Ford Motor Co. (F) announced that it will invest $72 million to expand production capacity at its power train facility in Chennai, India in order to support its sales and exports growth.
The investment will enhance the plant’s annual production capacity from 250,000 units to 330,000 units and will add a third production shift in the plant. The expansion will create more than 300 jobs and is expected to be completed in mid-2012.
Ford India President Michael Boneham stated that the expansion will help Ford build more fuel-efficient engines for India and other markets. Last year, the automaker revealed its plan to launch eight new models in India by 2015 and export the locally assembled popular Indian small car, Figo, to about 50 countries.
Ford’s car launches in India are a part of its major expansion plan in emerging countries, including Argentina, Brazil, China, India and Thailand. The company expects Asia will account for 70% of its global growth in the next decade, mostly from China and India. The latest expansion will bring Ford’s total investment in India to more than $1 billion.
India has a fast-growing automobile market as less than 1% of its population owns a car. Last month, the country’s car sales rose 13.2% to 162,825 vehicles from 143,862 vehicles in the same month a year ago. Currently, Ford occupies about 4% of the Indian market, which is about the same share as General Motors Co. (GM) and Toyota Motor Corp. (TM) hold.
Ford, a Zacks #3 Rank (Hold) stock, revealed a 48% rise in profit to $2.61 billion from $1.76 billion in the same quarter of 2010. On earnings per share basis, profits rose 35% to 62 cents per share from 46 cents per share a year ago, thereby topping the Zacks Consensus Estimate by 12 cents per share.
The rise in sales was attributable to the company’s One Ford plan, which relies on fuel-efficient lineups, continued investment in global assets, efficient management and strengthening of core businesses, which has offset the negative impact from not-so-favorable economic conditions as well as the earthquake and tsunami in Japan.
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