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It's a challenging time on retail demand, with consumer unsure: Michael Boneham

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Ford India saw a six per cent fall in sales in the past six months, to 41,364 units, when the industry average was a seven per cent growth. Michael Boneham, president and managing director, hopes to arrest this with the Eco Sport compact sports utility vehicle (SUV), due for launch a few months later, and the new Figo, launched today, starting at Rs 384,999 (ex-showroom Delhi). He shares his views with Swaraj Baggonkar. Edited excerpts:

You have a new plant coming up. Are you going slow on that, looking at the broader slowdown?

Part of launching new cars has also got to do with the capacity to build these and Gujarat is the key part of that. It will come on board in 2014 and, hence, our product strategy is driven also by capacity strategy. We have announced that the Eco Sport will be built in Chennai but obviously what is critical to us is that Gujarat come on line and give us the opportunity to grow our product base and volumes. We are on track for the Gujarat plant. I went there three weeks ago with Joe Hinrichs (Group VP).

 

So, no relook or scaling back of investments?

We have over $1 billion invested in Tamil Nadu and we have a $1-bn investment in Gujarat. We have got to take a long-term view. I am a little bit more optimistic: we have seen some pent-up demand and we are seeing more walk-ins as we get into the festive season. That is why it was important for us to launch the new Figo with the festive season, to give it a nice push into the environment when people are feeling more confident. The government has started to take a stance; we need to see if that gives confidence to business and individuals.

What is the situation on demand at the retail level?

It’s challenging. As a market, we are going through those periods of time when the consumer is a bit unsure whether he should make a commitment to investment in a product like a car.

Your competitors have raised their prices. Do you have similar plans?

No one can avoid input costs or continue to not to pass these on (to consumers); otherwise, you go out of business. So, we wanted to be aggressive as we moved into the festive season. Let’s wait and see how we move forward and what happens with inflation and diesel prices.

Is the pent-up demand seen only in some segments or the overall industry?

We have seen the SUV segment grow very well and we are very pleased about that because we have a new SUV coming in, the sub-4 metre Eco Sport. We are seeing the small car segment where the Figo is competing down year over year but the Figo has actually has been up, year over year. You have to look at the long term while adjusting production to demand all the time; you just can't be building cars on hope and we have done that.

The build up to the launch of the Eco Sport looks very healthy. Do you believe its success will give you the confidence to have more products on the same platform?

What we have said about the eight new products is a majority of these will be in that small car segment, with different offers. Eco Sport goes into that small car segment, essentially. We have all the eight coming by mid-decade and the Indian consumer will be spoilt for choice.