Ford India's commitment to launch a new product in the country every 12-18 months will see the company strengthening its domestic supplier base, as it seeks to keep the costs down while maintaining global quality standards.
The carmakers' latest offering, Ford Figo, is a case in point. With an eye on capturing the thriving small car market, the product has been competitively priced with about 85 per cent of its compotents procured from domestic suppliers.
Moreover, with Ford's India operations being positioned as the company's Asia-Pacific and Africa hub, domestic firms are also being primed to cater to products that will be shipped overseas. The carmaker expects to export engines as well as completely build units to markets in the vicinity such as South Africa.
"There is tremendous economies of scale available here. We are not only brining in our international suppliers, but are also developing the domestic supply base," Ford India president and managing director Michael Boneham said.
In the Ford Figo, Boneham said, high-cost parts had been incorporated into the local production cycle. For the first time, domestic suppliers have undertaken the production of the blockhead castings for the petrol and diesel variants of the vehicle.
However, Ford is not going easy on quality control at a time when the slippages have significantly impacted other international carmakers. Japanese major Toyota has recently had to recall large number of vehicles, in part, due to suspect components manufactured by some of its suppliers.
"The components have to be in accordance with global standards. We think that by developing the Indian supplier base, they will be able to service Ford India as well as other carmakers in the country," Boneham said, while adding that the firm's worldwide certification mechanism, Ford Q1, had been applied to its Indian suppliers.
Consolidating the local supply chain could also help Ford India cushion the imminent rise in raw material prices that is already threatening to cut into the margins of carmakers globally. With new product launches slated at regular intervals, the initial pricing of Ford vehicles in India is likely to be crucial.
"We want to be positioned very competitively (in terms of price). But we obviously can't resist a situation when raw material and commodity prices have been increasing. We will make our assessments," Boneham said.
