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Ford invests $900 million, seeks to challenge Maruti Suzuki

Ford has taken direct financial aim at the quickly expanding Indian auto market dominated Maruti Suzuki by announcing plans to build a $900 million production plant in Sanand, the same city in which the Tata Nano is built.

Maruti Suzuki currently leads India car sales with about 45 percent followed by Hyundai (18 percent), Tata (13 percent) and Mahindra & Mahindra (6 percent).

Ford’s planned factory in Sanand, in the business-friendly western state of Gujarat, will be operational by 2014 and employ 5,000 people, according to Ford.

Ford invests $900 million, seeks to challenge Maruti Suzuki 1
Ford Figo (interior)

With initial annual capacity of 240,000 vehicles, the plant will bring Ford’s total capacity in India to 600,000. It will reduce the cost of getting vehicles to domestic market and give the company access to west coast ports for exports. Ford has another plant in the southern state of Tamil Nadu.

Ford debuted its operations India in 1995. It plans to launch eight new products in the country by 2015. It aims eventually to export the Figo to 50 international markets.

Ford, which plans to increase its global sales by 50 percent to about 8 million vehicles a year by the middle of the decade, began exporting its compact Figo model from India in August.

In the first six months of 2011, it sold more than 60,000 made-in-India units, including exports, more than 50 percent higher than a year earlier. It’s market share is around 5 percent.

Car sales in India jumped 30 percent in the year to March to close to 2 million. The Society of Indian Automobile Manufacturers (SIAM) forecasts car sales this fiscal year would rise between 10 percent and 12 percent. It had previously forecast growth of 16-18 percent.

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