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September 24, 2009

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Small is beautiful for Ford in India

THE Ford Motor Co is to start production of a small car in India early next year, and its chief executive said the United States market was showing signs of recovery and he expected industry sales to rise in the next two years.

The No. 2 US auto maker is focusing on small cars, which it feels will increasingly drive sales, and chief executive Alan Mulally said the fast-growing Asia Pacific market will play a bigger role in Ford's global sales.

"We expect the small car segment will double in the next 10 years," he said at the launch of the Figo in the Indian capital of New Delhi.

"When you look at vehicle size, about 60 percent of the vehicles worldwide would be smaller vehicles like the new vehicle here."

The company did not disclose the Figo's price, but Mulally said Ford was not looking to directly compete with Tata Motor's Nano, the world's cheapest car at around US$2,000 which hit Indian roads earlier this year. "Right now we are going to focus on the larger portion of the market, which is the B size."

Ford will make the Figo at a plant in the southern Indian city of Chennai, which it plans to make a global production hub. The company is investing US$500 million in the plant, which will have an annual capacity of 200,000 cars.

India's domestic auto market is relatively small, especially considering its population of more than 1.1 billion, with about 1.5 million passenger vehicles sold last year.

It is, however, a fast-growing market, even in a global auto downturn. For the first four months of the 2009/10 fiscal year (April-March), domestic car sales rose nearly 10 percent from a year earlier.

US auto sales fell to monthly rates not seen since the early 1980s earlier this year, though some rebound was seen in July and August.

Mulally said there were signs of recovery and a sales pick-up was expected in coming years. Ford expects total US industry sales of about 11 million in 2009, rising to 12.5 million in 2010 and to about 14.5 million in 2011.


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