) has been successfully solidifying its position in the Indian car
market over the last year when it launched Ford Figo. Booming
sales of the Ford Figo helped Ford India post a 184% growth in
sales in 2010. This helped Ford compete globally with automakers
(ETR:DAI), Honda (
), Toyota (
), Maruti Suzuki (BOM:532500), Hyundai (SEO:005380) and others. We
believe that Ford's transformed position in India and its
aggressive growth plans can provide significant upside potential to
Ford's stock value.
We have a price estimate of $20.59
, which is around 42% above the current market price.
Ford's Bumper Year in India
Ford has experienced a bumper year in India with overall sales
reaching 83,887 units during 2010 against 29,488 units in 2009.
Ford Figo, which has sales exceeding 76,000 units since its launch
in March 2010, contributed significantly to this sales growth.
Ford's rapid growth of 2010 has continued in 2011 with Ford India
reporting its sales tripling in February 2011 compared to the same
time last year.
The Indian car market is poised to grow strongly in the coming
years, and we believe that Ford has positioned itself very
favorably in the market to capitalize on this growth. Ford's market
share in India is still around 2.6%, thus providing it with
substantial room for improvement.
Investing in Growth
Ford is focusing on expansion with plans to invest approximately
INR 50 billion (USD 1.1 billion) into a new production facility in
India. Ford recently approached the Indian government to seek 500
acres of land for this facility. Additionally, Ford India has also
been expanding its sales and service network across the country.
The company's dealer network has already increased to more than 170
outlets in 100 cities across India.
We believe that this will help Ford meet the growing demand in
the Indian car market and drive its international car market
Ford to Expand its Car Portfolio in India
Ford is hoping to build on its success of 2010 and is planning
to launch the all new Fiesta this year. Ford's car launch plan
includes a series of eight new global products that Ford plans to
introduce in India by the middle of this decade. This will help
Ford's overall positioning in auto market in India as it plans to
have products in each consumer segment. Ford hopes to capitalize on
Figo's success and push its revamped portfolio of products to gain
maximum mileage from the rapidly expanding Indian automotive
Upside from Faster International Growth
Increasing Ford vehicle sales in India could cause Ford's market
share to grow at a faster pace than what we had projected. In a
scenario where Ford International market share grows by 0.2
percentage points more than our current growth projection would
imply a Trefis price of $22 - a further 10% upside from our current
price estimate. You can modify the chart above to make your
See our full estimates for Ford.