Sales of utility vehicles, including Renault's popular low-cost Duster compact SUV, have been strong in an otherwise dismal year for the Indian auto industry where passenger car sales fell for the seventh straight month in May, Reuters reported.
So Ford began to ship its locally made EcoSport compact SUV on Monday, hoping to share in growing demand for mini-sport utility vehicles, which are popular due to heavy traffic, scarce parking and bumpy roads.
The Indian models will also be exported to Europe, including the UK as part of Ford's big bet on small "urban" sport-utility vehicles, the report said.
"Who would have ever thought that a small SUV on a (compact vehicle) platform would be one of the fastest growing segments in India ... also around the world," Ford CEO Alan Mulally told reporters in Chennai, where the company spent US$142m to set up the EcoSport production line.
Mini-SUVs are proving especially popular in emerging markets.
In China, IHS Automotive forecast demand to more than double this year to over 207,000. In India, it expects sales in the segment to grow from just 6,140 vehicles in 2012 to more than 126,000 in 2015.
A growing array of models is fuelling demand for small SUVs in emerging markets, IHS Automotive analyst Anil Sharma told Reuters. "Even two years ago, we didn't have these kinds of vehicles."
Ford makes the EcoSport in Brazil, China and now India. Production starts soon in Thailand and Russia.
Fighting rivals such as Maruti Suzuki and Hyundai Motor, which sell India-specific models, Ford's India sales fell 17% last year, compared with a 20% decline for rival General Motors' Chevrolet. Ford sells current and previosu generation Fiesta models and a rejigged previous generation Fiesta called the Figo, developed for emerging markets.
Ford's focus on small SUVs reflects a shift in consumer preferences globally towards SUVs for everyday driving.
A decade ago that shift boosted demand for larger SUVs, with massive utilities like the Hummer proving popular before rising oil prices and the US economic downturn squeezed sales. Demand is now shifting towards smaller, cheaper, more fuel-efficient SUVs and especially in emerging markets, Reuters noted.
According to IHS Automotive, global small utility vehicle sales grew 154% between 2005 and 2012. During the same period, demand for midsize SUVs grew 56% while sales of large SUVs shrank 22%.
"The story of the death of the utilities was premature," Ford executive vice president Jim Farley told reporters late last month.