Ahmedabad/New Delhi: Ford India Pvt. Ltd, the local arm of Michigan-based Ford Motor Co., will set up its second manufacturing facility either at Chakan near Pune or Sanand in Gujarat, according to five persons familiar with the development. None of them was willing to be named.
The company will take a call on the location at its board meeting later this week.
Ford’s existing manufacturing unit in Tamil Nadu has a capacity to produce 200,000 units a year.
The company is likely to invest at least Rs 5,000 crore in the greenfield facility that will have an initial capacity of 300,000 units annually.
Ford plans to launch eight new models by 2015 and the new plant will help the company meet local demand as well as export cars to neighbouring countries.
Labour problems are rampant in the Chennai automobile belt and experts say a unit in western India will not only help the company derisk itself against any production stoppage but also allow it to meet demand from northern and western India better.
These two regions account for almost two-thirds of car sales in the country, said Puneet Gupta, analyst at market research and sales forecasting firm IHS.
“The company has been in talks with several states for quite sometime but now it has shortlisted Maharashtra and Gujarat, considering the supplier base in the region and labour-friendly environment,” said one of the five persons.
“In line with its long-term commitment, Ford continues to pursue an aggressive growth strategy to bring in world-class vehicles,” said a Ford India spokesperson. “As part of its plan to introduce eight new products by the middle of the decade, Ford is significantly expanding its capacities in its existing facility in Tamil Nadu as well as exploring other options to meet the growing demand of consumers in India and export markets across the world.”
“We have already invested $600 million in India and going forward the investments will be significant,” said Nigel E. Wark, executive director, marketing, sales and service, Ford India. He declined to give details.
Ford officials have conveyed to the two state governments that they will finalize the location when the board meets later this week.
In Gujarat, Ford officials surveyed three sites—Halol, where General Motors India has its facility; Dholera, a greenfield city being developed as part of the ambitious Delhi-Mumbai Industrial Corridor; and Sanand.
“They (Ford officials) have met us at least three times in the last two months. They have zeroed in on Sanand. However, they will get back to us after their board meets,” said a senior Gujarat government official, who did not want to be identified.
The state government has offered 400 acres of land at Sanand for the factory and another 100 acres for ancillary units.
Sanand shot into the limelight in 2008 when Tata Motors Ltd, India’s largest vehicle manufacturer, decided to shift its Nano project there, after it was forced to abandon a site in Singur in West Bengal because of protests over land acquisition. Since then, the government has been trying to hardsell Sanand as an auto and engineering destination.
Recently, Maruti Suzuki India Ltd said it was exploring the area for its new manufacturing plant with a capacity to roll out one million cars a year in the first phase for an investment of Rs 6,000 crore.
If Ford does not come to Sanand and instead decides to set up the plant at Chakan, it will be one of the biggest investments by an auto firm in the region.
After Maharashtra announced the mega project policy in 2006, the Chakan-Talegaon-Ranjangaon belt around Pune attracted at least Rs 10,000 crore worth of investments and Maharashtra wooed big names such as Volkswagen, General Motors, Mahindra and Mahindra Ltd, Tata Motors and Fiat India.
Kshatrapati Shivaji, chief executive officer, Maharashtra Industrial Development Corp., refused to comment for the story.
In Maharashtra, Ford has been shown a 400-acre plot near Chakan.
So far, Mahindra and Mahindra has invested Rs 5,000 crore in phases and Volkswagen has invested Rs 3,500 crore at its Chakan plant.
Ford, which so far has remained on the fringes of the Indian auto market, tasted success last year with its locally developed small car Figo. Till May, it has sold at least 100,000 Figos produced at its Tamil Nadu facility.
Ford began exporting the Figo to South Africa in May last year and to Mexico in April this year. It plans to start exports to other markets including West Asia and North Africa.
“This step (new plant) should be seen in this context. They want to have a plant to primarily focus on export needs,” said one of the persons cited earlier in the story.
According to Gupta of IHS, to be able to get a sizeable 5%-plus share in the passenger car market, which is expected to expand to at least six million by 2017, it’s only logical for Ford to set up another facility.
“It also shows how serious they are about the Indian market. The success of the Figo has given them confidence,” he added.
Makarand Gadgil contributed to this story.