Ford Motor Company (NYSE:F) announced profits of about $ 72 million for its India’s business compared to a loss of approximately $71 million in the previous fiscal year. The company last reported profits in 2009 but the competitive India’s automobile market has not been in favor of the giant US carmaker for close to a decade.
The country’s automobile market is largely dominated by Maruti Suzuki, a subsidiary of the Japanese Suzuki Motor Corporation selling one of every two vehicles in India’s highways. With a market dominion of seventeen vehicles, Hyundai Motor Company comes in at the second place.
American and European car manufacturers have struggled to score a market share of as little as 3% individually prompting some like America’s leading car manufacture General Motors to call it quits in the country.
Ford on the other hand, refused to exit the heavily contested market and devised a 5-year strategy in China that will see the company break even. The grand plan dubbed Emerging Market Operating Model (EMOM) is a sharp deviation from One Ford plan devised by the company’s former Alan Mulally which saved it from the Global economic depression of 2008.
Through EMOM, the company’s management looks to save costs of up to 40% about $11 billion. Ford will build cars locally and partner with local manufactures to make market-driven automobiles. Indian’s are relatively price-sensitive buyers; Maruti and Hyundai grasped this earlier and adjusted. The companies produce a variety of vehicles that are cost effective and tailored to meet buyers’ needs. Their rich dealership networks also give them an upper hand over competitions.
Ford is already partnering with local manufacturer Mahindra and Mahindra to develop new models that utilizes the electric vehicle technology. Two years down the line and the EMOM is already paying off. When the plan working in India proves desirable in the long run, Ford will roll out the plan to its other operations especially its China arm that has been struggling in the past quarters.
“We’re certainly concentrating on India right now, but there’s all kinds of opportunity beyond India together should we both want to explore that,” Ford’s President of Global operations, Joe Hinrichs.
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