After hitting a sweet spot in the pricing for Figo, Ford Motor’s popular hatchback, the US carmaker is aiming to do an encore by aggressively pricing EcoSport — its much awaited compact sports utility vehicle in the Indian market on the back of a strong push for exports from its Chennai factory.
While Duster has targeted prospective mid-size sedan buyers of Honda City, Volkswagen Vento and Hyundai Verna, the EcoSport being a B segment compact SUV will aim at compact sedans such as Maruti Suzuki Dzire and Toyota Etios customers.
TET learns that the launch price of the compact SUV will be at a very aggressive . 6-9 lakh as against its global rival Renault Duster which is priced at . 7.7-11.49 lakh, and get off to a good start in a value conscious Indian market. A person close to the development told ET: “Ford is aiming to position the EcoSport SUV against Hyundai i20 and Maruti Suzuki Dzire that retail between . 6 - 9 lakh. The company is likely to surprise the market, the same way it did with Figo by offering an introductory price, which is as aggressive as . 5.9 lakh, to woo premium hatchback and compact sedan buyers.”
The attractive price offering has been possible due to the strong exports strategy at the heart of it, just like Figo, a source said. Today 30% of Figo production goes towards exports. ET learns that 40-45% of EcoSport’s 1.5 lakh units annual production planned will be shipped out of India, with Chennai acting as an exports hub to over 40-50 countries. The local plant will produce 380 variants for markets across the globe.
The export led strategy works well in favour of the Indian customers. International benchmarks help Indian customers to avail of advanced features such as Bluetooth Sync, rear parking sensor and hill climb assist in some of its top end variants, which are standard features with the EcoSport globally. In addition, the vehicle will come with 1 litre Ecoboost petrol engine promises to be fuel efficient delivering mileage of over 15-17 kilometres a litre and at an affordable price.
The vehicle will also be available in 1.5litre diesel engine and 1.5 litre petrol engine with automatic transmission.
A senior official at Ford India while declining to give specific pricing told ET that scale enables companies to deliver that level of efficiency, which helps in bringing value for the consumer through aggressive pricing. “Scale brings in efficiency, it helps companies deliver a capacity and get a better rate from the vendors and suppliers, it helps you keep your cost in check, in high inflationary scenario and that’s what global manufacturers really get to the table, that’s what Ford has got to the table, with its ability,” the Ford official added. Despite the excise duty hike for SUVs this budget, Ford is reportedly expected to fall in compact car category and the company will pay on 12% excise duty on EcoSport.
Increasingly, the product development, capacity creation and break even points are decided taking into account volumes of both domestic and exports market.
Experts say, exports has become a very pivotal part of product planning process than ever before, as exports helps global car makers to de-risk themselves against currency fluctuation, it helps them bring in economies of scale, which in turns aid in aggressive pricing in the growing cost environment of today.
Catering to the export market also brings along advanced features such as anti-lock braking system, automatic transmission, push-start button, airbags, Bluetooth connectivity, electrically adjusted side mirrors, rear view camera etc, features that are seen in high end cars. The new offerings from the Indian shop floors of car makers are increasingly allowing advanced features to be democratised and made available to the Indian customers at an affordable price, by virtue of such offerings. It’s not Ford alone that is reaping the advantages of economies of scale. Nissan, Renault, Volkswagen have been very actively looking at exporting key models out of India, that comprise 10-80% of the overall production of a particular model. This helps deliver benefit of affordable price along with feature packed vehicles.
For Hyundai India, 50% of its i10, i20 models produced in India are exported that is the reason why the company can today offer technology like rear parking camera, automatic transmission at an affordable price. One of key pillars of growth for Hyundai in India has been its aggressive pricing, which has been aided by strong exports. Hyundai India’s two plants produce 1700 product variants out of two production lines to cater to 120 countries.
“The price calculations always depend upon the volumes and the market environment of a specific country. Exports are part of marketing strategy for Hyundai India to derive benefits of economies of scale. They also raise the benchmark of our products to international quality standards,” said Rakesh Srivastava, VP (sales & marketing), Hyundai Motor India (HMIL). Similarly Nissan which exports 80% of its Micra produced in India and 50% of Sunny sedan has airbags as a common feature even in its base variant.
The economies of scale have also helped Nissan price its mid-size sedan Sunny in the compact sedan segment. “The exports form a unique component of the India operations as this helps Nissan create market presence in other parts of the world with cars manufactured in India. The suppliers, vendors and stakeholders offer competent rates for the bulk production and this optimizes cost and increases profitability,” said Takayuki Ishida, managing director & CEO, Nissan Motor India.
Going ahead, Volkswagen India plans to export 50,000 units per annum or about 25%-30% of Polo and Vento production in coming two years. Renault plans to add exports market for Duster like South Africa and Indonesia, apart from the current markets of UK and Ireland.
Source:Times of India