Ford Motor made a profit in India for the first time in ten years in the last fiscal year, indicating that a strategy conceived two years earlier by the U.S. automaker for one of the world’s most competitive car markets is beginning to show some success.
Under an initiative named the Emerging Market Operating Model (EMOM), Ford slash manufacturing expenses by 40 percent and is developing more vehicles regionally as it shifts away from its “One Ford” plan, which limited its ability to be cost-competitive and quick in a fast-growing market, Ford executives and industry sources informed Reuters.
“EMOM is the North Star for the turnaround at Ford in India,” stated Anurag Mehrotra, managing director of Ford’s India unit, in an interview.
It’s early days yet, and Ford still represents less than 3 percent of overall passenger vehicle sales in India, where experts say it’s tough for auto manufacturers to make money.
“They are still a long way away till they can call India a successful market,” stated Kaushik Madhavan, vice president, mobility at consultant Frost & Sullivan.
A major factor for Ford India will be how it leverages its partnership with regional automaker Mahindra & Mahindra, he stated.
As part of EMOM, Ford is making deeper ties with Mahindra to build passenger vehicles in India, which could also associate sales in other growing markets.
Over the past two decades, Ford has invested $2 billion in the country, which has become a major growth area for automakers. Car sales increased 8 percent to 3.3 million in 2017 and India is set to become the world’s third-largest market by 2020 with sales of more than 5 million cars, as per the consultant IHS Markit.