Saturday, 27 August 2011

Ford hints at cutting output - speaks Michael Boneham




Ford India is planning to adjust its vehicle production and its product mix to better handle the sudden slowdown in demand for petrol cars in the Indian market. The company is also using its exports to neutralize the huge drop in demand for petrol vehicles in the domestic market. 

However, its diesel vehicle production is facing a component supply shortage which has restricted Ford India's plans of ramping up production of diesel cars to meet the surge in demand. Speaking to TOI, Michael Boneham, president and managing director, Ford India said: "Right now we're looking at adjustments of production mix between diesel and petrol vehicles. We need to adjust our production to the new demand scenario. Going forward, if due to further hikes in interest rates or fuel price the demand falls significantly, we will adjust our overall production accordingly. We will continue to make assessments and we're clear that we won't keep building stock." 

Ford India has seen a dramatic increase in the sales of its diesel vehicles in the last seven months. In December 2010, the diesel-petrol ratio of its sales was 55:45, riding mostly on the Figo. That has now changed to 75:25 thanks to the more-than-Rs 20 differential between diesel and petrol. For Ford, this sudden change in demand profile led to a 2.5 month waiting period on diesel vehicles. 

Worse, its suppliers could not keep up with the sudden surge in demand for diesel vehicles vis-a-vis petrol. "Powertrain suppliers have not kept up because the swing triggered by the change in the product mix has been dramatic and sudden," said Boneham. 

"Right now we're looking at adjustments of production mix between diesel and petrol vehicles. We need to adjust our production to the new demand scenario. If due to further hikes in interest rates or fuel price the demand falls significantly, we will adjust our overall production accordingly," says Michael Boneham.

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