1-2% until a few years ago. Ford expects to use both the educational and entertainment aspects of the online and mobile mediums to get the message out and bring their products to life. Mobile is increasingly becoming more important and Ford is experimenting with being able to service customer expectations of two way interactive communication instantaneously rather than with a 24-48 hour response time. The aim is to take advantage of mobile location services to better match dealers to customers on both the sales and the service side. Ford does not differentiate between a brand only activity and a sales only activity. Everything is about the brand and the ultimate goal is to sell more cars. Ford India uses tools such as Buddy Media, Cotweet, Meltwater, Cymfony and Radian 6 to manage their social media efforts.
For our SUV fans, Nigel said that the EcoSport will be launched “On Time”. That made us smile. Talk about being non-committal, ha! He was gung-ho about the new Ford Fiesta which according to Nigel sells about 400-500 cars each month. He was especially proud of the automatic version which has better fuel mileage than even the manual version (16.97 kms/litre versus 16.95 kms/litre). We closed the round table session with Nigel driving us round the block whilst demoing the voice activated features of the Fiesta. Watch out R2-D2…
See our Ford events section for more round table photos and keep an eye out for our detailed Fiesta test drive report.