Will EcoSport help Ford India shed the 'one model wonder' tag?

Alan Mulally, President and CEO of Ford Motor Company has placed huge bets on EcoSport - the compact SUV officially launched in India on Wednesday (June 26).  He sees the EcoSport as Ford's next best hope for the Indian market after the compact car Figo. He has visited India twice in the last 18 months - first to unveil Ford EcoSport last year at the New Delhi Auto Expo and earlier this month to roll out the first car off the assembly line at Ford India's manufacturing facility near Chennai. Ford top officials have been repeatedly saying - India head Joginder Singh said it again on Wednesday - that EcoSport will be a game changer for Ford in India.

The company had invested $142 million in its Chennai manufacturing facility to build the EcoSport. Not everyone bought into the high expectations Ford India tried to raise prior to the launch of the product.

How Ford India prices EcoSport will make or kill the model in a new compact SUV segment where pricing is turning out to be the greatest differentiator.

That is why the EcoSport price announcement, made on Wednesday, is significant. The petrol version will cost Rs 5.59 lakh (ex-Delhi) and the diesel version will be priced at Rs 6.69 lakh. It is aggressive pricing considering the car would be taking on Renault Duster, Maruti Ertiga, M&M's Bolero and Tata Sumo. The hot selling Duster is priced at Rs 8 lakh and upwards.

It reveals quite a bit about Ford India's plans. The company, which has been very slow in reading the Indian market and launching the right products, firmly believes that there is a great future in the compact SUV segment. Joginder Singh expects the segment to grow five fold in volume by 2020 from the current levels of 2.73 lakh units (2012-13).

Renault's Duster is already showing the way. The car which was launched in June 2012 notched up an impressive 14 per cent market share in the SUV segment which is defined as cars measuring less than 4400mm in length and priced below Rs 15 lakh. In the last two months, it has further increased its share to 25 per cent. Duster's enviable growth has come partly at the cost of Tata's Sumo's whose market share has fallen from 13 per cent prior to the launch of Duster to seven per cent now. Tata Motors, in anticipation of EcoSport launch, had last week unveiled freshened up Sumo models to improve sales.

The pricing tells us that Ford sees EcoSport as a volume product. The company has the capacity to produce many more cars. Its Chennai facility with 2 lakh unit capacity can do with much more output. Ford is also building a two lakh unit facility in Sanand, Gujarat. The company will soon be having the capacity to produce many large volume products simultaneously.