Ford India is planning to cut the prices of its cars in order to tackle the growing competition. The company has not given any deadline as to when one can expect the price cut but it is set to happen eventually.
“There is scope for reviewing our product prices as local market dynamics are changing so fast,” Nigel E Wark, Executive Director, Ford India, was quoted as saying by The Economic Times.
He added that while the company continues to go strong on the Figo hatchback, prices of other products need to be rationalised in tune with new launches in the market and increased competition. Let’s take a brief look at the sales of Ford cars in India to understand why the need for a price cut arose.
The Figo is an excellent ‘value for money’ hatchback and despite the competition, it has reported consistent sales of over 5,500 units every month. However, Ford’s other models such as the Fiesta Classic, new Fiesta and Endeavour are selling in less numbers when compared with the competition.
Ford launched the new Fiesta petrol and diesel versions in July 2011 with prices ranging between Rs. 8.23 lakh – 10.47 lakh. The prospective buyers felt that the car was priced significantly higher than other cars in the segment and it resulted in low sales. Last week, the company launched petrol automatic versions of the Fiesta. The car has been selling in low numbers despite its long list of features and driving dynamics.
During August 2011 – January 2011 Ford managed to sell 4,471 units at an average of 745 units per month. During the same period, Fiesta’s direct competition such as the Hyundai Verna sold at around 4000 units per month, the Volkswagen Vento sold at 2,900 units per month and the Honda City sold at roughly 2,600 units per month.
Ford launched the Fiesta Classic in April 2011 with prices ranging between Rs. 5.49 lakh – 7.29 lakh. Though the Fiesta Classic is competitively priced but is not as appealing as the Maruti Suzuki Dzire, Tata Manza and the Toyota Etios.
Coming to the Fiesta Classic, Ford sold 8,364 units during July – December 2011 at an average of 1,394 units a month. During the same period, Toyota sold 22,548 units of Etios at an average of 3,758 units per month while Maruti Suzuki sold 44,881 units of Dzire, the leader in this segment, at an average of 7,480 units per month.
The Endeavour has been in the Indian car market since 2003. Though the company has given facelifts to the Endeavour now and then, it needs a complete makeover to compete with the segment leader, Toyota Fortuner. During August 2011 – January 2012, Ford managed to sell 1,298 units of Endeavour and Toyota sold 5,352 units.
The price cut may help Ford sell its cars in more numbers than at present. It has helped Honda and Fiat in the recent past. However, in the long term, for sustained growth, Ford has to introduce more models in new segments such as the mini SUVs and MPVs such as the EcoSport and B-Max MPV. The sales of Ford cars had declined to 4 per cent during May 2011 – February 2011. This is quite surprising because the auto industry has registered a growth of 9 percent during the same period.