Ford Sees Stagnant Car Sales in India

Even before Tata’s $2,500 (Rs 100,000) car hits Indian roads, American auto maker Ford is singing a melancholic tune.

Ford acknowledged that its car sales in India in 2008 would be the same as last year – 40,000 (which itself was lower than the 2006 sales figure of 42,060 units).

Sure looks like Ford’s troubles in the U.S. have reached Indian shores.

Ford India Managing Director Arvind Matthew told the Wall Street Journal (subscription required) that high interest rates in India and global economic uncertainty would restrain purchases this year.

Only after Ford’s proposed small car rolls off the assembly lines and demand improves does the company expect to fully utilize its 200,000 local production capacity.

Meanwhile, Ford is investing $500 million to make a small, inexpensive car for the local market within the next two years, and to build a engine manufacturing plant that will go online by 2010.

Ford’s small car for the Indian market is expected to be priced between Rs 300,000 to Rs 400,000.

Ford said the new investment would boost its financial commitment in India to $875 million, and underscored its plan to elevate India as one of the strategic production hubs for small cars in the company’s Asia Pacific and Africa region.

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