NEW DELHI (Reuters) – Ford Motor Co made a profit in India for the first time in a decade in the last fiscal year, signaling that a strategy conceived two years ago by the U.S. car manufacturer for one of the world’s most competitive car markets is starting to show some success.
Under an initiative called the Emerging Market Operating Model (EMOM), Ford cut manufacturing costs by 40 percent and is developing more vehicles locally as it moves away from its “One Ford” plan, which restricted its ability to be cost-competitive and agile in a fast-growing market, Ford executives and industry sources told Reuters.
EMOM - North - Star - Turnaround - Ford
“EMOM is the North Star for the turnaround at Ford in India,” Anurag Mehrotra, managing director of Ford’s India unit, said in an interview.
It’s early days yet, and Ford still accounts for less than 3 percent of total passenger vehicle sales in India, where analysts say it’s tough for auto manufacturers to make money.
Way - India - Market - Kaushik - Madhavan
“They are still a long way away till they can call India a successful market,” said Kaushik Madhavan, vice president, mobility at consultant Frost & Sullivan.
A key factor for Ford India will be how it leverages its partnership with local automaker Mahindra & Mahindra, he said.
Part - EMOM - Ford - Ties - Mahindra
As part of EMOM, Ford is deepening ties with Mahindra to build passenger vehicles in India, which could also involve sales in other emerging markets.
Over the past two decades, Ford has invested $2 billion in India, which has become a major growth area for car manufacturers. Car sales rose 8 percent to 3.3 million last year and India is set to become the world’s third-largest market by 2020 with sales of over 5 million cars, according to consultant IHS Markit.
Car - Companies - India - Buyers - Pressure
But global car companies have mostly struggled to woo India’s cost-conscious buyers and are now under pressure from investors to focus...
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