Twenty-five years after its first car rolled off the production line in the country, American car major Ford India has ceased manufacturing vehicles for sale in India.
The shutting down of its operations has been attributed to dwindling sales and more than $2 billion in operating losses, but some experts say it reflects the company’s failure in understanding the core Indian customers, their needs and then producing some good ads, which would have made at least some impact in the market.
Netizens calling it as the marketing failure:
While I’m sure critics of Modi will point fingers at the administration for @FordIndia shutting manufacturing operations, the fact of the matter is that it was a product and marketing failure.— Kushan Mitra (@kushanmitra) September 9, 2021
GM, another American automotive company, and Ford were among the first car makers who entered India during liberalisation.
GM had closed its manufacturing unit in Halol, Gujarat, in 2017 and sold its Talegaon, Maharashtra, facility to China-based Great Wall Motors — and subsequently stopped its sales in the country.
However, brands such as Kia, who play in the same segment, entered some four years ago and are running profitable.
Lloyd Mathias, Business Strategist, said despite being among the earliest entrants with GM and Daewoo, Ford India’s product portfolio lagged and later entrants such as Hyundai Motor stole the show.
Ford made some great cars and their Sanand plant in Gujarat was a pioneer in domestic manufacturing – yet they lost the plot with inadequate products, and sub-optimal marketing, he said.
“It was a mix of various factors, but indeed Ford India’s products and marketing are the key elements to their failure,” he said.
Sandeep Goyal, Managing Director, Rediffusion, believes Ford India faltered primarily in underestimating the Indian consumer: they thought the ‘poor’ Indian consumer can be passed off with obsolete end-of-life products.
The initial products lacked fits and finishes and came with no frills. On the other hand, Maruti Suzuki and Hyundai were treating the consumer as ‘special’, offering newer offerings at attractive prices. Styling was modern, and every new model added a better choice. Ford products continued to look stodgy and boring.
Goyal added, “The advertising was also dull and listless. I really don’t remember any of their advertising. Ford never signalled its world leader global pioneer status.”
While BBDO India handles its creative duties, Mirum India is the social media agency on record for Ford India.
Even the first of its offerings, the Ford Ikon, was a poor competitor to Maruti Esteem, which was already 10 years old. The arrival of the Honda City just demolished whatever little customer support it had in India. The EcoSport was the only young and fun offering and it got good traction.
Its Ford Ikon ad:
Ford EcoSport ad:
Ford is a quintessential American brand and is genetically predisposed towards catering to Americans first. It is still the largest brand going by the number of cars sold in the US, which is the second-largest car market in the world after China.
Samit Sinha, Founder, Managing Partner, Alchemist Brand Consulting, suspects the management’s worldview would, by and large, have always been US-centric. So when it came to addressing the needs of markets in other parts of the world, especially large emerging Asian markets such as India, it tended to struggle, especially in comparison to its Japanese and Korean competitors.
“To my mind, the failure of Ford in India, where it has lost over a billion dollars, has had more to do with a lack of a deep understanding of the needs and preferences of the Indian consumer, than anything else. That has reflected in their choice of products, pricing or features. The fact that it was not fully committed to adapting to the needs of Indian consumers were obvious in little things like not reengineering the controls to have the turn indicator lever on the right side of the steering wheel, which is more intuitive for a driver in a right-hand-drive vehicle,” he said.
The significance of the first impression for a car brand in a new market is very high. As the first Ford-branded car to be launched in India, the Ford Escort was perhaps not the best way to introduce itself in India, as it looked somewhat dated compared to the Japanese and Korean offerings at that time, especially from Maruti Suzuki and Hyundai. They may have over-depended on the Ford badge value to carry it off.
By the time they launched the Ford Ikon, which according to Sinha was a far more worthy product; it was perhaps already too late. And therefore despite having done reasonably well with the Endeavour and the EcoSport, the brand never achieved the kind of traction that would have made it successful in the fifth largest car market in the world.
Ford Endeavour ad:
Sinha said the success cannot be attributed just to advertising.
“The car brand’s advertising, while not unimportant, is relatively the least significant element in its marketing mix. The product itself and – to an extent – expert and peer reviews, are what communicate the loudest. Therefore, I don't believe that any amount of clever, noticeable and memorable advertising campaigns could have compensated for the inadequacy of the other elements and rescued the brand from its eventual sub-optimal sales performance,” he said.
Mathias too said Ford India lacked the nimbleness of the Korean and Japanese companies and their after-sales costs are relatively higher. Also they didn't find a strong niche in the market to dominate, like Hyundai did with the small car, the Santro, or Toyota with the Innova. Also, in general, the perception is that after-sales service of American car makers is more expensive than competitors.
He said all their launches lacked the scale and impact of their competitors.
In short, Ford India has been a vision failure: underestimating the consumer and trying to pass off below-par products in a market that was price sensitive but at the same time quality conscious too.
Consumer preferences for cars are dynamic, sometimes fickle, and are dictated by several changing perceptions, not all of which are to do with rational factors. And this includes the intangible imagery around a brand that makes a car brand desirable