The diesel car growth story, which is riding on the momentum provided by the price differential between petrol and diesel, may witness a pause if the diesel subsidy is changed significantly, but Ford India is prepared to meet any shift in consumer demand, according to a senior executive of Ford India.
He said the company, which will be entering the SUV segment with the launch of Eco Sport, will not suffer because of others, including Renault, entering the segment ahead of it.
Speaking to newspersons in Coimbatore on Thursday to formally launch the refurbished Ford Figo, N. Raja, Vice-President, Sales, Ford India Pvt Ltd, Chennai, said the company has sold 2.35 lakh units of the Figo since its launch. The new Figo comes with about 100 changes. But despite these changes, the company has retained Figo’s competitive pricing.
He said the industry had witnessed a demand fall of 14 per cent in August and in September growth was in the negative — minus 5 per cent growth. He said the industry body SIAM had estimated the car industry would grow at 1-3 per cent this year and he expected Ford India’s growth to be in line with industry growth.
He said the first quarter growth for the industry was good but the dip came in the second quarter. He said there have been a lot of enquires in the past few days ahead of the festival season and he expected the positive mood to propel the demand for cars during the coming Diwali season.
Explaining the reasons for his optimism when buoyancy was witnessed in the mid-SUV/MPV segments in which Ford will enter with Eco Sport only next year, Raja said during September while Ford Figo’s sales were up by 20 per cent, that industry segment witnessed 10 per cent de-growth. He expected the company to sustain Figo’s sales during the rest of the financial year.
Answering a question as to whether Renault’ SUV model Duster in the mid-priced segment, that has already witnessed robust demand would not affect Ford’s proposed model, the Ford India VP said the segment was a nascent segment. It was growing and felt `there is enough growth for all players’.
Questioned as to how long he expected the diesel cars story to last in view of the observation made by the Finance Minister P. Chidambaram that the current fuel subsidy model was not sustainable, Raja said despite there being no subsidy, the demand for diesel vehicles was growing in European markets. With technological changes, diesel vehicles have shed their reputation for being noisy and their mileage had improved.
He said the Figo has achieved 85 per cent localisation and its manufacturing plant has the flexibility to produce vehicles to meet market demand and petrol vehicles were exported to South Africa and Brazil from India. As the diesel price hike of Rs 5/litre had happened only recently, it was too early to judge its impact on consumer preference.
Raja said when Ford’s India car project was launched, the demand preference was 60:40 (diesel:petrol). But this has now changed to 70:30. If the fuel subsidy was changed drastically, he expected the demand for petrol vehicles to go up since buyers preferred diesel vehicles, despite its much higher price, as diesel was cheaper by nearly Rs 20/litre than petrol. But Ford has the flexibility in its production line to meet any change in consumer demand, he said.