March 26, 2010 Ready to Ride

Volume 13 | Issue 2

The Ford Motor Company first set foot in Brazil in 1919. Since then, the company has enjoyed plenty of growth, but perhaps never as much as

When they hear the name Ford, most Americans probably conjure up the recent losses suffered by the company during the United States’ economic crisis – and the subsequent government bail-out that ensued. However, travel below the Equator to Brazil where the effects of the global recession are already largely in the past and where, spurred on by an already well-recovered economy, sales of automobiles are booming, the mention of Ford evokes activities such as growth, expansion, success, and yes, even profits.

RAPIDLY INCREASING VOLUMES
The numbers speak for themselves. In 2009, Ford Brasil sold over 323,800 vehicles, which represents an increase of 15.3 percent over 2008. In the automobile segment alone, where the company has enjoyed great success with its Ka, Fiesta, and Focus brands, Ford grew by 23 percent – its best-selling Ka line, one of the Top 10 selling cars in the country, saw volumes increase by 31 percent – achieving a 9.7 percent market share (a 1 percent increase over 2008). The company attributes its success to factors such as advanced design, competitive pricing, and longer warrantees: 2010 models come with significant price reductions over 2009 models (in terms of purchase price as well as costs for repairs and replacement parts) and three-year warrantees independent of mileage. Also included are unique, top grade equipment and accessories that enhance performance, comfort, and safety.

Ford has also continued to carve out an increasingly large portion of niche market segments as well. In terms of utilitarian vehicles, the EcoSport – over 43,500 of which were sold last year – continued to completely dominate Brazil’s SUV market due, in part, to the fact that Ford’s SUV line is the most complete on the market (with Flex Fuel 1.6L and 2.0L engines available in 4×2, 4WD, and automatic models). Concurrently, the Ford Fusion continued to hold sway over the luxury sedan segment. The more than 9,800 units launched last year seduced consumers with attractive bells and whistles ranging from sequential automatic transmission and AWD traction control to a 10GB Sync Microsoft multimedia center with a touch screen.

Meanwhile, Ford Brasil’s truck division had an excellent year. Propelled by the innovative features included in the manufacturer’s main Cargo line – renowned for its durability, performance, and low maintenance costs – in 2009, Ford Brasil sold more than 22,200 commercial vehicles. This volume represented a 5.9 percent over 2008. In terms of sales, it was a record for the manufacturer, which now controls 23.5 percent of the Brazilian truck market (excluding the extra-heavy segment in which it doesn’t compete).

“Ford was the truck manufacturer that posted the best results outof all (the multinationals) that have installed plants in Brazil,” claims Oswaldo Jardim, director of Truck Operations. “In terms of production, the segment was heavily affected by the fall in exports. As a whole, the sector reduced production of trucks by an average of 26.1 percent. Of all the major players, however, Ford Trucks showed the smallest reduction (19.18 percent). This is because the majority of our production is absorbed by the domestic market.”

Indeed, as part of a concerted strategy to focus increasingly upon Brazil’s thriving and constantly expanding domestic market, in 2009, Ford Trucks launched a whole new line of Transit vans. The vehicles were so well-received – in less than a year, the company captured 7.5 percent of the market – that Ford is rolling out a new chassis cabin van. Expected to hit the market later this year, this new model is expressly targeted to meet the transportation needs of Brazil’s increasingly dense urban areas.

MAJOR INVESTMENTS
That the truck division did so well, particularly in the midst of a very unstable economic climate, is a testament to Ford’s commitment to quality as well as the efficiency of its service network. “These positive results are due to our solid structure as well as to distributors who are highly motivated and to a solid base of suppliers whom we can count on,” explains Jardim. “For this reason, we’re preparing for further growth by investing R$370 million (roughly US$200 million) in our Brazilian operations (based in São Bernardo do Campo, on the outskirts of São Paulo) between now and 2013. This capital will will go towards the launch of new products throughout the South American market, which currently represents one of the most disputed regional markets in the world.”

Actually, the investment in its trucks division is not the only spending that Ford is planning for the future. Between 2011 and2015, the manufacturer has reserved R$4 billion (US$2.2 billion) (the largest investment the company has made during the 90 years it’s been operating in Brazil) in anticipation of the market’s great growth potential as well as to guarantee the company’s global competiveness. The lion’s share – an estimated R$2.8 billion (US$1.5 billion) – will go towards expanding Ford’s automobile plant in Camaçari, Bahia (where current annual production capacity will be increased from 250,000 to 300,000 units) as well as modernizing its facilities in Horizonte, Ceará, both of which are located in Brazil’s traditionally poor, but rapidly developing Northeast.

Concurrently, the company is also plowing R$600 million (US$323 milliion) into its state-of-the-art industrial plant in Taubaté, São Paulo, where its Zeta RoCam engines – responsible for 80 percent of Ford’s engines sold in Brazil – are produced. With this investment, the company seeks not only to double its current product capacity to an estimated 500,000 units a year, but also to launch a new series of Sigma engines, vaunted as being not only the most modern in Brazil, but in the world. The first flex-fuel engine with aluminum heads, blocks, and pistons, Sigma engines are exceptionally light, durable, and produce low levels of noise and emissions.

“The Taubaté plant is internationally renowned and the new unit only strengthens Ford’s long tradition as an innovator in the design and manufacture of engines,” says Marcos de Oliveira, president of Ford in Brasil and the Mercosul countries. “The Sigma family represents a new step in the road towards efficiency, economy, and sustainability by attempting to meet present and future demands of both consumers and the marketplace.”

A LARGER GLOBAL ROLE
Although the Sigma engine was originally launched in Europe in 2008, the flex-fuel version is a Brazilian invention and reflects the company’s increasing focus on developing local technology as well as expanding its commitment to bio-fuels. In Brazil, Ford’s Novo Focus line will be the first to be equipped with the new engines. However, the company also plans to supply Sigma engines not only to the rest of South America, but to North America as well, where they will be used to outfit a new generation of Ford Fiestas beginning with the compact and energy-efficient Fiesta 2011.

“It’s certainly a great recognition for Brazil to have its engines chosen to supply one of the world’s most demanding markets, especially for a new product that possesses strategic importance for Ford U.S.A.,” says Marcos de Oliveira. “This is yet another example of Ford’s global ONE strategy that seeks to optimize the company’s technologies and production capacities around the world.”

Actually, this isn’t the first time that Ford Brazil has strutted its stuff on the global stage. Between 1974 and 1990, the Taubaté plant supplied more than 1.5 million four-cylinder engines to North American Mustangs, Rangers, and Thunderbirds. Although since 2000, the plant has been more heavily focused on meeting the demand of the booming Brazilian market, it can also proudly stake claim to being Ford’s third largest subsidiary in the world in terms of sales.

Ultimately, regardless of the category or the market, Ford Brasil is currently, as Marcos de Oliveira points out, “at a very positive moment” – a sentiment that is echoed by Mark Fields, Ford Motor Company president of the Americas.“Brazil has always been considered a nation of the future, but today it’s a nation of the present. For this very reason, we want to be prepared to grow along with Brazil, increasing our production capacity and constantly improving our level of competitiveness.”

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