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Rediff.com  » Business » Ford vs GM: And the winner is...

Ford vs GM: And the winner is...

June 14, 2006 11:53 IST

The days of General Motors versus Ford are far from over. This time, they are battling over developing markets, including India.

"This is Ford country. On a quiet night, you can hear a Chevy rust."  Written across a well-worn baseball cap or a black T-shirt, this immortal line exemplified the mother of all corporate battles.

Those were the times when nothing was bigger than a nice General Motors versus Ford story. Those were the days when GM was, without dispute, the largest car maker in the world, while the Ford Taurus was the largest selling car in the US. And names such as Toyota and Honda were considered growing "imports".

In typical daring American spirit, Ford and GM decided to play significant roles in the consolidation wave and absorbed many a legendary marque from across the world. Ford picked up premium brands like Aston Martin, Jaguar, Volvo and Land Rover, while GM added Saab, Subaru and, for some time, even Fiat to its kitty.

How things have changed. GM continues to be a behemoth all right, but textbooks are now being written on how nothing can save it. The Taurus is history and a certain Toyota Camry has been the largest selling car in the US for almost a decade now.

Some of these mega brands the American manufacturers acquired are now being considered heavy liabilities that are tough to turn around and are now being used as tools for badge engineering and platform sharing.

Towards the end of the last century, both GM and Ford took tentative steps to enter the "next world" that of the developing markets of Asia and East Europe. And guess what, it is this new world that might help these American giants find their footing again in the automotive map.

That said, the "new economies" strategy that the big two followed has changed a great deal from the early days. While GM set up partnerships in China and India, Ford followed suit quickly.

India got the first part of the GM versus Ford battle in 1995, when GM tied-up with Hindustan Motors to build the Opel Astra in Halol, Gujarat, while Ford found an ally in Mahindra & Mahindra, and started assembling and selling the Escort from M&M's Nashik plant. The Astra versus Escort battle spilled over from Europe and landed in our shores. But there was no eventual winner.

Present sense

Cut to the present. Ford found the Ikon formula successful - take a European model, work on it at their state-of-the-art small car facilities in the UK and Germany and adapt it for the Indian market - therefore, the new Fiesta.

While GM gradually retired the Opel brand, and introduced the more elastic (and, perhaps, more powerful in India) Chevrolet brand. Astutely, GM worldwide picked up Daewoo, which gave them virtually ready-to-launch models for global markets, including those in developing countries. Thus, the Aveo.

Both Ford and GM chose to have Bollywood stars to endorse their new cars - Abhishek Bachchan for the Fiesta, despite him appearing for the Maruti Suzuki Versa campaign along with daddy Bachchan not so long ago, and Rani Mukherji and Saif Ali Khan for the Aveo.

Both companies want to capture the imagination of the youth and tap the "new energised India", represented by these sophisticated young stars. The "Go Fida" campaign of Ford was pale in comparison to the highly original "Josh machine" for the Ikon six years ago, but it did enough to make the market take notice.

The Aveo communication lacked spunk and clarity in contrast. Surprisingly, Ford has started hard-selling the fact that the Fiesta has a common-rail diesel powered version, which clearly shows the intent of Big Blue to tap the lucrative and emerging market for sophisticated diesel cars.

GM wants to sell only 13,000 cars this calendar year, thanks to production constraints, which means less reason to make more noise.

Ford, on the other hand, had to find a niche for the good old Ikon (1,12,037 units since November 1999 launch), which now retails at a lower price range, and their "young Ikon" campaign has worked wonders in establishing the car amongst the increasing number of the BPO-rich.

Adapt and adopt

But to get to these exciting days in India, Ford and GM had to attend the school of hard knocks, post the Astra/Escort days. Cars are different from colour televisions and they cannot be sold across the world by incorporating minor changes.

Yet both GM and Ford chose the similar and easy route of picking up their small sedans from Europe as their launch pad models.

Now, an Opel developed in Germany for Europe was always going to be an expensive car to buy and run in India, and ditto the Ford Escort. After five years of moderate sales, both GM and Ford decided to part ways with their respective partners and decided to bring in what was supposed to be their money-spinners.

While GM continued its operations at Halol, Ford moved to a greenfield facility at Maramalainagar near Chennai to build the Ikon. The Ikon, without doubt, was the first effort from a big league car maker to produce a car for India.

Sure, it was based on the tried-and-trusted European Fiesta platform, but Ford had to engineer a three-box body style complete with a boot for India.

The Josh machine was an instant hit and did quite well for Ford India, with sales averaging between 2,500 and 3,500 units per month.

GM, by now, was getting more interested in China and that meant the Indian operations had to wait for the release of the Opel Corsa (in three body styles, that too), which proved to be too small a car, and a bit too late in life for buyers to get excited about.

Meanwhile, the Ikon, despite stiff competition from Hyundai and Maruti, established itself as a modern three-box sedan.

New brand

GM started focusing again on India by 2002 and they took the brave decision to retire Opel brand eventually and launch and concentrate on the effervescent Chevrolet brand.

For this, GM dug deep into their Japanese partners and launched the brilliant Subaru Forester as a Chevrolet in India. Sadly, the Forester was not big enough an SUV (sports utility vehicle) to suit Indian preferences and the car bombed. But the next Chevrolet from GM became the first profitable model for the company.

The Tavera, an Isuzu-derived diesel people-mover took the market by storm as a refined, reliable and even good-looking alternative to the hot-selling Toyota Qualis. Chevrolet tasted even more success when Toyota's global thinking forced the Qualis out of the Indian market.

The people-mover segment was not yet ready for the all-new Toyota Innova and the Chevrolet became the default choice for everyone, from BPO operators to pilgrims (all right, with some competition from Indian-bred Tata Sumos and Mahindra Scorpio).

Another Fiesta?

Ford though, had a fairly successful entry into the small volume SUV market with the Endeavour, but the eminently forgettable launch of the Fusion crossover (car plus MPV or multi-purpose vehicle) was now building its case for the Ikon replacement.

Europe had gone through two generations of Fiestas since the Ikon and the new three-box Fiesta was designed and developed for India with suitable powerplants.

Sure the car didn't look any bigger than the Ikon but it was much more contemporary and, best of all, had a diesel engine that featured common-rail diesel injection technology - refined, powerful and economical than conventional diesels, the concept was popularised in India by Hyundai through its CRDi models.

The launch of the Fiesta was somewhat drowned by the noise and buzz created by the Suzuki Swift but since then, the new three-box from Ford has been growing in strength.

Enter DaewooGM, with its resources, could have outdone Ford in creating a few small car platforms by investing a few billions in all-new projects. Instead, in a seemingly smart move, they bought the ailing Daewoo - lock, stock and an array of pre-developed car models.

Actually, the acquisition of Daewoo is one of the few smart things done by the General and GM-Daewoo Automotive Technologies is doing a pretty good job of selling automobiles in Europe and Asia. India got its first Daewoo-derived model when the Toyota Corolla-sized Optra was launched under the Chevy brand.

The Optra is yet to have a diesel model in its line-up, yet it managed to do reasonably well (22,094 units since its July 2003 launch). The Tavera, on the other hand, has managed to do 35,964 units since its June 2004 launch (of course, helped by the demise of the market leader Qualis).

But the car that was supposed to re-ignite the GM-Ford battle was the much awaited Aveo  - again a car built on a readymade Daewoo platform. Mind you, GM did not incur much cost in the design and development of the car and that meant they could price the Aveo brilliantly around the world.

An entry-level version of the Aveo 1.4 that will soon be launched, will retail around Rs 5,55,000 - almost half a lakh of rupees less than the base Fiesta 1.4. The Aveo has been a success story in European markets too.

The new battle

The only hitch for GM India was the lack of a diesel powertrain for their spanking new three-box sedan (though the hatchback UV-A that will take on the Swift and Getz is on the cards). That meant much of the dealership footfalls have not resulted in sales numbers.

After three months, the GM report card shows only 4,402 Aveos (launched in March 2006), while Ford has already clocked 17,263 units since its November 2005 introduction.

"The Fiesta TDCi has managed to penetrate traditional petrol markets like Delhi and Mumbai and 60 to 70 per cent of the cars we build are diesels," says Arvind Mathew, managing director, Ford India.

Who's winning?

Well, Ford India seem to have an edge when it comes to passenger cars, while the GM India strategy of horses for courses has paid off handsomely till now. Ford, thanks to their development centres in Europe, is a better small car maker than GM, but the General has struck gold with the sweet Daewoo line-up.

We hear that Ford is all set to enter the lucrative pick-up (semi-commercial) market soon, while GM is busy readying an assault comprising body-style variants (same car in a two-box and three-box variants), and more importantly, diesel engines for each of their models.

Ford and General Motors are changing, and the routes that they have taken to grow rapidly in new markets is as diverse as it could get. Both have had their share of duds (Forester, Fusion) and both seem to have found their niches (Tavera, Fiesta diesel). It is safe to conclude that it has been a hit-and-miss ride by the Big Two in India.

However, both GM and Ford face stiff competition in India today from both multi-national and homegrown car companies. What their respective Indian management will be striving for will be more attention from their parent companies who are busy cleaning up their homes. No, we have not seen enough of GM versus Ford yet.
Bijoy Kumar Y
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