The Ikon commitment

"Throughout my career, I was willing to take assignments and risks that people avoided." This statement was attributed to the short and stocky Jacques A. Nasser, president and CEO, Ford Motor Company, in a half-page Bridgestone advertisement published in a daily. Yet this risk-taker seems to fear the dangers of allowing used-car imports into a country as per the WTO provisions.

Quantitative restrictions that ban the import of used cars into India are expected to be phased out by April 2001. Nasser, in the country recently to launch Ford India Ltd's first "Indian" car, Ikon, is not happy with the idea at all. "We have a conceptual issue in allowing used car imports," he declares.

Citing New Zealand’s example, where the local auto industry died because of used car imports, he says, "It is for the Indian government and the people to decide whether they want to get the world’s junk. To me, it is a fundamental decision." He argues that used car imports will further create problems when it comes to insurance, financing and other such things. But he has no comment on whether his views on the issue are shared by other US car manufacturers.

Rough estimates reveal that one can get a good reconditioned foreign used-car for Rs.1.5 lakh if imports are freely allowed. That could not only push up domestic demand for cars tremendously, it could also cause a major upheaval in the domestic auto industry which would probably have no choice but to align prices with that of second hand imports. Life could specially get tough if the government decides to keep used-car tariffs low.

The Ikon commitment
Given this situation, Nasser's worry could be natural since Ford India, the 78 per cent subsidiary of Ford Motors, has seen an investment of Rs.1, 700 crore and has priced its Ikon at Rs.4.99 lakh upwards.

"Ikon demonstrates our commitment to India," he asserts, adding that it is not often that Ford motors launches a new factory and a new car at the same time. The inverted E-shaped Ford India's plant near Chennai has a capacity to roll out 50,000 vehicles annually, and expansion can be carried out to ensure one lakh units without much fuss.

"Initially we intend to manufacture 20,000 Ikons. Based on the demand, production will be scaled up," says Philip G. Spender, managing director, Ford India. According to him, plans are to increase the component localisation from the current levels of 70 per cent.
Ikon will be distributed by 27 Ford India dealers.

Talking of dealers, Nasser says it is wrong to assume that the higher the dealer numbers, the better the reach. "In the US and other markets, too many dealers pose a problem." Could this comment possibly be a result of the fact that some of Ford Motor's franchised dealers in the US frustrated the company's ambitious plans of buying into their setups? You can only guess here.

Exports
Nasser rules out any export plans for Ikon, on grounds of uneconomic costing--greenfield investment, non-depreciated plant. He says, however, that Ford India will export $200 million worth of components. Towards this, the company is setting up a separate export plant adjacent to its existing facility. The plant will source auto components locally and assemble kits for export.

Cautious about divulging his future plans for Ford India, Spender says his company’s breakeven depends on its future offering. Does that mean a small car is on the immediate anvil? Nasser responds, "At this point, our concentration is on Ikon. Maybe later, we will introduce a small car." But he categorically rules out any plans of offering Volvo or Mazda models in India.

A linguistic, Nasser is fluent in English, Arabic, Spanish and Portuguese. Now he’s adding Hindi to the list. On his first visit to India, he has mastered the words "Josh" and "Zinda Dil", which form part of the Ikon’s promotion slogan. Ever the shrewd businessman, he’s asked Ford’s India officials to see whether these terms can be registered as the company's trademark for Ford Motors’ exclusive use globally!

The Ford commitment
Nasser establishes Ford’s commitment to India further by talking about its participation in societal benefits. A firm believer that only a strong society and a strong company could coexist, he points to the Indian subsidiary’s two endowments ( $1 lakh and $1.4 lakh) for Henry Ford Chairs at the Indian Institutes of Technology in Chennai and Delhi respectively. The Chair at IIT, Madras has been established for research in vehicle emission and environment and that at IIT, Delhi, for research in biomechanics and transportation safety.

Ford India has, in addition, supplied advanced testing equipment to the Pune-based Automotive Research Association of India towards upgradation of the Association's labs and strengthening of its emission and engine testing facilities. The company has also set up a fully equipped Primary Health Centre, Sanjeevi, near its Chennai plant to provide free basic medical facilities to the locals.

Customised wheels
Meanwhile, the Ford wheel has come full circle. The company that pioneered assembly line mass production of cars, is today into customised car production. With all auto majors reaching the threshold of technological advancement in automobile engineering, Ford Motors, in order to be different, is focussing its energies on building long-lasting relationship with its customers.

One such step is personalised cars. According to Nasser, Mazda Motors (now part of Ford Motors) and Ford Motors manufacture one model each as per buyer specs. "It works out to be profitable. But that doesn't mean we are not investing in R&D to upgrade our technology," he says.

Nasser is also looking at different ways of connecting Ford Motors with customers. One such route is the web. Ford Motor has recently concluded two agreements, one with Microsoft to enable customers to place their orders on the Net, and the other with Oracle for venturing into e-commerce.