Ford to build second plant in India image

Ford Motor Co. plans to invest INR40bn (approx $1bn) to build a new integrated manufacturing facility in Gujarat, India.

Ford already has a plant near the southern Tamil Nadu port capital of Chennai, where it manufactures small cars such as the Fiesta as well as the Endeavour sports-utility vehicle.

“Ford will invest approximately Rs. 4,000 crore in the two facilities, which include stamping, body, paint and assembly operations for vehicle manufacturing, as well as machining and assembly operations for engine manufacturing,” the company said in a release on Thursday.

Foreign carmakers have been ramping up investment in a price-conscious Indian market, where small cars are the biggest sellers and domestic operators have long dominated the market.

“Today one out of six Ford vehicles are sold in this region and by the end of the decade we expect about a third of Ford vehicles sales to come from here,” said Hinrichs. “That’s why we’re investing.”

According to the automaker, the new facility will have an initial annual capacity of 240,000 units, and the engine plant will have an initial annual capacity of 270,000 engines.

Ford sold 95,395 passenger cars in India in the year ended March 31, giving it a 4.8 percent market share, according to data from the Society of Indian Automobile Manufacturers.

Last month, Ford introduced a new variant of its Fiesta sedan, the first of eight models the company intends to introduce in the country by 2015.

It posted net income of $2.4 billion in the second quarter and its shares fell to a 2011 low on Wednesday.