Late to the Chinese Market, Ford Aims to Catch Up

From the AP:

Ford wants to double its Chinese market share to 6 percent by 2015. To make that happen, the company is launching six new vehicles in China this year, including two small SUVs called the Kuga and the EcoSport, the Mondeo midsize sedan and the Explorer SUV, which is exported from Chicago. The Lincoln luxury brand will arrive next year.

To meet its goals, the company has undertaken its most ambitious growth since Ford went on a post-war building spree in Michigan 60 years ago.

Ford is spending $5 billion to build five plants — including three assembly plants, an engine plant and a transmission plant — that will more than double its Chinese production capacity to 1.7 million vehicles by 2015.

“They used to be laggard, cautious. But now they’re all in,” says Michael Dunne, president of the automotive consulting group Dunne and Co. in Hong Kong. “They are saying, ‘We have confidence in the China market. We have confidence in our products. We can win here.'”

Ford sold a company record 407,721 vehicles in China in the first six months of this year. But that was only a quarter of the vehicles GM sold. Volkswagen has six brands aimed at every type of buyer in the vast Chinese market, from the cheap Skoda to the ultra-luxury Bentley. Until Lincoln arrives, Ford has just one.

There are other obstacles. Ford cars are expensive. In a market where 70 percent of vehicles sold cost less than $14,500, Ford’s cheapest car is the Fiesta, which starts at $13,300. The Explorer starts around $80,000 thanks to a 25 percent import duty and other taxes.

Ford’s development costs are also steep compared with competitors’ because it still does much of the research and design for Chinese vehicles at its headquarters in Dearborn, Michigan, where costs are relatively high. Ford hopes to double its technical workforce in Nanjing to 1,500 people by 2015; GM already employs more than 2,000 people at its technical center in Shanghai.

Posted by on July 9th, 2013 at 9:12 am


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