Ford Motor Co. (F) plans to launch eight new models in India over the next five years, and export the locally assembled popular Indian small car, Figo, to about 50 countries. The company’s strategy is backed by doubling of annual production capacity to 200,000 units per year during July at its plant in Chennai, located in southern India.
Joe Hinrichs, head of Ford’s Asia-Pacific and Africa operations, has revealed that the new models will share the same chassis in line with the company’s “One Ford” strategy. He also stated that the company would export Figo to international markets including Mexico, North Africa and the Middle East. The company already began exporting the small car to South Africa in May.
Ford’s car launches in India are a part of its major expansion plan in the emerging countries, including Argentina, Brazil, China, India and Thailand. Through the expansion plan, the company aims to tap the growing market potential in the emerging countries, especially those in Asia. The company expects Asia will account for 70% of its global growth in the next decade, mostly from China and India.
Since last year, Ford has also invested $510 million in China and $500 million in India as part of its expansion plan. Recently, Ford and Japan’s Mazda Motor announced their plan to invest $350 million in their Auto Alliance joint venture plant in Rayong, Thailand. This comes on top of a $450 million investment for a new plant at the same location made in June.
In the second quarter of the year, Ford posted a profit of $2.7 billion or 68 cents per share (before special items that include sales of Volvo cars among other things), overshadowing the Zacks Consensus Estimate of 40 cents per share. The profit improved $3.34 billion from a loss of $638 million or 21 cents per share (before similar adjustments) in the second quarter of 2009.
Sales in the quarter appreciated 17% to $31.3 billion, higher than the Zacks Consensus Estimate of $29.5 billion. Excluding sales of Volvo cars in 2009, sales surged 31%. This company’s strong results were attributable to better performance by its Automotive operations around the world, driven by strength of new products.
Based on the improved results and global expansion plan, Ford maintains a Zacks #1 Rank (Strong Buy) on its stock in the short term (1–3 months). Consequently, we reiterate our Outperform recommendation on the stock for long term (6+ months).
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