Ford Motor Company (NYSE: F) is expanding engine and car production in India to feed a growing export market in the company's Asia Pacific and Africa region.
Ford completed a capacity expansion at its engine plant in Chennai, India by 36 percent, 80,000 units annually, the company announced Tuesday. The additional diesel engines will boost total annual capacity at the plant to 340,000. The expansion was completed in 14 months and will provide powertrains to the Indian and export markets.
The India engine plant which produces both diesel and gasoline engines is a first for Ford and features a single flexible production line, and it also produces crank shafts and has full engine testing facilities. The company hopes the state of the art assembly line will allow it to more swiftly respond to changing market demands.
We are at an interesting phase of growth with the markets demanding swift responses from manufacturers, Ford India president and managing director Michael Boneham said Tuesday.
The movement to make India a regional hub for low displacement engine production comes as part of a broader movement by Ford to expand its manufacturing capacity in the Asia Pacific and Africa region. The Dearborn, Mich.-based car company invested $72 million in the Chennai engine plant expansion and is in the process of building seven new factories throughout the Asia Pacific and Africa region. Almost 40 percent of the engines from the Chennai plant will be exported to South Africa, Thailand and Taiwan.
Moreover, Ford plans to export its Ecosport model from India, according to News Track India. The company is launching the small SUV in the domestic Indian market in 2013.
We will be exporting the Ecosport model out of India, Boneham told reports. We are the only car manufacturer to export engines out of India.
Approximately 80 percent of the components in the Ecosport will be locally produced, according to the Economic Times. Ford currently has a vehicle manufacturing plant at Maraimalai Nagar and plans a second factory at Sanand in Gujarat in advance of eight new product launches by 2015.
Ford's June sales in India were a languid 7,023 units, down 9,228 from the year before, according the Economic Times.
A poor domestic showing, though, masked the fact that Ford's Indian exports have grown 29 percent since the beginning of 2012. The export numbers continues to be particularly pleasing for us at Ford India, Boneham said in June. He referenced the soon-to-be-completed engine plant, adding that it would make Ford's Indian unit an export hub of small cars and engines regionally.
Ford Motor Company (NYSE: F) shares rose 0.59 percent to $9.40 in late afternoon trading.