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Old 29th August 2011, 17:19   #1
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Default Ford Ramping down production - Is this the beginning of a Downtrend?

This was expected the moment one saw the prices of the New Fiesta. Anyway the news is Ford is planning to ramp down owing to reduced demand of its petrol vehicles and also owing to reason that diesel component manufactureres are not able to sustain increased demand.

Now both are not good for Figo (thier only well running model). Petrol demand has decreased, Diesel component shortage. I am hoping its not the begining of the end of a good wave.

Ford Plans Production Adjustment As Demand Slows | MotorBeam - Indian Car Bike News & Reviews

Edit: Wanted to ask "Is this beginning of Downtrend", but mistyped it as "This is begining of downtrend"
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Old 29th August 2011, 17:23   #2
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Default re: Ford Ramping down production - Is this beginning of Downtrend for them?

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and also owing to reason that diesel component manufactureres are not able to sustain increased demand.
Not able to keep up demand for diesels. This sounds like good news to me.
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Old 29th August 2011, 17:28   #3
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Default re: Ford Ramping down production - Is this beginning of Downtrend for them?

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Not able to keep up demand for diesels. This sounds like good news to me.
Good point, but given the fact that they have some 8 models planned for next 5 years and are not able to manage parts manufacturing for thier first car is not that good a news.

Moreover, the waiting period is increasing to 2.5 months just owing to parts shortage (not owing to incrased demand). That was the reason I thought it might repel customers away from it.

Note: If Ford stays on even I will be happy, dont take me to be a Ford Basher please.

Mods: Can you remove the words This is begining of downtrend for Ford. Guess that doesnt apply in this case. Its my mistake

Last edited by xingamazon : 29th August 2011 at 17:30.
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Old 29th August 2011, 17:28   #4
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Default re: Ford Ramping down production - Is this beginning of Downtrend for them?

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Originally Posted by xingamazon View Post
This was expected the moment one saw the prices of the New Fiesta. Anyway the news is Ford is planning to ramp down owing to reduced demand of its petrol vehicles and also owing to reason that diesel component manufactureres are not able to sustain increased demand.

Now both are not good for Figo (thier only well running model). Petrol demand has decreased, Diesel component shortage. I am hoping its not the begining of the end of a good wave.

Ford Plans Production Adjustment As Demand Slows | MotorBeam - Indian Car Bike News & Reviews

Edit: Wanted to ask "Is this beginning of Downtrend", but mistyped it as "This is begining of downtrend"
how is this a downtrend?
its just a market adjustment.
everyone's here to make money.
Diesel trumps petrol in demand, petrol doesnt sell.
free up whatever common resources are there(production, monetary or managerial), put them in diesel.
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Old 29th August 2011, 17:48   #5
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Default re: Ford Ramping down production - Is this beginning of Downtrend for them?

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Originally Posted by xingamazon View Post
I am hoping its not the begining of the end of a good wave.
When the Indian market surges, it surges by a HUGE margin; it is going to be obviously difficult to sustain that momentum.

The increased preference towards diesel was expected.

I'm surprised at the fact that diesel component manufacturers can't meet demands; bet that's a first!

I doubt other manufacturers will follow suit; most have a backlog (Swift, Polo, Verna etc.) for certain vehicles.
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Old 29th August 2011, 17:58   #6
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Default Re: Ford Ramping down production - Is this beginning of Downtrend for them?

I think its a market trend after petrol hike. Petrols down and diesels up. Honda had do do major price cuts.

As far as pricing for the new Fiesta, with the Classic still around, they have to create space between the two cars.

Quote:
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Moreover, the waiting period is increasing to 2.5 months just owing to parts shortage (not owing to incrased demand). That was the reason I thought it might repel customers away from it
Even Swift has the same waiting. Customers don't really care about the reason behind the wait.

Yes, they might lose customers in the short run and its a shame because they need to sell as many as they can in the 1st year when the shape is hot.
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Old 29th August 2011, 18:05   #7
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Default Re: Ford Ramping down production - Is this beginning of Downtrend for them?

Yes Diesel vehicles are in demand due to our skewed government fuel policy, I think every manufacture these days are struggling to sell petrol powered vehicles including market leader Maruti. The overall market sentiment coupled with interest rate hikes has hit the auto segment along with other core manufacturing sectors.

Due to excessive diesel component demand there can be part shortages leading to slower production, remember even shortage of a single component can stall the assembly line. I have seen this practically at the Fiat Palio assembly line almost a decade back.

Adjusting production mix and strategizing the production as per the demand in a quite common industrial practice, this should not be viewed as a downturn of a company.
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Old 29th August 2011, 18:07   #8
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Default Re: Ford Ramping down production - Is this beginning of Downtrend for them?

But one main reason I am guess Ford vehicles were in demand was the diesel was available off the shelf. Imagine if it would mean waiting period for both Swift and Figo, would people still go for Figo?
I doubt they would, it would be difficult to maintain the same level of customer content if there is a waiting period.
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Old 29th August 2011, 19:40   #9
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Default Re: Ford Ramping down production - Is this the beginning of a Downtrend?

Guys,

Don't read too much into it. Even Maruti & Tata are cutting down on production. Basically, everyone is preparing for a slowdown in growth (overall market). The stupendous growth of 2010 was simply unsustainable.

Maruti slashes production

Tata resumes production
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Old 29th August 2011, 19:48   #10
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Default Re: Ford Ramping down production - Is this the beginning of a Downtrend?

This is a prudent move since local costs are not cheap and inventory pile-up is costly to maintain ( the dealer does not pick up the tabs in case of an industry slow down) . With interest rates likely to go up by another 0.5% or so in the coming 12 months, we are yet to see the last of the squeeze . So we would clearly see slowdown in expansion plans , reworking of production plans , etc . Think about the auto ancillary units who supply parts - they are no Ford, GM , VW or Maruti . They are borrowing at anywhere between 11-15% interest rate for their working capital and any production ramp up ( capex loans) is quite an ask at this juncture because banks are edgy about credit quality, having lived through nightmares in 2008-2010 .
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Old 29th August 2011, 20:23   #11
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Default Re: Ford Ramping down production - Is this the beginning of a Downtrend?

We cannot be growing 30% year-on-year all the time, there was bound to be a slight breather in the growth engine. We may not like it, but individuals and companies are holding on to their buying, investment decisions and this will sure trickle down to Automotive sector as well. All are just doing some basic belt tightening to brace themselves for slowness in demand in near future.
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Old 29th August 2011, 21:25   #12
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Default Re: Ford Ramping down production - Is this the beginning of a Downtrend?

SouravC and Mayank.
I agree, this correction is in a way good.
But my point is Ford at one point of time had gone ahead and announced that it would introduce 8 new models and a new plant. But are in a position where its current capacity itself is underutlized. Doesnt that sound like an oxymoron.
So what is happening for the plan then, will that be put in back-burner?
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Old 29th August 2011, 21:59   #13
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Default Re: Ford Ramping down production - Is this the beginning of a Downtrend?

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Originally Posted by xingamazon View Post
But my point is Ford at one point of time had gone ahead and announced that it would introduce 8 new models and a new plant. But are in a position where its current capacity itself is underutlized. Doesnt that sound like an oxymoron.
So what is happening for the plan then, will that be put in back-burner?
Well, the automobile industry is a funny industry which suffers from perennial over capacity if we add up the global capacity - I guess its a very optimistic industry
Specific to the news item
A.) Those are sound bytes meant for mainstream media feed, not necessarily untrue but certainly not sacrosanct
B.) The plan of 8 models is by the year 2015 - there are 4 more years to go on that
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