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'Growth potential in India is enormous'

Phil Spender, managing director of Ford India, has every reason to smile. After all, Ford Ikon -- the josh machine from the Ford stable -- is the market leader in the mid-size car segment.

Following the comparative lackluster show by Ford Escort, the company needed a successful vehicle and through aggressive marketing and sleek design, it has now managed to push all the other mid-size cars behind them. Or so claims Spender.

From February 2001, Ford Ikon is being exported to South Africa and Mexico, which many feel is a victory for a 'Made in India' product.

It is in Marimalai Nagar, 53 kilometers from Madras, that the Ford Ikon is manufactured and it was at this hi-tech plant
that Shobha Warrier met Phil Spender. Excerpts from the interview:

When Ford launched Escort, it did not do very well. The Ikon, however, is quite a success. What do you think are the reasons for this?

Escort was not a major success because it was the first vehicle that we introduced in India. We did a very quick time plan and the role of the Escort was to learn the market and to find out what really would satisfy the Indian consumer.

The reason we picked Escort was because it was a strong vehicle and had an excellent reputation for quality and durability under very severe conditions. The roads here are very challenging. We knew Escort would be a vehicle that could stand up to that challenge. We were proved right.

Then, why did the Escort fail in the Indian market?

We learnt a lot about the consumer preferences and means of satisfying them after launching the Escort. Ikon has endeavored to actualize those preferences. The Escort was a much more expensive car than the Ikon -- that was another lesson we learnt.

As a result of that, while launching the Ikon, we decided to make it closer to the 'sweet spot' pricing to the consumer. We also made it more zinda dil and stylish. We realised that good performance was what the consumers were after. That really was the beginning of Ikon, the josh machine.

What were the Indian consumers' preferences? How different were they from those elsewhere?

I don't think the premium market is any different, in terms of the aspirations that the consumer has. Having a great product is something everyone longs for.

Here in India, the consumer is only concerned about the value but in other countries, you have to satisfy other needs too.

Ikon's brand marketing is considered one of the biggest successes. How did you hit upon the josh machine

The exercise has certainly been successful and we are very proud of it. First of all, we planned a product that would be really good. Then we did a lot of research to understand how we were going to connect with the customer.

During the research, one of our potential customers actually used the word josh. We picked that up and tried to put it in proper context. Our marketing team and the ad agency developed on that theme and planned the whole strategy around the josh machine. Josh to us is spirit, and that exactly what Ikon represents.

Will you adopt a similar strategy in South Africa and Mexico for the Ikon?

Yes, indeed. We will go in for similar positioning.

Wil that mean using the same marketing methods?

It would be targeting similar consumers -- those who are full of life and young at heart consumers. We will use the same communiqué.

At Ford, how much do you think has Indian consumer changed over the years?

Today, Indian consumers are not buying things simply based on the price. It used to be so soemtime back and manufacturers dished just that out. Now, people buy with an objective, an aspiration. That is the biggest change, I think.

Most Indians now feel a vehicle is no longer a luxury. It is regarded as a productivity tool. It is part of the modern economy. The Indian consumer is also very alert, Internet-savvy and knows what is going on around the world.

You will soon see a big boost in the mid-size segment. People will want to own better cars. I think it is quite a change.

Car ownership has increased by leaps and bounds. Attractive financial packages are also now available for the consumer to buy a car. As consumers are nowadays comfortable with credit, you will see an upwardly mobile population.

The growth of Indian economy has dropped below 6 per cent. How do you think will this impact the automobile industry?

I think the economic growth will be good. There is a long way to go for India. And that is one of the attractions of this market. Its growth potential is enormous and you see it will continue to go up. Many foreign cars are coming to India.

I think if you look at the population growth, the economy should be growing at 6 to 7 per cent minimum. There is no doubt about that. But the positive sign is that cars have started selling in India. Ad hoc tax was the main reason why the market was down last year.

Are you happy with the budget announcements?

I think some very good moves have been made by the government.

How has lack of good infrastructure affected the automobile industry?

Infrastructure has not really hit the market yet. But unless something is done, it will. I don't think the problem is lack of funding. There isn't enough control on the implementation part. A lot of money is being wasted.

Last year, something like Rs 36 billion was dedicated to road infrastructure, but that much money was not spent. I think it is important to implement these infrastructural projects successfully. The roads here do need improvement for the market to grow.

However, I am not worried. Our philosophy is always to go out and do something about it. We are chairing a select committee on infrastructure development and we are going to try and help prepare and come up with solutions.

What about the congestion on roads…?

I think you are going to see mobility changing in India. Some of the western models will not work here in India as the population is too big. What India needs is a really comprehensive mobility study and how rail and road transport can be interspersed with vehicle ownership.

You only assembled the Escort here. Now you are using a lot of local content for the Ikon. How do you compare the ancillary products made in India with the overseas products?

Yes, 'Made in India' is not always synonymous with quality. So, we had a major issue on our hands to try to convince markets outside India that 'Made in India' can be beautiful.

Having said that, Ikon encouraged local products. Our business partners are learning very quickly and our goal is to provide world-class quality to Indian consumers.

We also want to provide world-class quality service to our export markets, which at the moment are South Africa and Mexico. I think we are doing a pretty good job. But I still feel there is room for improvement.

Improvement in quality?

In quality, in customer competitiveness, and in customer service. We need to improve because a lot of other nations are also making substantial progress.

Were you happy with the quality of the products earlier?

Up front, we have invested heavily in our suppliers and partners, and we have got the largest supplier system. Our engineers go and help train people. So, we have made a significant contribution to try and help the performance of all those who are involved with us. I think our level of performance is a little bit higher than the average in the industry.

India has very talented engineers. So, I am optimistic about their abilities. It is amazing to see the way our people work here. They are good learners, very smart and intelligent.

How has the Ikon been seen in Mexico and South Africa?

It is still early days. The Ikon has been there for less than a month only. But the initial feedback is that our customers are very happy.

Are you happy with the sales of Ikon in India?

We are very happy with our leadership position. Last year, we exceeded our target. This year, we are setting ourselves a very aggressive target.

We are also targeting the rural market. Our target consumer is a person who is adventurous, young at heart and aspiring. He can be there in a city or in a rural area.

Is it very difficult to penetrate rural market with a vehicle like Ikon?

Not at all. We have found that we can penetrate the rural market, too. It is a huge market and we have to expand our distribution system more effectively. But in some of the territories, for example in Karnataka, we have a bureau point at every 200 kilometers. We, thus, have the rural part of Karnataka covered. There is no reason why our car cannot be successful in the rural areas.

Just as a managing director of a car company, or a dentist can be a zinda dil, a farmer can also be a zinda dil person. It is not geographically, socio-economically or demographically different. The fact that we have focused more on the cities first was just a matter of priority.

Do you have to change the word josh to regional languages?

The areas that we really wanted the Ikon to succeed was in the north and that was the reason why we chose zinda dil and josh. We targeted ourselves to the northern market, as it is the largest market in India; Punjab in the north and Maharashtra in the west.

What we found was that josh was the word understood all over India. Now, josh is understood in Tamil Nadu as well as in the north. It was never a problem to us that josh was a Hindi word and could be understood only in the north.

How has the depreciation of the rupee against the dollar affected the automobile industry?

We are trying to keep from being hit hard through productivity improvement. But we will not sell cars below cost. We have to have a reasonable margin so that we can have all the features that the customers need.

What about the import of second-hand cars?

Imported used cars and new cars cannot co-exist. The government has recognised this. All the countries that have experimented with second-hand cars now realize that it was a mistake. Many of those countries, including New Zealand, are moving away from the import of second-hand cars. India doesn't have that problem now and it doesn't need to have that problem.

After the launch of Ikon, you said that you wanted to go and tell your headquarters that you made a complete success of Ikon. Did you do that?

I am getting close (laughs). What we achieved during the last year has been reviewed by the bosses. The challenges are still considerable and we are working very hard to take the next step, which is to improve the quality, customer satisfaction, distribution system and dealership.

Did you ever consider launching a small size car in India? To the Indian middle class, a car is still a luxury.

We are on record that we are not unhappy with our absence from the small car segment. A number of manufacturers, today, are selling at a low cost. They are losing money on every car that they produce. And we wouldn't want to go to an area where we cannot generate a margin.

Over the next few years, there is going to be a shake out and you are going to find that small cars are as expensive as the Ikon. When the consumers realise that, they will go in for cars like the Ikon.

Okay Ikon is here. What next?

We don't discuss our future product plans -- that is our policy. But I can tell you that we will not remain a single car company for long.

Photographs by Sanjay Ghosh

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