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Ford India to Rev Up Engine Exports

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Ford Motor Co. (F - Free Report) plans to boost exports of its engine production from India by shipping them for the first time to Europe. Currently, 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.

The company has already pumped in $2 billion to build manufacturing facilities in India. However, it is still lagging behind Hyundai Motor Co. and Maruti Suzuki India Ltd, which occupy the lion’s share in the Indian car market. Last year, Ford sold 96,270 vehicles, while Hyundai sold 373,709 vehicles in the country.

Earlier this year, Ford unveiled its new global compact sports utility vehicle (SUV) EcoSport at the 2012 India Auto Expo in Delhi, which is a part of its plan to roll out eight new models in the country by 2015. The automaker plans to invest $142 million to manufacture the SUV at its Chennai plant in south India for the domestic and export markets.

Currently, Ford builds Figo and Fiesta models at the Chennai plant. Last year, the automaker announced that it will invest $72 million to expand production capacity at its power train facility in the plant in order to support its sales and exports growth. The investment will enhance the plant’s annual production capacity from 250,000 vehicles to 330,000 vehicles.

Ford’s car launches in India are a part of its major expansion plan in the emerging countries, including Argentina, Brazil, China, India and Thailand. The company expects that Asia will account for 70% of its global growth in the next decade, mostly from China and India. It 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 occupies about 4% of the Indian market, which is about the same share occupied General Motors Co. (GM - Free Report) and Toyota Motor Corp. (TM - Free Report) .

The Zacks #3 Rank (Hold) company posted a 39% fall in profits of $1.20 billion or 30 cents per share in the second quarter of the year from $1.98 billion or 49 cents in the corresponding quarter of 2011 due to lower operating results in all the regions except North America. However, the company’s profits were higher than the Zacks Consensus Estimate of 28 cents per share.

Revenues in the quarter dipped 6% to $33.3 billion, due to the same factors mentioned above. However, it exceeded the Zacks Consensus Estimate of $32.0 billion. In the first half of the year, Ford’s U.S. total market share was 15.4% in the U.S. and 8.1% in Europe.

For 2012, Ford anticipates market share in the U.S. and Europe to be lower than 16.5% and 8.3%, respectively, in 2011. It also expects the overall pre-tax operating profit to be lower than 2011 compared with the prior guidance of tallying. Operating margin in the Automotive segment is anticipated to be equal or lower rather then the prior guidance of improve over 5.4% in 2011.

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