Ford India to market new fuel-efficient vehicles

Ford India has announced plans to market a new line of fuel-efficient vehicles.

The cars, which will be available for sale in 2010, are fueled by compressed natural gas and liquified petroleum.

Ford India currently distributes Ikon, Fusion and Fiesta cars, as well as the Endeavor sports-utility vehicle. However, the worldwide economic recession caused sales to plummet by 22.5 per cent from April-September 2008. Nevertheless, the company still managed to ship a total of 4,062 cars and SUVs during the troubled period.

"The credit crunch and the lack of confidence has affected [us] in the short-term," admitted Michael Boneham, president of Ford India. According to Boneham, the company expected 2009 to be a tough year for the industry with a single-digit growth (rate). However, the optimistic president projected that sales would increase when Ford launched its fuel-efficient small car in 2010.

Ford will undoubtedly face stiff competition from a number of companies vying to dominate the lucrative Indian automotive market. For example, Toyota is reportedly developing a new fuel-efficient vehicle expected to retail at $5,000. In addition, Tata is slated to launch its affordable $2,500 Nano sometime in the near future.

TAKE A LOOK-What's happening in emerging car markets

India expects the automobile sector to double its share of gross domestic product to 10 percent and contribute $25 billion in export earnings in a decade, the trade minister said on Thursday.

Kamal Nath also said the government would consider incentives for exporters of cars and auto-part makers and keep policy favourable to help auto makers sustain high growth in output.

"We believe that the sector's contribution to GDP will double from its current 5 percent to 10 percent .... and exports should go up nine times," Nath told a business conference.

"By the middle of next decade, India should be the destination of choice for design and manufacture of automotive components and vehicles in the world."

India's booming auto sector has lured major companies to tap the domestic market, and many of them plan to make it an export hub to take advantage of low-cost labour and components.

Nath said Maruti Suzuki, India's biggest car maker, was planning to scale up its capacity to 1 million cars by 2010, Hyundai was looking at capacity of 600,000 cars by 2009 in the country and Toyota plans to scale up output to 200,000 units.

Demand for cars has been hit by rising interest rates, with the central bank raising its key lending rate to a seven-year high of 9 percent in July, and rising input costs have squeezed profit margins of auto makers.

"I believe this is a passing phase," Nath said.

Diesel powers India’s car sales growth

THE markets may be gripped by fears of an economic slowdown and the government by inflation worries, but the Indian consumer’s love affair with automobiles shows no sign of ending. Despite rising fuel prices, India’s automobile sales grew 8.09 per cent in May, 2008, according to data released by industry body the Society of Indian Automobile Manufacturers (SIAM).

Passenger car sales in the domestic market jumped 14.26 per cent, while total two wheeler sales were up by seven per cent during the month. With the price difference between petrol and diesel going up further, the sale of diesel cars is expected to accelerate vis- à- vis the petrol versions. According to industry sources, the current ratio of car sales in models such as the Swift that is available both in diesel and petrol variant is 60: 40. This means that out of every 100 units of Swift sold 60 are powered by diesel engines, while 40 are petrol versions. Sources disclosed that in the case of Maruti's Dzire the diesel version accounts for nearly 80 per cent of sales while the petrol variant makes up 20 per cent. The new generation diesel engines are a vast improvement over the older ones, which were prone to heavy vibrations and were also noisier.

Ford Motor Company, for instance, has started registering a sharp increase in car sales after it introduced its latest diesel models. The fact that technology is an important factor is reflected in the fact that Tata Motors has reported flat growth even though the company mainly markets diesel models. The company sold 14,228 units in May this year compared to 14,217 units in the same month last year. Mahindra & Mahindra (M& M) has reported a12.98 per cent increase in domestic sales during May at 19,296 units, up from 17,079 units in the same month last year which also goes to show the increasing popularity of diesel vehicles. The company mainly produces SUVs although it has introduced the Logan car recently as part of a joint venture with Renault.

Diesel is Rs 15.76 per litre cheaper than petrol in Delhi and modern diesel engines also give higher mileage per litre than petrol engines, which brings down the running cost of diesel cars even further. However, diesel engines normally cost more to maintain than petrol engines. Each time the government raises the price of transport fuels, the price of petrol goes up more than that of diesel, as a result of which the gap has been widening over the years. The reason is that petrol is still perceived as a rich mans fuel while diesel, which is used in the farm and public transport sectors, is considered politically sensitive.

According to sources, diesel cars have a20 per cent market share in India at present. However, diesel as a vehicular fuel comes in for some criticism from environmental groups on the ground that it is more polluting than petrol. But the car companies claim that modern diesel engines emit less carbon dioxide than petrol engines and the emissions are less harmful. Both Maruti and Hyundai have also introduced alternative fuel options such as LPG and CNG this month in anticipation of some buyers opting for these models as these are cheaper to run than the petrol versions.