Increasing affluence and mobility and a developing infrastructure are driving India's auto industry growth.
"It is an exciting time to do business in India," Mathew said. "The country has one of the largest populations in the world and a massive rising middle class of young professionals for whom owning a car is within reach. The possibilities for growth are astounding."
Competitive Job Market, Increasing Salaries Drive Indian Economy
At least 70 percent of the populace in India is under the age of 35. There is a strong trend toward urbanization and upward mobility. This is good news for Ford India as the nation's young, aspirational consumers either own or aspire to own a car. Moreover, they constitute an eager labor force in a piping hot job market.
But there is a downside to the rapid economic growth in India, company officials contend. While rapidly escalating wages fuel car purchases, they also spur increased employee turnover.
"There is a war for talent in India and it isn't restricted to the automotive sector," said Nancy Reisig, Ford India vice president of Human Resources. "People can easily find a new job in their field with a 30 to 50 percent pay increase every couple of years. That means we must make job satisfaction and employee programs a priority to ensure that we attract and retain the best."
To foster employee loyalty, Ford India is putting a lot of effort into supervisory training, employee engagement and career development activities, as well as ensuring the basics such as a competitive pay package.
"There's no tolerance for poor management in a job market where positions are easily obtainable," Reisig said. "With BMW and Mahindra & Mahindra building new plants near Ford India along with the explosion of new jobs in the IT and IT-enabled service sectors, we have to make careers at Ford India as rewarding as possible."
"Demand will remain strong in mature markets like the U.S. and Japan, but nowhere near as strong as the double-digit growth in countries like India," said Maseki Taketani, a director of CSM Worldwide. "Automakers must succeed in India to remain viable in the global market place."
Ford India's focus on customer service and fuel-efficient mid-size cars like the entry-level Ikon and the upscale Fiesta has the company poised for success in the burgeoning market.
This year's India Customer Satisfaction Index Study by J.D. Power Asia Pacific ranked Ford second only to dominant domestic automaker Maruti Suzuki thanks in large part to the success of Ford's Quality Care service program at dealerships. Since the program's launch in 2000 Ford has moved up from eighth place in the study. The Quality Care program is available at nearly a third of its 115 dealer service locations nationwide, and reaches 75 percent of Ford's customers in India. The program offers such conveniences as customer pick-up and drop-off, loaner cars and post-purchase calls.
"The program helps dealers deliver consistent service," said Uma Umashankar, Ford India general manager, Customer Service Organization (CSO). "The program is a source of pride for participating dealers and we're working to implement the program throughout our dealer body."
Ford India's dealerships are spread among 74 cities throughout the country. Ford sales are traditionally strong in the south (cities such as Chennai and Bangalore) as well as the north (the Punjab region). And the company plans to expand its presence in large markets such as Delhi, Kolkata, and Mumbai.
Critical to Ford India's expansion is the country's developing infrastructure, which is one of the keys to India achieving economic growth in general. A major north-south/east-west expressway project is underway. In addition, projects to develop rural roads and connect ports to key cities are transforming work, life and business in the country.
Most importantly, the more expansive road system is helping to drive interest in vehicle ownership in a country where motorcycles are the most common form of motorized transportation. Passenger vehicles only account for 13 percent of vehicular traffic in India, but with increased availability of low cost financing more consumers are able to afford a car.
"We saw 154 percent growth in sales in September 2006 and 142 percent growth in October," said Scott McCormack, Ford India vice president of Marketing, Sales & Service. "Almost 95 percent of vehicles are financed in India, in part because the country has very high per capita income growth. The perception that you own your car forever is diminishing and the period of ownership is shortening."
India is a "small car" market and Ford India's hottest selling cars are the entry-level Ikon and the upscale Fiesta. The Ikon is marketed to tech-savvy young professionals who are seeking to buy their first car. Consumers looking to trade up are buying the Fiesta, thanks in part to the presence of "Bollywood" movie star Abhishek Bachchan in the vehicle's advertising.
Diesel versions of Fiesta are extremely popular, accounting for more than 70 percent of its sales alone. According to the Society of Indian Automobile Manufacturers, more than a quarter of all passenger car sales in October were diesel models, with major growth in the midsize car segment.
"Fuel efficiency is the most important factor at vehicle purchase in India," Umashankar said. "People are known to drive without air conditioning just to save gas. In a country as hot as India, that's saying something."
As an American automaker, however, Ford has an image problem when it comes to fuel economy, Umashankar added, despite the fact that most of the Ford vehicles sold in India are based on fuel-sipping European models.
However, the popular assumption about Ford making gas guzzlers is gradually changing. Ford Fiesta recently entered the Limca Book of Records (the Indian equivalent of the Guinness Book of Records) for recording the longest distance ever traveled on a single tank of diesel and petrol in Autocar India magazine's first-ever Max Mileage Marathon. The Fiesta running on petrol traveled continuously for 22 hours and 1,183 kilometers before running out of gas. The Fiesta running on diesel traveled for 29 hours and nearly 1,571 kilometers before stopping.
"This is a further endorsement of the quality and efficiency of Fiesta's modern Duratorq engines," Mathew told reporters at the time. "Fiesta offers exceptional value and can be instrumental in huge savings for the customer."
With rapid urbanization underway and an increasing number of consumers eager to buy a car, India promises to take center stage alongside economic juggernaut China over the next 10 years.
"India's time has arrived," McCormack said. "Indians believe in themselves and they're confident they'll be a world leader."
