Singapore: Dearborn, Michigan-based Ford Motor Co., having lost its 76-year ranking as the second largest car maker in the US, will spend $500 million (Rs1,965 crore) in India as it seeks growth in emerging markets.
Ford will begin selling a small car in two years and set up an engine factory with a capacity to make 250,000 units a year by 2010, the car maker said in an emailed statement. The company will also make diesel engines at its Chennai plant by April for its Fiesta and Fusion models.
The auto maker is turning to Asian countries, such as China and Thailand, to boost sales after losing its position as the second largest car maker in the US to Toyota Motor Corp.
Economic growth and rising incomes are making autos affordable to more people in India, where sales may triple by 2015, according to government estimates.
“India is a growth market and lots of investments will pour in,” said R.K. Gupta, who manages $150 million of stocks as the chief investment officer of Creditcapital Asset Management Co. Ltd in New Delhi. “India will be a focus for automobile companies for the next decade as there is a big boom here and sales are pretty dull in the developed markets.”
Suzuki Motor Corp., General Motors Corp. and other car makers plan to spend a combined $6 billion in India by 2012.
India’s economy has expanded at an average annual rate of 8.6% since 2003, trailing only China among major economies.
Ford, in talks to sell its Jaguar and Land Rover units to Tata Motors Ltd after a record $12.6 billion loss in 2006, will expand auto-making capacity at its plant in Chennai to 200,000 units per annum.
In addition, Ford’s Volvo Car Corp. unit plans to sell 500 vehicles in India this year as economic growth lifts demand for luxury automobiles.
Shailendra Bhatnagar in New Delhi contributed to this story.