In an exclusive interview with Hormazd Sorabjee, the president and CEO of Ford Motor Company reveals the key role India will play in the carmaker's future growth strategy.
Has the recession in your traditional US and European markets made you focus on high growth markets like ours?
No, it's not the recession at all. What it really comes down to is the new Ford strategy. Traditionally we had individual set-ups in each country but over time they stopped communicating with each other. When I arrived three years ago, it was clear to me that if we are going to compete as a global company against the best in the world, we needed to act like a global company. That is where our ‘One Ford’ strategy came from and this is why the launch of the Figo here is so important, because it is about leveraging our assets and intellectual capability worldwide and then bringing the vehicle to market for our customers. In the case of India, we have a good foundation but we have clearly been focussed on the bigger markets, especially America and Europe. Going forward, a third of the global car market will be in the Asia-Pacific region. So, as a global player, we need to serve this emerging market as well. The Figo is positioned where it needs to be, right where the maximum volumes are. Also, it is the first of many new vehicles that we are going to launch here.
What role do you see India playing in the development of new small cars for Ford worldwide?
We make small cars all around the world but since we were very regionalised we could never get the value of scale. The way to move ahead is to get our supply base and product strategies aligned. The Figo is another example of a new Ford that’s going to have a full product line but we’re going to be very focussed on small, medium and large vehicles. We can then use our global scale to line up suppliers and get the very best scale economies. We have a great operation here in India and it is a key part of our global product development system. But at the end of the day, it’s about design that can be made quite efficiently and features that people really want. It is also about getting the scale and labour right, which is always an important piece of the operation. But the critical thing is to ensure that a design is cost-effective on a global scale.
India does not seem to be as important to Ford as it is to others who are making the country their global small car production hub?
Look at what we are doing now. We are doubling our production capacity here to 200,000 cars and 250,000 engines. In terms of design, we have designers here working with their counterparts in Europe, America and other key areas worldwide. We have a worldwide team to develop small cars and India is going to play a very big part in this process. That is because our guys know what the Indian customer really wants and that is where it all starts. It’s about understanding what Indian customers value in a car and getting that included in the design of the car. What are the compulsions of having the same car for all your global markets?One of the things that is really causing this trend is that the requirements from a car have started to become more common across the world. All our customers are dealing with issues like the cost of energy, safety, fuel efficiency and value for money. If you look at the total global vehicle market, about 60 percent of it will be smaller vehicles. An additional 25 percent will be medium-sized vehicles and 15 percent will be large vehicles. When customer requirements come together like that, it helps us to increase the scale of our operations.
Where does India figure in the One Ford plan?
Also, can we expect the same car that you sell in Europe or North America to come here as well?What we really want is to get the majority of the car to be the same around the world. We know what the customer wants and we’re continually updating that information. We feed that into the development system to make sure that the uniqueness that Indians want is provided by us in our new models. We will use our scale to ensure that the majority of the car is the same in areas where the customer does not see value. That’s how you get the value add by using common parts. On some of these new vehicles and platforms, about 75 to 85 percent of all parts will be the same. And the rest will be customised so we get the best of both worlds. The Figo has emerged from our One Ford plan and our Indian operations are lined up with Ford worldwide.
Your B-platform has a number of cars which are an obvious choice for this market.
Absolutely and I have said earlier that the future goes to India. The new commitment from Ford is that we are going to serve every market with a family of vehicles. That is what is different today and that’s where Ford can add value. We really do believe in the Indian market, it's going to be the fastest growing market for us.
Will you be bringing in advanced powertrain technology to India?
All of our new powertrain technologies will be available for the Indian market. The key is to package them in a way that makes sense to the Indian customer. You will see improvements in our internal combustion engines, plus materials in the car and the use of new alloys whether they are steel or aluminium. Also, over time, we will have hybrids and electric vehicles coming into India. I think the biggest opportunity with these advanced technologies is going to be the infrastructure. It will be built from a partnership between governments and the automobile industry. Every country is going to do it at a different pace and so we are going to partner with every country around the world and bring in the vehicles that make sense for them.
Will the One Ford strategy deliver cost savings to customers as well?
We are leveraging our assets and capability around the world. But we also operate regionally and our suppliers and designs are regional. When our vehicles come together and upto 85 percent of the parts are the same, we can bring the scale and cost benefits right to the consumer. For example, when production moves from say 50,000 units to three million units worldwide and the supply base, design and assembly are aligned, just think of the value proposition for everybody.
What about your future model plans?
I can say that we will move to a broader portfolio of products in India because that is what the company is doing globally. Our strength is that we have a complete family including large cars, utility vehicles and trucks. So we’re going to bring that to the Indian customer. You will see lots of variations on our B-platform and more entry level cars.
Was the decision to sell Jaguar Land Rover to Tata Motors a financial or strategic one?
This was not a financial decision. It was part of our strategy to focus on the Ford brand. We decided three years ago that we would have a laser focus on the Ford brand, so that we would have a complete family of Ford vehicles. After all, that is 85 to 90 percent of our total business and we want to be world class on every Ford vehicle. You can’t be world class on six or seven different brands, so we moved from a house of brands to a focus on Ford.
Any advice for Mr Tata?
Just to keep the focus on the customers of the brands he has bought, because they are fabulous brands.
What future investments are you looking at beyond the current $500 million?
We believe that if we supply Indian customers with the vehicles that they want, then we will grow the business going forward. We will keep investing as the business grows over here.
Since you were with Boeing earlier, what are the similarities between the aerospace and automotive industries?
There are way more similarities between automobiles and aircraft than there are differences. In both cases when you start designing the product, you are really looking at the end user. Also, you need to have a clear view about the future in terms of quality, fuel efficiency, safety and value. Everything you put into both these products should meet these objectives. The enabling technology is exactly the same, whether it is the powertrain, materials or electronics. On the new vehicles from Ford we will also have integrated phased array antennas. These can help drivers look to the side; so if they are pulling out of a parking spot, then this system can help them look two or three cars down to see what those cars are doing. Basically, it is all about blind spot monitoring. Other similarities include the electronics for hands-free voice-activated calling, the safety features, braking and electronic signalling. All of this is exactly the same because cars and airplanes are both very sophisticated vehicles.
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