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Ford Recalls EcoSport SUVs in India

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Ford Motor Co. (F - Free Report) revealed that it would recall 972 units of diesel variant of EcoSport mini sports utility vehicles (SUVs) in India due to a glitch with their  glow plug module, which helps in starting engines. The Detroit-based automaker has not yet received any reports of accidents or injuries related to the problem.

Ford started shipping locally manufactured EcoSport in India in June this year with a starting price of 559,000 rupees ($9,400) in order to tap the growing market for mini-SUV in the country.

Like China, mini-SUVs are becoming more and more popular in India due to traffic congestion, lack of parking space and patchy roads. As a result, the automaker seems to be much more cautious about maintaining the service quality of the vehicle.

In China, IHS Automotive has projected that demand for small SUVs will more than double to over 207,000 units in 2013. In India, the automotive think tank anticipates mini-SUV sales to grow manifold from only 6,140 vehicles in 2012 to more than 126,000 units in 2015.

Ford plans to export the EcoSport from its Chennai plant in South India to Europe later this year. According to the company’s chief executive, Alan Mulally, the company is on track to build more vehicles using global platforms or chassis, in order to reduce costs and hasten product development.

In Oct last year, Ford had revealed that it will expand sales network in India as part of its major expansion plan in the emerging markets. It will increase the number of outlets to 500 by 2015 from 230 currently in the country.

In Sep 2012, Ford had announced plans to boost exports of its engine production from India by shipping them for the first time to Europe. The automaker exports 40% of its Indian-made engines and 25% of its Indian-made cars to 35 countries.

Ford’s plan to rev up Indian exports is in line with its capacity expansion programs in the country. The company expects to manufacture 450,000 cars and 600,000 engines in India by 2015.

Ford is pursuing a major expansion plan in the emerging countries, including Argentina, Brazil, China, India and Thailand. Mulally expects that Asia-Pacific will account for 40% of its vehicle sales in four to five years. The company also anticipates Asian sales volumes to double and account for a third of its global sales by 2020.

According to Joe Hinrichs, the president of Ford’s Asia Pacific and Africa region, India will be the third largest market after U.S. and China by the end of the decade. Currently, Ford shares the Indian market with other leading automakers such as General Motors Co. (GM - Free Report) , Toyota Motor Corp. (TM - Free Report) and Tata Motors (TTM - Free Report) .

Currently, Ford retains a Zacks Rank #3, which translates to a short-term rating (1–3 months) of Hold.

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