Ford Motor Co. on Tuesday said that it will invest $195 million (Rs1,300 crore) in Chennai to build a global technology and business centre that will serve as a hub for product development, mobility solutions and business services for India and other markets around the world.
The centre will also house the company’s largest information technology organization outside of the company’s global headquarters. Mint had in October 2015 first reported about Ford’s plans to set up a global technology and business centre in India.
“India is not only a vibrant market for cars and new mobility ideas, it also is rich with talent, technical expertise and ingenuity,” executive chairman Bill Ford said in a statement. “This new center will help us attract the best and brightest, and make Chennai a true hub of innovation for Ford around the world.”
Once it gets completed in 2019, the centre will become Ford’s third global product development centre in Asia Pacific and part of Ford’s global product development network.
“It also will feature a wide range of laboratories and testing facilities for both full vehicles and components, enabling Ford to conduct extensive testing of future vehicles in India,” the company said in a statement.
However, Tuesday’s announcement is unlikely to help Ford’s India operations immediately and the focus will be more on feeding into the Detroit-based company’s global operations.
Ford in India continues to struggle even after being present in the country for more than 20 years, in which the Indian market has changed drastically.
In the six years between 2010-11 and 2015-16, the American car maker’s annual sales in India have grown only twice.
Sales reached the highest at 98,537 units in 2010-11 because of the success of the Figo but they declined to 92,665 units and 77,225 units in 2011-12 and 2012-13, respectively.
Sales grew in 2013-14 and fell in 2014-15 only to rise again in 2015-16, albeit on a smaller base.
During the same period, the Indian passenger vehicle market expanded from 2.52 million units to 2.78 million.
In recent times, the company’s second generation Figo failed to receive the kind of response that the previous one did. Ford did create a new compact SUV segment with the EcoSport, but it failed to capitalize on the first-mover advantage. The segment is now dominated by market leader Maruti Suzuki India Ltd and Hyundai Motor India Ltd.
Ford, along with Volkswagen India Pvt. Ltd, was the last one to enter the sub-four-metre sedan category but demand in the segment has waned, which meant lukewarm response for the American car maker’s Figo Aspire.
In pursuit of making its business sustainable, the company has changed tack and shifted focus to exports, which grew 41.37% to 55,821 units between April and September.
India’s overall car exports grew 3.89% to 319,579 units.
In the new centre in Chennai, the company will hire 3,000 skilled workers over the next five years.
“Ford also will consolidate 9,000 employees from six existing facilities in Chennai on the 28-acre campus,” the company said in a statement.
Ford has invested over $2 billion in India to set up two plants, one each in Chennai and Sanand in Gujarat. Together, these plants have the capacity to make 610,000 engines and 440,000 passenger vehicles a year.