Ford Motor on Tuesday opened a new chapter in automobile price wars in the country.
The company launched its maiden small car in India, the Figo, with an aggressive price tag ranging between Rs 3.5 lakh for the entry-level petrol vehicle, and Rs 5.3 lakh for the top-end diesel variant.
Figo is the second car to be launched this year with an entry price of less than Rs 3.5 lakh — a price segment that has seen little action since General Motors introduced the Spark three years ago.
GM launched its second car in the segment, the Beat, earlier this year. Ford expects to create ripples in the market primarily on its pricing strategy, much the same as GM.
“Without a small car we were out of 70 per cent of the market,” said Michael Boneham, managing director, Ford India. “Now that the Figo is here, this is just the start.”
The Figo compares favourably with competitors (see table) on pricing and performance, but along with the Beat, its rock-bottom pricing indicates very low margins for the company and an intensification the battle for a slice of the compact car segment.
The offerings of the two heavyweights of domestic car industry, Hyundai (i10 kappa, i20) and Maruti (Swift, Ritz), in the segment now end up more expensive.
The Polo, which Volkswagen launched last month, too looks way off the mark now, with a starting price of Rs 4.42 lakh. Ironically, it is the cheapest offering for India from Europe’s largest carmaker.
Ford claimed that despite the aggressive pricing, the Figo is not a loss-making proposition, even while remaining non-committal on margins.
With an all-new small car B platform in the making and more cars set to roll from their factory, the benchmark in pricing is likely to plunge further.
“We are not in the business of losing money,” said Joe Hinrichs, president, Ford Asia, Pacific and Africa. “We are going to keep competing at lower price points.”
With more small cars from Nissan and Toyota in the offing later this year, it remains to be seen whether the two Japanese carmakers go the American way or the European way. It may as well be that they may devise a new Japanese way.