How the Figo changed Ford India's fortunes

New Delhi: Ford India's compact car or hatchback Figo crossed the 3,00,000 sales mark in its third year, the company said earlier this week. The car which has been a runaway hit helped Ford turn around its fortunes in India, analysts say.

The Figo, which was launched in March 2010, received 10,000 booking in the very first month. Within the first 100 days of its launch, the company had already received 25,000 bookings.

These numbers might not sound impressive in 2013 considering Ford India's latest offering - the EcoSport - has over 30,000 bookings to its credit in a fortnight or so, but back in 2010, it was a big deal for Ford India. The Figo helped Ford establish itself as a strong player in the small car market, where the biggest opportunity lay.

"Before the Figo, we were a niche player. We weren't in the market where 70 per cent of the sales were happening. With the Figo's launch Ford India's sales almost tripled, from 30,000 odd sales we went to 80,000-90,000 odd sales per year," Ford India spokesperson told NDTV.

Until 2010, Ford India's stable consisted of the Endeavour- a sports utility vehicle or SUV, and Classic- a sedan. But they didn't turn out to be the blockbusters Ford needed to entrench itself in the highly competitive Indian market.

"Yes, the Ford Figo worked where most of their other products didn't," auto expert Raj Kapoor said.

It was Ford's first venture in the small car segment and they priced it right... it worked for them, he added.

Besides the pricing, Ford also got its network and spare parts policy right for the Figo, Mr Kapoor added.

Some other models - the Ikon, Escort, Mondeo and Fusion for example - had been discontinued by 2011. The Ikon was discontinued at the beginning of 2011 when the Fiesta was launched.

"Ford was literally bleeding in India. It was the launch of Figo that turned around Ford's fortunes in the country," a Kolkata- based Ford dealer said requesting anonymity.

In a way, it was Figo's pricing that made it a smash hit. Figo started at Rs 3.5 lakh (petrol), but it was the diesel variant starting at Rs 4.48 lakh that turned out to be the real crowd puller. Its competitor, Maruti Suzuki's Swift was more expensive.

The Figo has been a big turning point for Ford, but to put its success in perspective, the Swift continues to sell over 1,50,000 units even eight years after its launch.

It's a "far cry from what the Swift has achieved,"  Mr Kapoor said.

What's pretty clear, however, is the fact that Figo's success helped Ford establish a foothold in the most lucrative segment in India's most competitive segment.

Ford is now in a position to grow exponentially. Its compact sports utility vehicle - the EcoSport - has become a big success after its launch in July.

And once again, the price point has been the clincher. Starting at Rs 5.59 lakh, the EcoSport is much cheaper than its nearest competition- Renault's Duster, which starts at Rs 7.99 lakh.

The EcoSport is unlikely to weigh on Figo's sales though.

"There is no cross-shopping happening between the EcoSport and Figo and Figo is expected to report robust sales going forward as well," Ford India spokesperson said.

With EcoSport's launch, Ford India seems to have got the recipe just right at a time when the auto industry is going through a major slowdown.

Why Honda Amaze, Ford EcoSport are giving rivals a headache

High interest rates and rising fuel prices have dealt a body blow to car sales in India, which are on track to fall for a second consecutive year. For the six months to September, car sales in the country are down nearly 5 per cent, the sharpest decline in half-year sales in a decade.

The slowdown has meant India's top car makers have failed to push volumes. Maruti Suzuki's 2013-14 year-to-date market share is around 48 per cent, higher than previous two years, but only because the current fiscal has not seen violence and strikes at its plants. Maruti's closest competitor Hyundai's market share has remained flat at around 20 per cent for the past many years.

The winners, so far in 2013, have been Honda and Ford's India units. Honda is riding on the success of its entry level sedan Amaze, which has catapulted the company as India's third biggest car maker after Maruti and Hyundai. Honda has overtaken Tata Motors in the first six months of FY14 and is witnessing its most successful phase in India.

Ford was India's fourth largest car maker since the middle of 2010, mainly on the back of Figo's success. However, Ford started slipping in 2012 and currently lags Toyota and Volkswagen in sales. The success of EcoSport, however, has lifted Ford's sales and market share at a time when Volkswagen, GM and Nissan have all lost market share in last few months.

Honda and Ford come nowhere close to Maruti and Hyundai as far as volumes are concerned. For instance, Honda sold just 10,000 cars in September as against Maruti's total sales of over 1 lakh units, but analysts are optimistic in their outlook as far as these two companies are concerned.

Here's how Amaze and EcoSport are challenging the dominance of Maruti and Hyundai.

1) Honda Amaze and Ford EcoSport offer superb fuel economy, which gives them an edge at a time when fuel prices are rising by the month. Both Amaze and EcoSport have been priced competitively, which is another area, where the two score over rivals.

2) Nomura analyst Kapil Singh and Nishit Jalan say EcoSport and Amaze have a strong order book and volumes will remain to be high over the next few months as well. Both these cars have a waiting list.

3) The sedan segment in India is growing despite the slowdown helping Amaze sales. EcoSport has managed to grow despite declining volume in the utility vehicles segment at the cost of Xylo/Quanto models of M&M and Maruti Ertiga. It has also hurt Renault Duster. M&M volumes fell 19 per cent, while Ertiga volumes dropped a whopping 60 per cent in September, Nomura analysts said.

4) Both Maruti and Hyundai's recent launches have either failed to take off or have cannibalized their own products. Nomura analysts said Grand i10 cannibalized the sales of i10 (down 60 per cent year-on-year in September) and i20 models (down 30 per cent you in Sept). That's why Hyundai volumes fell in September despite strong dispatches for the Grand i10.