If media reports are to believed unlike Honda and Volkswagen, Ford may not produce the small car for india in India. Ford is currently studying the feasibility of launching a compact car in India that will be imported as a completely-knocked-down (CKD) kit from a manufacturing hub in Thailand. The reason for importing rather than building a small car plant here is, Ford can leverage Free Trade Agreement between India and Thailand. Because of FTA, import duty on CKD and semi-knocked-down kits is only 10 per cent whereas from other countried it attracts more thn 50%. Ford already sources CKD kits for the Endeavour sports utility vehicle from its plant in Thailand, which are assembled at its Chennai plant.
Ford – Mazda joint venture called as AutoAlliance Thailand will start making compact cars in 2009 for the domestic and Association of Southeast Asian Nations (Asean) markets. Ford may bring the Mazda 2 to India in 2009-10 when other global giants, including Honda, Toyota and Volkswagen plan to bring competing products to the local market. Ford is also looking at launching the premium mid-sized sedan Focus from Thailand.
Many auto makers are leveraging the FTA between India and Thailand where they can build plants to cater to the vast Asean market. Given that labour costs are roughly at par with those in India and the import duty on CKD and semi-knocked-down kits is 10 per cent, car-makers may find it more viable to assemble Thai imports rather than set up fresh plants in India. For instance, Tata Motors, which has set up a pick-up manufacturing plant in Thailand, will be sourcing trucks starting next year for the Indian market. Ford already sources CKD kits for the Endeavour sports utility vehicle from its plant in Thailand, which are assembled at its Chennai plant.
Thailand raising challenger
Thailand, which is already the largest automotive manufacturer in Asia-Pacific, can potentially become the world’s small-car hub in the face of competition from China, India and Malaysia. Thailand is already a global export hub for one-ton pickup trucks. About 40% of its total production for one-ton pickup trucks is exported. Thailand’s car industry has about 15 auto assemblers, more than 700 tier-I suppliers and more than 1,000 tier-II suppliers.The country’s tier-I suppliers mostly consist of global auto-parts suppliers and their partners and a few Thai companies. Thailand has managed to turn its auto-part industry into a world-class base due to its economies-of-scale strategy and export-oriented mindset. This has resulted in automakers from all over the world making a beeline to establish their manufacturing bases in the country. Thailand has also aggressively pursued free trade agreements (FTAs) with various countries such as Australia and India, which has further strengthened its auto industry.
Ford – Mazda Thailand JV:
The US$500 million plant is a 50:50 joint investment between Mazda and Ford and it will build cars from the B and C-D segment. It will be built on the same site as the existing pick-up truck plant, which is currently pushing out 175,000 trucks a year.Cars from this plant will be sold in Thailand and exported to other countries in Asia, Australasia and Africa. B and C-D segment cars will mean the Mazda 2, Mazda 3, Mazda 6, Ford Focus, and many other cars.