Chennai: Ford Motor Company announced on Tuesday that it will invest another $72 million in India to expand capacity at its engine plant in Chennai. The expansion has become necessary following the brisk sales of Ford’s small car Figo in the Indian market. The engine plant feeds not just India but also select export markets. Thanks to the new investment, capacity at the Chennai engine plant will go up from 2,50,000 to 3,30,000 units per year, an additional output of 80,000 diesel engines. Ford will introduce a third production shift at the engine assembly plant which will create more than 300 new direct jobs at the Chennai plant. The expansion is due to be completed by mid-2012.This latest tranche will bring Ford's total investment in India to over $1 billion.

The capex ties in with a period of hectic activity at Ford India. The company plans to follow up the success of the Figo with a whole clutch of new cars. “The new investment supports our plan to introduce eight new global Ford vehicles in India by 2015,” Ford India MD Michael Boneham said in a statement. Ford’s announcement comes on the heels of a similar investment decision from fellow Detroit biggie General Motors. GM India has announced it will pump in $500 million to raise capacity at Halol and Talegaon and introduce new products.

Ever since its launch early 2010, the Figo has been a brisk-seller riding on its spiffy features and diesel powertrain helping Ford clock a 184% growth in 2010. In 2011, the Figo was responsible for the 42,395 units (including exports) sold in the January-April period, up 83%.The investment in the Chennai engine plant has not only made Ford diesels more affordable but also turned India into an engine hub. Earlier Ford used to import diesel engines from its Dagenham plant in the UK. Now they are made in and exported from Chennai.

By March, the Maraimalai Nagar engine plant manufactured over 1 lakh engines, just 14 months after operations kicked off in January 2010. Since June 2010, over 4,000 India-built 1.4L and 1.6L petrol engines have been exported to Thailand every month. Diesel engines have also been exported to South Africa since 2008 and Ford plans to export India-built petrol and diesel powertrains to more markets in the near future.


Source: May 18, 2011, TOI