`With newer versions, the Ikon range will appeal to a broader section of buyers'

JANUARY 23: Ford India Limited (FIL) surprised the auto industry early this month when its new mid-size car Ikon topped the December sales charts in its segment, beating even Maruti Esteem. Ford has learnt its lessons from the Escort fiasco and plans to concentrate on just one product -- the Ikon -- and will offer the car in more variants in order to cater to the palates of different buyers. In a conversation with SWATI PRASAD, Phil G. Spender, Managing Director, FIL, talks about Ford's strategy for the Ikon, its experience with e-commerce and the company's future plans for India. Excerpts:

After selling 1,702 Ikons in December, which was more than even the sales figure for Maruti Esteem, do you think you can sustain the top slot?
That was a pleasant surprise. We produced a bit more than usual. But for the next couple of months, we won't be able to produce as many Ikons. We would be concentrating on our new model the Ikon Rally Sport. This is a sportier version of the existingIkon. Rally Sport is being launched in Delhi by the end of March and will carry a price tag of Rs 5.92 lakh.

However, by March, production should be back to normal. We would like our consumers to be patient.

What we are doing now is creating newer high-value segments for the Ikon. We are generating a model range that appeals to a broader segment of consumers.So the 1.3 litre CLXi is the `Affordable Ikon' while the 1.6 CLXi is the `Just Josh' and the Rally Sport is the `Sporty Josh' that will appeal to the youth who have high disposable incomes. This product is meant for that section of the youth which goes to night clubs. Such consumers, we feel, are looking for a sporty, rather than a luxury car.

Ikon GT, a concept car that we'd unveiled at this year's Auto Expo, is auto stylist Dilip Chhabria's version of the Ikon. We want to get market response on this car and then we would see when this version can be launched. Ikon GT would then be the `Ultimate Josh'.

With so many new entrants in themid-segment, and their optimistic targets to boot, don't you see a shake out happening soon?
Yes. Some players will experience a setback. With the entry of new player, the top-end of the segment is already seeing a drop in sales. Sales of cars like Mitsubishi Lancer and Honda City have dropped. I expect that to remain a trend.

The mid-segment will grow to 60,000 plus units by the end of this fiscal. But there will be growth primarily in the 1.3 litre segment. People see 1.3-litre mid-size cars as an alternative to 1.0 litre models such as Maruti Zen, Hyundai Santro and Fiat Uno.

With the advent of attractive finance packages, people will be able to afford the Ikon. A redistribution of share amongst manufacturers will also happen. However, there is growth primarily at the bottom of the mid-segment.

Do you see mergers and acquisitions happening in the Indian car industry?
There has to be some M&A activity happening in the Indian car industry as well. The industry is utilising only 40 percent of its installed capacity. This is highly unprofitable. And in order to stimulate growth, the industry will have to address this issue. Consolidation has to happen and obviously, some companies will not make it.

Wouldn't you admit that Ford had burnt its fingers by bringing an upper-end model -- the Escort -- first?
Depends on your strategy. The way we see it, our strategy is to sell cars in a market where we can generate margin and wealth. We can't do that in the small car market. There is a major risk there -- that of going out of business completely because the margins are really small. We started out with the Escort which is a real strong product. Escort did the job for us established quality, durability and safety standards and launched the Ford brand name in India. We have learnt our lessons from the Escort. Ikon is the first of our interpretation of what the Indian consumer really wants.

What comes after Ikon? A small car?
We have no plans for a small car at this point.We want our sales to gather momentum in the mid-segment. The Ikon segment is where the action will be. Earlier, there was a huge Rs 2 lakh to Rs 3 lakh difference between the small car segment and the mid segment. Now the two segments are coming together.

Our priority is to make a success of Ikon, to build a customer following and to keep the vehicle fresh. We also want to develop export markets for the Ikon.

However, once all that has happened, we would go back to the premium segment and launch something between the Mitsubishi Lancer and the Mercedes Benz.A small car is an extremely difficult product. So we would think about that a bit later.

With the launch of Ikon, Ford had also stepped into business-to-consumer e-commerce by informing the consumer about the booking status on the Internet. What had been your experience with the Internet?
We wanted to learn the technology. We had some teething problems with that medium, which is actually a medium of the future. However, we are glad weventured into the Web and I would say that we were partially successful.However, in business-to-business e-commerce, we're going very well. If there is any problem that we've faced so far, it is due to the telecom unreliability. There are delays and interruptions. We've got the B-to-B working a lot better. It is the business to consumer which is less mature. With the Internet, we're trying to be transparent in communicating with the consumer.

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