Ford Motor Company was trailing in sales in the Indian market as it did not have a presence in the high-volume small car segment that dominated the Indian passenger vehicle market. To gain market share, Ford India developed the Ford Figo, its first small car, targeting young buyers. The Figo offered more features than competitors at similar price points. However, launching the Figo in the competitive small car market posed challenges for Ford's marketing and sales strategy in India.
Ford Motor Company was trailing in sales in the Indian market as it did not have a presence in the high-volume small car segment that dominated the Indian passenger vehicle market. To gain market share, Ford India developed the Ford Figo, its first small car, targeting young buyers. The Figo offered more features than competitors at similar price points. However, launching the Figo in the competitive small car market posed challenges for Ford's marketing and sales strategy in India.
Ford Motor Company was trailing in sales in the Indian market as it did not have a presence in the high-volume small car segment that dominated the Indian passenger vehicle market. To gain market share, Ford India developed the Ford Figo, its first small car, targeting young buyers. The Figo offered more features than competitors at similar price points. However, launching the Figo in the competitive small car market posed challenges for Ford's marketing and sales strategy in India.
Ford Motor Company was trailing in sales in the Indian market as it did not have a presence in the high-volume small car segment that dominated the Indian passenger vehicle market. To gain market share, Ford India developed the Ford Figo, its first small car, targeting young buyers. The Figo offered more features than competitors at similar price points. However, launching the Figo in the competitive small car market posed challenges for Ford's marketing and sales strategy in India.
Ford Motor Company in India: Developing the Ford Figo This case was written by R Muthukumar, under the direction of Debapratim Purkayastha, IBS Hyderabad. It was compiled from field research, and is intended to be used as a basis for class discussion rather than to illustrate either effective or ineffective handling of a management situation.
2012, IBS Center for Management Research. All rights reserved. To order copies, call +91-08417-236667/68 or write to IBS Center for Management Research (ICMR), IFHE Campus, Donthanapally, Sankarapally Road, Hyderabad 501 504, Andhra Pradesh, India or email: info@icmrindia.org www.icmrindia.org
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MKTG/299 Ford Motor Company in India: Developing the Ford Figo Ford Motor Company (Ford), one of the global leaders in the automotive industry found itself trailing in terms of sales volumes in the Asian region, especially India since its inception. Though it had entered the Indian auto market in 1995 and introduced mid-sized car models that were doing well in respective niche segments, its sales growth had not kept pace with the growth in the market. Unlike the US market, the Indian market for passenger cars was dominated by small cars and Ford India was not present in that segment. To capture a significant share of this high-volume, high-growth segment of small cars, many companies both multinational and Indian were gearing up with new product launches. Ford realized that a strategic decision was required through its wholly-owned subsidiary Ford India Pvt. Ltd (Ford India) for the Indian market. Ford India undertook marketing and consumer research to understand the Indian customer and to find a potential target customer for its new products. Based on the research findings, Ford India started developing the Ford Figo in partnership with global and regional Product Development teams.. By the end of 2009, the team at Ford had developed its first small car through which Ford sought to gain a foothold in the emerging Asia Pacific and Africa markets. i The Figo was targeted at the growing market of young buyers in India. The company felt that it had done a good job of understanding the pulse of the market, the consumer mindset and was ready with a product that would appeal to the target segment. According to the company, Figo offered more features, interior space, technology and durability than other vehicles in the same price range. ii Ford Motor Companys President and CEO Alan Mulally (Mulally) said, We are confident the Ford Figo will be a product that Indian consumers really want and value. iii However, the challenge before the team was how to launch this new car in the highly competitive Indian small car market and how to market Figo in a way that it would appeal to the target segment. THE SMALL CARS SEGMENT OF THE PASSENGER VEHICLE MARKET IN INDIA According to the Society of Indian Automobile Manufacturers 1 (SIAM), passenger cars were classified on the basis of length into mini (</=3,400mm), compact (3,400-4,000mm), mid-size (4,001-4,500mm), executive (4,501-4,700mm), premium (4,701-5,000mm) and luxury (>5,000mm). Earlier cars were classified on the basis of price into segments A (< Rs 2 .300,000), B (Rs. 300,000-500,000), C (Rs. 500,000- Rs. 1 million), D (Rs. 1 million - Rs. 2.5 million) and E (> Rs. 2.5 million). Multi Utility Vehicles (MUVs) were classified on the basis of seating capacity seven, nine, and 13-seaters. iv
(Refer to Exhibit I for details on classification of passenger vehicles as per SIAM) As of 2010, passenger vehicle sales contributed to 16% of the total automobile sales in India. v
Passenger vehicle sales had shown an increasing trend in the 2000s. India was the seventh largest producer of passenger cars in the world, as of December 2010 with sales of 1.95 million units. vi
Maruti Suzuki, Hyundai Motor India Ltd. (HMIL) 3 , and Tata Motors Ltd. (Tata Motors) 4 were the
1 SIAM, New Delhi, was a representative body of the automotive industry in India. 2 Rs.= Indian rupees. As of mid 2011, US$1 was approximately equal to Rs. 44.89. 3 It is the Indian subsidiary of Hyundai Motor Company, Seoul, South Korea. It manufactures passenger cars for the domestic market in India and also exports cars to other countries from India. 4 Headquartered at Mumbai, Tata Motors is one of the leading automakers of India. It manufactured passenger cars, multipurpose vehicles, utility vehicles, and trucks. Ford Motor Company in India: Developing the Ford Figo
2 dominant players with a combined share of more than two-thirds of the total sales of passenger cars vii (Refer to Exhibit II for details on various manufacturers of passenger vehicles in India). In India small cars accounted for more than 70% of the total cars sold in the country and the country was the largest manufacturer of small cars in the world. viii Small cars - mini and compact accounted for the sales of around 900,000 cars in India in 2009. With annual sales forecast to grow to 3.0 million units by 2016, global automakers started moving to introduce small cars in the country. ix (Refer to Exhibit III for market shares of various segments in annual sales of passenger cars in India; Refer to Exhibit IV for details on features of small cars from leading producers). Being the largest segment, the small-car segment witnessed the highest new car launches i.e. 11 new launches between the three years 2007 and 2010 (of which five were launched in 2010) with major ones being the Ritz, the A-Star and the Zen Estilo (from Maruti Suzuki), the i10 and the i20 (from Hyundai), the Indica Vista (from Tata Motors), the Polo (from VW), the Etios (from Toyota), the Ford Figo, and the Chevrolet Beat. As of 2010, Maruti Suzuki was the market leader in the small cars segment, followed by HMIL and Tata Motors. x Maruti Suzuki had been selling small cars since the 1980s; HMIL and Tata Motors started selling them in the late-1990s. Understanding the potential of small cars in India, GM India entered this segment in 2007. As of 2009, it sold two models of small cars the Spark and the Aveo U-VA. As of 2010, other players in the small car segment included Fiat India Pvt. Ltd 5 , Skoda Auto India Private Ltd 6 , Honda Siel Cars India Pvt. Ltd. 7 , Volkswagen India Pvt. Ltd. 8
and Nissan India Motors Pvt. Ltd. 9 , Toyota Kirloskar Motor Pvt. Ltd. 10 , planned to step into the arena in the near future. xi
FORD IN INDIA Ford Motor Company, a global automotive industry leader based in Dearborn, Michigan, USA, manufactured or distributed automobiles across six continents. With about 201,000 employees and about 90 plants worldwide, the companys automotive brands included Ford, Lincoln, Mercury and Volvo. The company provided financial services through Ford Motor Credit Company. Established in 1995, Ford India was a wholly owned subsidiary of Ford Motor Company with more than 2,300 employees. Ford started its operations in India in 1995 as a 50/50 joint venture with Mahindra & Mahindra 11 (M&M). The company launched its first product in India The Escort (C segment sedan) in 1996 from M&Ms Nashik Plant. In 1999, the Escort platform was ceased and Ford launched Ikon from its new facility in Chennai. This was followed by the launch of Endeavour SUV in 2003, the Fusion in 2004 and the Fiesta in 2005. In March 2005, Ford bought out M&Ms 15% stake in the company.
5 It is an automobile company formed by a 50:50 joint venture between Italy-based Fiat Group Automobiles S. p. A., (Fiat) and India-based Tata Motors. Its manufacturing plant at Ranjangaon has the capacity to produce 100,000 cars annually. 6 Based at Aurangabad, it is a wholly-owned subsidiary of Skoda Auto of the Czech Republic, which manufactures passenger cars for the Indian market. 7 Headquartered at Mumbai, it is a joint venture between Japan-based Honda Motor Company, and Siel Limited, a group company of the Siddarth Shriram Group, Gurgaon. This joint venture was formed to manufacture and market Honda passenger cars in India. 8 It is the Indian subsidiary of Europe-based Volkswagen AG, a passenger cars manufacturer. 9 It is the Indian subsidiary of Japan-based Nissan Motors Company. 10 It was an automobile company formed as a joint venture between the Japan-based Toyota Motor Corporation and Indian-based Kirloskar Group. 11 It is the automotive division of one of the leading business conglomerates in India, the Mahindra Group. It manufactures multipurpose vehicles, light commercial vehicles, tractors for agriculture, and three wheelers. Ford Motor Company in India: Developing the Ford Figo
3 For the period January to December 2006, Ford India posted an overall growth of 87%. In January 2008, Ford announced plans to invest US$ 500 million to double the capacity, set up an engine plant and launch Figo. Ford India registered a 3% overall annual growth in 2009 on year-on- year sales performance, selling a total of 29,488 units in this year compared to 28,563 units sold during the previous year. Ford India did not register any significant growth in the passenger vehicle market in India (Refer to Exhibit V for Ford Indias sales compared to the total passenger vehicle sales in India). As of 2009, Ford India sold around 2,000 cars a month while the market leader Maruti Suzuki India Ltd. 12 (Maruti Suzuki) sold over 71,000 cars a month. xii According to experts, the main reason for Ford Indias low sales volume in the country was its lack of presence in the small car segment in a market which was extremely price-conscious. NEW PRODUCT DEVELOPMENT PROCESS FOR FIGO Generally, the process of new product development involved a series of stages: the generation of new ideas, screening of ideas to identify the one with the most potential success, development of the idea into a concept that could be tested on a small group of potential customers in order to design a marketing strategy around it, development of the product, test marketing and finally launch it into the market. xiii Ford India followed a unique product development process while developing Ford Figo (Refer to Exhibit VI for Fords approach to new product development). THE IDEA BEHIND THE FORD FIGO The idea for the Ford Figo came about from Ford Indias strategic plan for the future and the market research which was carried out as part of that plan. This research highlighted a number of changes occurring in the marketplace.
For instance, it found that:
Globally in the next five years, small cars would make up about 60% of all cars sold. To be successful in its business Ford wanted to become one of the major players in that segment The Target customer would be a young individual, just married probably within the last 12 months and more ambitious. He lived at home with his parents, culturally considered quite acceptable in India. He had an income of Rs. 300,000 to 400,000 (US$6,750 to US$9,000) a year. The car buyer had started becoming increasingly upwardly mobile, aspirational, reasonably well educated at university level, with an MBA/Post Graduation or beyond and he was looking to move from a motorbike to a four-wheeler. xiv He viewed quality and value for money as hygiene, and expected more security, less stress and more personality in his car. The Ford brand appealed more to the older age group and the company was in danger of losing the younger customers. Ford used these changes in the marketplace to its advantage. It set about researching and developing a car that would harness the true potential of the changing market. It wished to change the attitude of consumers toward the Ford brand and also to capture a younger generation of customers. It was against this background that the idea for the Ford Figo was born.
In September 2007, Ford identified its target customer for Figo. The research had shown that there was a growing market of young buyers, particularly among women. After listening to research, Ford decided to develop a small car specifically for India and similar markets. The company believed that the small car segment was where all the action was and, hence, would account for the
12 Based at Gurgaon, it is one of the leading automobile companies in India that manufactures passenger cars, minivans, and sports utility vehicles. Ford Motor Company in India: Developing the Ford Figo
4 bulk of its new launches one every 12 to 18 months over the next few years. xv Ford decided to position the Figo in the high volume, small-car segment. Figo would meet the changing customer needs with its attributes pricing, fun to drive, cost of ownership, interior space, technology and safety. Our market research indicated and largely confirmed to us the complexity of the Indian market. In other parts of the world people look at the features of the cars first and then the price, it is the other way around in India. Aspirational youth still live in a joint family system and seek advice from their elders on major decisions, xvi Michael Boneham (Boneham), President and Managing Director, Ford India Pvt Ltd, said.
The Figo offered a platform for Ford to enter the vehicle market, affordably without sacrificing style and comfort. According to experts, while affordability and practicality were of great importance in this segment, buyers were not willing to sacrifice on style and performance. The Figo was expected to be a perfect combination of style and affordability. xvii
The design team focused on listening to customers prior to the initial design process thus ensuring that the final design of the Figo was representative of market needs. Ford designers set out to create an attractive exterior coupled with a stylized and exquisitely crafted interior that gave generous proportions and better value for money. Creating appeal and communicating value to the customer starts with good design You want a car that reflects and makes a statement about you, xviii said Emily Lai, color and materials Design Manager for Figo. Boneham said, It is a clear shift in strategy and thinking. Finally we listened to the customer. The company had maintained that the mid-size and entry-level sedans, represented by its first launch Ikon and the subsequent Fiesta, was the segment to be present in the country, what with a growing affluent middle class. xix Ford argued that the size of the vehicle did not matter as long as the price was right and consumer saw a value equation with the offering. TURNING THE IDEA INTO REALITY The Ford Figo was designed to capture the younger generation of customers and to cater to the needs of a wider range of buyers. As such it was specifically targeted at the mid-20s age group and the emerging needs of this group. Extensive Indian market research was undertaken to identify the core needs of this target market. Ford Indias marketing team gathered 15 young men from the capital city, New Delhi, Bangalore and Lucknow, a smaller, second-tier city. Each of the men represented the core target customer of the new car. Ford believed that newly married young men, in their mid-twenties, represented the prime target for Figo (Refer to Box I for details about Target Customer for Figo). Box I Target Customer Sandeep Young, 26-27 years old, Ambitious with aspirations of moving up both socially and professionally; Newly married with no children, living with parents Likes international, established, trusted brands; Stylish and cool in his circle Technologically savvy part of online social networks / blogs First time value seeking and status driven buyer looking for o Attractive Design o Interior Spaciousness o Substantial Package o Cost of Ownership Adapted from Ford India Internal Documents Ford Motor Company in India: Developing the Ford Figo
5 To help designers, engineers and marketers understand this target, the potential customer was given a typical name. For the new Ford Figo, that target customer was named Sandeep. Ford wanted to understand what made them tick, what their lives were about, and what they wanted in a car. Rahul Gautam, Ford India brand manager described the potential target customer, Sandeep is the quintessential middle class youth. He is coming up in life and he is ambitious. He has just gotten married and he is starting to earn more, getting recognition in his job and being promoted. He wants to give attention to his family, he respects his parents and he wants to spend time with his wife, plus he aspires to do well in his job. Interestingly, he has kept his bachelor mindset. So all this leads to some stress and tension because he feels pulled in different directions and short of time. xx
He added, Hes looking for a product that offers his own, exclusive space. A place he can use to groove to his music while going to and from work, a place he can use to take his wife out safely at night, pick up relatives or friends or take the family on a weekend trip. He worries about two wheelers and accidents so the right car relieves tension for him. xxi
Fords learning through the past and the marketing research drove the product, marketing and communication decisions. This research found that the target customers:
were looking for a break from the routine liked to buy the latest vehicle but were cautious and tended not to spend beyond their means were looking for a distinctive design in a car and new styles which would help them, express their individuality. In March 2009, Ford had conducted Consumer Immersion an ethnographic workshop with target customers for top management and marketing. DESIGNING A CAR MATCHING THE NEEDS OF CUSTOMERS Ford Motor Company President and CEO Alan Mulally stated that the new Ford Figo had been designed and engineered to compete in the heart of the domestic India car market. xxii The new Ford Figo was designed to appeal to those who were more open to change, more independent minded and more willing to embrace new things. It was designed to change customers expectations of what a car in this segment should offer in terms of design, package and driving dynamics. xxiii Ford Figo Shared key elements of Fords kinetic design language with vehicles like the globally renowned Ford Focus, Ford Mondeo and the Ford Fiesta. Ford Figo featured a fresh, contemporary shape that offered a distinctive alternative to traditional brands in this segment. The design language conveyed a dynamic spirit of energy in motion. The Figo was actually designed in Australia and engineered in India. xxiv Development work was done by Fords Asia Pacific & Africa product development team in Broadmeadows, Australia, near the northern outskirts of Melbourne. The team was led by Scott Strong. Broadmeadows was the headquarters of Ford Australia while Fords Asia Pacific & Africa product developments head office was located in Bangkok, Thailand. xxv The Figo was based on the Europes Ford Fiesta xxvi . 13
When the design team for the new Figo met with the marketing team from India, the direction given to them was: We Want More. After deciding on packaging objectives that needed to be met, such as reducing the overall length of the car to suit the Indian market, the designers were given the go-ahead to apply a near-clean sheet approach to both the interior and exterior. xxvii
The Figo was compact at 3.8 meters by 1.7 meters. According to experts, this size was just right to ease its passage through the tide of bullock carts, angry taxis, handcarts, motorbikes and cows that clog (Indias) city roads. xxviii Designers ensured that despite its youthful spirit, Figo was mature and smart. Although it was small in size, it was designed to have solidness and safety. xxix
13 This should not be confused with another Ford model sold in India, also under the name Fiesta. The Indian Fiesta was also rumored to have received significant engineering input from Ford Australia. Ford Motor Company in India: Developing the Ford Figo
6 According to Scott Strong, Ford Asia Pacific and Africa (APA) design director, design teams initial concepts were well received by Indian customers and received positive feedback from research clinics. With the backing of Ford management and the Indian marketing team, the design team went to work, adding more personality to the Figo and strategically taking elements of the global Ford kinetic design philosophy and adding them to the new interior and exterior designs. The new designs were tested at a second round of customer clinics and received a good response from group of potential Figo buyers. Quality, substance and generous proportions were evident in the design of the new Ford Figo, which featured a solid stance, an invitingly large interior and a vibrant, youthful character. Its package was right-sized for the market, which was predominated by congested urban driving conditions. From its modern headlamps, grille shapes and sculpted bonnet of its distinctive face to the subtle integrated spoiler and chamfered window shape at the rear, Ford Figo was filled with kinetic design touches. These also included sculpted shapes to the body side chiseled front fenders, a comet tail undercut in the side indicators, and additional light-catching sculpting in the lower bodyside which combined to communicate the solidity, substance and protective safety of its design. The Ford Figos large side window shape was another key kinetic design feature hinting at the comfort and spaciousness awaiting occupants' front and rear. The side window graphic was executed with a blacked-out B-pillar, an elegant design touch that unified the side windows into one shape visually. With its wheels positioned at the four corners of the vehicle with minimal overhang, Ford Figos bold wheel arches signaled its agility and solidity. Beyond design, Figo had lifestyle features like Bluetooth connectivity, CD with MP3 compatibility and Aux-in port for iPod connectivity. The new Ford thus instantly connected with the energy and vitality of the buyer. DEVELOPING THE PROTOTYPE The prototype development process started with a thorough understanding of the needs and requirements of the target market. A highly advanced three-dimensional imaging computer system 14 was used to ensure that everything in the car was within reach. Variations in torso, limb size and comfort values were calculated for all human joints. As a result of this, the items like seats, seat belts, mirrors and so on, were made to suit different car drivers. In addition, Ford researched every other aspect of the car from its physical shape, color, the texture of the interior surfaces; the sound of the car and even the interior smells.
The car was made with a 1.19-litre 70 bhp petrol engine and a 1.4-litre 68 bhp diesel engine, with four variants LXI, EXI, ZXI and Titanium (Refer to Exhibit VII for Specifications of Ford Figo). Both these engines were manufactured at the companys new 250,000 capacity engine plant near Chennai. xxx Ford used the Three-Wet High-Solids paint technology, which gave a high-gloss finish with excellent depth of color, while providing durability and increased resistance to scratches and stone chips. Throughout the assembly process, error-proofing technology helped measure precision. The plant was equipped with precise part checking fixtures that allowed engineers and manufacturing technicians to verify build precision very accurately. Created with a best of the best approach, it had been benchmarked against other competitive facilities globally, as well as the existing manufacturers in the Indian market, for quality and production efficiency. xxxi Were confident that the new Ford Figo will be extremely attractive to Indian car buyers, said Boneham. xxxii
14 This is the Human-Machine Interface to ensure the driver doesnt have to reach out too much for any of the controls. Ford Motor Company in India: Developing the Ford Figo
7 PRODUCT DEVELOPMENT The Figo was developed by engineers of the Asia-Pacific in consultation with Indian Engineers. xxxiii The Ford Figo was designed with a unique personality to appeal to target buyer groups. As India was a price sensitive market, to keep the cost price under control, Ford decided to source up to 80-85% of the parts for Figo from suppliers in India. xxxiv Boneham said, This is about where you need to be in this segment to be really competitive from the material cost point of view which then gives you the opportunity to price aggressively. One of the other things that we are going to focus and which is very critical in this segment is cost of ownership. Total lifecycle cost the purchase price, which obviously people are very sensitive about, fuel economy, scheduled maintenance, parts pricing, overall competitiveness. xxxv To enable this Ford did benchmarking exercises against the key rivals on component pricing, on scheduled maintenance and fuel economy. According to the company, Figo was designed to give a fuel economy of around 15.6 km a liter and 20 km a liter for the petrol and diesel versions, respectively. xxxvi
According to the company, at Ford, Purchasing (as a department) was organizationally independent of product development and had always been a powerful force within the company. Because of the sheer volume of materials and services Ford purchased, a very slim reduction in purchasing cost could result in very significant savings. Consequently, the Purchasing team was involved closely in nearly every product decision. TESTING Before the car was launched, it was necessary to put it through a thorough test market program. Boneham said, We are running at about 160 vehicles off the line for various trials. We are doing a lot of kilometres all over India at the moment. We have gone through huge testing regimes all over the world. xxxvii The objective of this was to test the car rigorously prior to launch and provide feedback to the company.
A 3.2 kilometre testing facility was designed to provide engineers with vehicle feedback under real world conditions to evaluate vehicles for squeaks and rattles, braking performance, steering manoeuvres and wheel alignment. Straight roads, twisty roads, pavement with a variety of smooth and rough surfaces and even simulated village streets were built into the course. Once the vehicles were in regular production, they were randomly pulled from the assembly line and tested to determine if all functions were operating correctly. Designed with safety in mind, the new test facility allowed engineers to test multiple vehicles at one time and helped reduce the number of tests on public highways. The company engaged consumers through moderated clinics and through one-on-one interviews before vehicles reached market. It also used the Internet for consumer comments in auto sites, chat rooms and blogs. xxxviii
TAKING IT TO THE MARKET By the second half of 2009, the Ford Figo was ready for its launch. In September 2009, Ford revealed its Figo model in New Delhi. Alan Mulally claimed that Figo would be a game-changer for Ford India. He said, The Figo should help us make considerable gains in India, where we have had not much presence in the market till now. We do not operate on the basis of market share but on customer demand and products. xxxix Figo was to be launched in early 2010 in the price range of Rs. 349,000 to Rs 442,000 for the petrol version and Rs 447,000 to Rs 529,000 for the diesel version. xl According to Boneham, Figo offered more features, interior space, technology and durability than other vehicles at this price in the segment. xli We focused on parts and keeping their cost down. The components are built in India. This was a significant strategy to get the cost down first, so we could price-position the car right, xlii he added. Ford Motor Company in India: Developing the Ford Figo
8 Industry observers said that Figo featured a premium experience at a budget price. However they questioned whether Ford India would be able to find a gap in the small car segment to position and price the Figo effectively. In a highly price-conscious and competitive Indian small car market faced with the impending launch of new models of small cars from various global automakers, what should Ford India do to market its Figo? The team at Ford also saw it as a very big challenge as the company really needed to make its presence felt as it was one of the first multinational automotive company to enter India, but till then, did not have an offering in the highest growing segment. How could they effectively take the Figo to the market?
9 Exhibit I Classification of Passenger Vehicles as per SIAM Segment Length Engine Size Example A1 - Mini Up to 3400 mm Upto 800 <1000cc M800, Nano A2 - Compact 3401 to 4000 mm 1000cc to <1600 cc Alto, Wagon R, Zen, i10, A-Star, Swift, i20, Palio, Indica A3 - Midsize 4001 to 4500 mm 1600cc City, Sx4, Dzire, Logan, Accent, Fiesta, Verna A4 - Executive 4501 to 4700 mm 2000cc Corolla, Civic, Optra, Octavia A5 Premium 4701 to 5000 mm 3000cc Camry, E class, Accord, Sonata, Laura, Superb A6 - Luxury Above 5000 mm 5000cc S class, 5 series B1 - Van Omni, Versa, Magic B2 MUV - Multi Utility Vehicle / MPV - Multi Purpose Vehicle Innova, Tavera, Sumo SUV Sport Utility Vehicle CRV, Vitara cc means cubic centimeter Adapted from www.siamindia.com
10 Exhibit II An Overview of Manufacturers of Passenger Vehicles in India - As of September 2009 Company Name Year of Establishment Vehicles Manufactured Models Small Car Models and their Prices (in Rs.) Hindustan Motors Ltd, New Delhi. (Collaboration with Mitsubishi Motors, Japan) 1942 Passenger cars, Sports Utility Vehicles (SUVs) Ambassador, Pajero, Lancer, Lancer Cedia, Outlander, Montero.
None Maruti Suzuki India Ltd, New Delhi. 1981 Passenger cars, SUVs. Maruti 800, Maruti Omni, Alto, Gypsy, Versa, Wagon-R, Esteem, Zen Estilo, Baleno, Vitara, Swift, A-Star, SX4, Ritz. Maruti 800 Rs 185,000 - Rs 222,000 Alto Rs 225,000 - Rs 290,000 Wagon-R Rs 330,000 - Rs 426,000 Zen Estilo Rs 312,000 - Rs 398,000 A-Star Rs 345,000 - Rs 410,000 Swift Rs 400,000 - Rs 520,000 Ritz Rs 390,000 - Rs 517,000 DaimlerChrysler India Private Ltd, Pune 1994 Passenger cars Benz C-Class, Benz E- Class, Benz S-Class, Benz SL-Class None Fiat India Private Ltd, Pune. 1997 Passenger cars Sienna, Palio Stile, Palio Stile Multijet. Petra, Uno, Linea, Grande Punto, Fiat 500 Palio Stile Rs 336,000 - Rs 444,000 Fiat 500 Rs 1,482,500 Palio Stile Multijet Rs 431,000 - Rs 470,000 Grande Punto Rs 400,000 - Rs 612,000 General Motors India Private Ltd, Vadodara. 1994 Passenger cars and Multi Purpose Vehicles (MPVs) Optra Magnum, Tavera, Vectra, Spark, Aveo, Aveo U-VA, Captiva. Spark Rs 320,000 - Rs 423,000 Aveo U-V A Rs 400,000 - Rs 497,000 Honda Siel Cars India Pvt. Ltd, Greater Noida. 1995 Passenger cars and MPVs Honda Accord, Honda CR-V, Honda City, Civic, Honda Jazz. Honda Jazz Rs 698,000
11 Company Name Year of Establishment Vehicles Manufactured Models Small Car Models and their Prices (in Rs.) Hyundai Motors India Ltd, Chennai. 1996 Passenger cars and SUVs Santro Xing, Getz, Accent, Verna, Sonata, Terracan, Tucson, i10, i20. Santro Xing Rs 264,000 - Rs 373,000 Getz Rs 360,000 - Rs 500,000 i10 Rs 332,000 - Rs 540,000 i20 Rs 480,500 - Rs 773,000 Toyota Kirloskar Motors Private Ltd, Bangalore. 1997 Passenger cars, SUVs and MPVs Innova, Corolla, Camry, Prado, Land Cruiser, Fortuner
None Skoda Auto India Private Ltd, Aurangabad. 2001 Passenger cars Superb, Laura , Octavia, Fabia
Fabia
Rs 490,093 Audi AG, 2004 Passenger cars and SUVs Audi A4, Audi A6, Audi A8, Audi TT Audi Q5 and Audi Q7, Audi R8.
None BMW India Private Ltd, Gurgaon. 2007 Passenger cars and MPVs BMW 3 Series, BMW 5 Series, BMW 6Series BMW 7 Series
None Nissan Motor Company Ltd. 2008 Passenger cars and MPVs X-Trail, Maxima. None Porsche AG 2003 Passenger cars and MPVs Boxster, Cayman, 911, Panamera, Cayenne. None Tata Motors Limited, Mumbai. 1945 Passenger cars, MPVs, Trucks. Nano, Indica, Indica Vista, Indica Xeta, Indigo, Sumo Grande, Safari
Nano Rs 115,000 - Rs 172,000 Indica V2 Rs 338,500 Indica Xeta (petrol) Rs 314,250 Indica Vista Rs 447,400 Compiled from various sources Ford Motor Company in India: Developing the Ford Figo
12 Exhibit III Market Share of Various Segments in the Annual Sales of Passenger Cars in India
Adapted from Indian Passenger Vehicle Industry: Long Term Demand Outlook Remains Robust, www.icra.in, January 2010.
13 Exhibit IV Features of Various Small Cars in India Maruti Alto Hyundai i10 Maruti Swift Tata Indica V2 Hyundai i20 GM Spark Model Petrol Petrol Petrol/Diesel Petrol/Diesel Petrol/Diesel Petrol Engine power (in bhp 15 ) 46 bhp 66 bhp 87 bhp (petrol) 75 bhp (diesel) 64-70 bhp (petrol) 53-69 bhp (diesel) 79-100 bhp (petrol) 89 bhp (diesel) 63 bhp Seating capacity 5 5 5 5 5 5 Variants 3 4 5 5 8 6 Length 3495 mm 3565 mm 3760 mm 3675 mm 3940 mm 3495 mm Torque (in Nm 16 ) 62 Nm @ 3000 rpm 99 Nm @ 2800 rpm 113 Nm @ 4500 rpm 140 Nm @ 3000 rpm 220 Nm @ 1750 rpm 90.3 Nm @ 4200 rpm Fuel efficiency (in kmpl) 17.6 12-16.3 14-18 (diesel) 12-17 (petrol) 12.2-16.6 (diesel) 10.5-14.5 (petrol) 19-22.6 (diesel) 11.3-16.1 (petrol) 12.3-16.9 Maximum speed 137 kmph 149 kmph 160 kmph 135 kmph 156 kmph 164 kmph Doors 5 5 5 5 4 5 Compiled from various sources. Contd
15 Brake horse power 16 Newton meter
14
Contd
Source: Ford Figo v/s Rivals: Comparative Specs Chart, http://motoroids.com, March 11, 2010 Ford Motor Company in India: Developing the Ford Figo
15 Exhibit V Comparison of Ford Indias Sales to Total Passenger Vehicle Sales in India
Adapted from www.automonitor.co.in
Exhibit VI Fords Approach to New Product Development It was against such a competitive and complex backdrop that Ford decided to prepare Ford India for the challenges ahead to put the company ahead of the competition. As part of a strategic plan for the future called Ford 2000 17 , Ford India started implementing a customer orientation into every aspect of Fords business operations so that every product and service delivered by the company would be designed around the specific needs and wants of its customers. UNDERSTANDING THE CUSTOMER As consumers wants and needs were constantly evolving, Ford wanted to keep track of them to remain competitive. It monitored market trends, shifting consumer interests, and social and political developments to identify issues that would affect consumers, the industry and the company. Ford had a network of internal and external experts from around the world to get a diverse, comprehensive perspective on consumer trends and how they would affect consumers future choices on vehicles and mobility. Ford used these data and analysis throughout its marketing, product development, and research and design organizations to guide future product and technology developments. Ford ensured its marketing experts used an intensive research and analysis process to understand its potential customers and their needs. Ford had a brand DNA and hypothetical target customer for each of its new brands.Apart from containing simple demographic information such as age, gender and income, Fords target customer profiles had other details such as what they liked to do, what music they would listen to, and where they shopped. This complete approach helped the product development team focus on designing a vehicle that would meet customers needs and desires. Contd
17 Previously in 1995, Ford had embarked on an ambitious restructuring plan called Ford 2000, which included merging its North American, European, and international automotive operations into a single global organization. Ford 2000 called for dramatic cost reductions to be obtained by reengineering and globalizing corporate organizations and processes. Product development activities were consolidated into five Vehicle Centers (VCs), each responsible for the development of vehicles in a particular consumer market segment (one VC was in Europe). By making processes and products globally common, Ford intended to eliminate organizational and process redundancies and realize huge economies of scale in manufacturing and purchasing. Ford Motor Company in India: Developing the Ford Figo
16 Contd In addition to product- and brand-specific market research, Ford had a team specifically dedicated to tracking shifts in social, technological, economic, environmental and political arenas. This Global Consumer Trends and Futuring team identified trends that would impact the future of consumers values, attitudes and beliefs. xliii
The team found that the trends of consumers needs included: An increasing focus on careful consumption, in which consumers had to balance their values, passions and preferences with practical purchases as the global economic recession continued Increasing desire for information and connectivity on-the-move to make the most of their time. xliv
Ford conducted market research online and in person, refining and creating new data-gathering processes that influenced product development and marketing campaigns. Christine Stasiw- Lazarchuk, Ford director of Global Market Research, said that Ford executives were truly interested in customer feedback that would help in New Product Development decisions. Gordon Platto (Platto), Ford chief designer, said, Were heavily influenced by market research. We go to customer immersion events and spend time with customers in their homes to understand how they use their vehicles. It enables us to better meet the customer needs. You can see the influence in our new vehicles. xlv
Platto added, As vehicle segments get smaller and more diverse, Ford uses market research to understand how far to push design concepts and unique features. This is done by extracting information from consumer questionnaires and by inviting customers to have open discussions with researchers in focus groups. You go to market research with an open mind to understand what the customers are looking for. xlvi
In order to refine a future niche vehicle, Market Research took few exterior and interior designs to a customer focus group to ask specific questions about participants likes and dislikes. In the next stage of the products development, the design team analyzed and interpreted the consumer feedback. By taking a disciplined approach to gathering consumer feedback, Ford gained a better understanding of consumer expectations. Compiled from various sources.
Ford Motor Company in India: Developing the Ford Figo
17 Exhibit VII Specifications of Ford Figo Vehicle Summary Name: Figo Lxi Car Body Type: Hatchback Top Speed: 160 Fuel Consumption: Highway 15.00 kmpl. Fuel Consumption: City 12.00 kmpl. Engine Specifications Engine Type: Petrol Maximum Power: 70 Bhp @ 6250 rpm Maximum Torque: 102 Nm @ 4000 rpm Dimensions Length: 3795 mm Width: 1680 mm Height: 1427 mm Other Specifications Seating Capacity: 5 Steering: Power Brakes: Front Disk, Rear Drum Gears: 5 Manual Fuel Tank: 45.00 Compiled from various sources Few Images of Ford Figo
Contd Ford Motor Company in India: Developing the Ford Figo
18 Contd
Interiors of Ford Figo
Source: Ford India
Ford Motor Company in India: Developing the Ford Figo
19 End Notes:
i Nikhil Gulati and Santanu Choudhury, Ford Targets India Market with First Small Car, http://online.wsj.com, September 23, 2009 ii Ford Rolls Out Figo at Rs 3.49 lakh, www.newsgaze.com, March 13, 2010 iii Fords Global CEO Reveals New Ford Figo Targeting India Market and Export Sales, http://media.ford.com, September 23, 2009 iv Prodding the Giant, www.dhanbank.com, November, 2010 v Overview of Indian Automobile Industry, www.automobileindustryindia.com, 2010 vi Indian Passenger Vehicle Industry: Growth Momentum to Continue, www.icra.in, March, 2011 vii www.team-bhp.com. viii India is the Second Largest Small Car Maker, www.siliconindia.com, September 25, 2009 ix Nikhil Gulati and Santanu Choudhury, Ford Targets India Market with First Small Car, http://online.wsj.com, September 23, 2009 x September 2009 Indian Car Sales Figures & Analysis, www.team-bhp.com. October 7, 2009 xi Nikhil Gulati and Santanu Choudhury, Ford Targets India Market with First Small Car, http://online.wsj.com, September 23, 2009 xii www.marutisuzuki.com. xiii The Ford Focus a Car for the Millennium, www.business2000.ie xiv Julian Lorkin, Marketing in India: How the Rubber Hit the Road for Ford's Figo, http://knowledge.asb.unsw.edu.au, November 29, 2010 xv N. Ramakrishnan, Small Car Segment is Where All the Action is: Ford India Chief, www.thehindubusinessline.in, February 3, 2010 xvi Pawan Luthra, How to Market in India: Ford India MD, www.indianlink.com.au xvii Ford Figo Goes Entry Level, www.yworld.co.za xviii Ibid. xix N. Ramakrishnan, Small Car Segment is Where All the Action is: Ford India Chief, www.thehindubusinessline.in, February 3, 2010 xx @ Ford India Special, www.at.ford.com, November 2009 xxi Ibid. xxii Nikhil Gulati and Santanu Choudhury, Ford Targets India Market with First Small Car, http://online.wsj.com, September 23, 2009 xxiii The Ford Focus a Car for the Millennium, www.business2000.ie xxiv Ford Figo - Built in India, Developed in Australia. And 2012 Ford Ranger, www.theautoindustrieblog.com, September 30, 2009 xxv Ibid. xxvi Ford Figo - Built in India, Developed in Australia. And 2012 Ford Ranger, www.theautoindustrieblog.com, September 30, 2009 xxvii New Ford Figo Brings Kinetic Design for Economy & Small Cars in India, www.zimbio.com, March 11, 2010 xxviii Jeremy Cato, Ford Figo Takes on India , www.theglobeandmail.com, March 9, 2010 xxix Ford Figo Goes Entry Level, www.yworld.co.za Ford Motor Company in India: Developing the Ford Figo
20
xxx Ford Gets Aggressively with Figo Pricing, www.thehindubusinessline.com, March 9, 2010 xxxi Ford Introduces New Figo Hatchback for Indias Burgeoning B-segment, www.mazdas247.com, September 24, 2009 xxxii Ford-introduces-new-Figo-hatchback-for-India-s-burgeoning-B-segment, www.mazdas247.com, September 24, 2009 xxxiii Murali Gopalan, Ford to Use Figo Inputs for Global Car Plans, www.thehindubusinessline.com, April 1, 2010 xxxiv Nikhil Gulati and Santanu Choudhury, Ford Targets India Market with First Small Car, http://online.wsj.com, September 23, 2009 xxxv N. Ramakrishnan, Small Car Segment is Where All the Action is: Ford India Chief, www.thehindubusinessline.in, February 3, 2010 xxxvi Ford Gets Aggressively with Figo Pricing, www.thehindubusinessline.com, March 9, 2010 xxxvii N. Ramakrishnan, Small Car Segment is Where All the Action is: Ford India Chief, www.thehindubusinessline.in, February 3, 2010 xxxviii Market Research Drives Product Development at Ford, www.reliableplant.com, June 6, 2009 xxxix Bhattacharya Sindhu, Figo Will be a Game Changer for Ford in India, http://findarticles.com, September 24, 2009 xl Ford Gets Aggressively with Figo Pricing, www.thehindubusinessline.com, March 9, 2010 xli Ford Rolls Out Figo at Rs 3.49 lakh, www.newsgaze.com, March 13, 2010 xlii Julian Lorkin, Marketing in India: How the Rubber Hit the Road for Fords Figo, http://knowledge.asb.unsw.edu.au, November 29, 2010 xliii Understanding Changing Customer Needs, http://corporate.ford.com xliv Ibid. xlv Market Research Drives Product Development at Ford, www.reliableplant.com xlvi Ibid.