View Full Version : Ford to expand Chinese factories again

6th April 2012, 04:32 PM

Ford will expand its biggest factory complex in China to meet growing demand in the world's largest car market.

The $600 million expansion will include a new assembly line, body shop and paint shop at its Chongqing site in southwestern China, Ford said Thursday. Chongqing is the company's largest manufacturing operation outside of the Detroit area.

Ford is trying to catch up with rivals who have been in China longer and command a bigger share of sales. The expansion will give the automaker the ability to make 350,000 more vehicles per year, increasing its total to 950,000 by 2014. That will help Ford's goal of tripling the cars in its Chinese lineup to 15 over the next three years

Rest of article can be found at the link

9th April 2012, 09:36 PM
There's massive growth to be had there in China, only THREE percent of the population own a vehicle. Makes one think "Australia? What about it?". We're hardly a wart on the elbow.


By Michael J. Ureel, FCN

In less than a decade, China 's auto industry is expected to double in size, making it critical to any automobile company serious about a global presence.

Ford Motor Company, with strategic alliances with Mazda, new products and manufacturing capacity is prepared to compete well in the world's fastest-growing market.

"Ford is in a position to become one of China 's top auto players," said Jim Padilla, president and chief operating officer, Ford Motor Company, last week at a ceremony marking the expansion of the Chongqing assembly plant. "We are still confident of the growth potential for Ford Motor Company in China ."

By 2014, the auto industry in the Asia Pacific & Africa region is projected to grow by 10.5 million units. And China alone is expected to claim 6 million units of that growth, reaching an estimated 11.1 million annual units.

"As of yet, only 3 percent of China 's population owns a car," said Mark Schulz, executive vice president and president, International Operations, Ford Motor Company. "But that percentage will undoubtedly grow."

The key for Ford, as well as all other foreign automakers, is building brand awareness and gaining repeat customers, according to Schulz. "As we are still relatively new in China , we have many first-time customers," he said. "We need to concentrate on giving them reasons to become repeat buyers—and that means providing new product choices, great quality and the level of service they expect."

Ford has invested heavily in China, making it a large part of its global expansion strategy. The company's rapidly expanding manufacturing base is critical to its success.

Ford entered a joint venture with China's Changan Automotive Group in 2001, called Changan Ford. Its first domestically produced vehicle, the Ford Fiesta, was launched in the Chongqing plant in 2003. It added the Ford Mondeo in 2004 and recently launched the Ford Focus.

"I am particularly impressed with the growth of the Changan Group over the past few years," said Mei Wei Cheng, chairman and chief executive officer, Ford Motor China. "Ford Motor Company is going to continue to work closely with Changan Group and grow hand-in-hand toward a better future."

In September, Ford broke ground on the Changan Ford Mazda Engine Company facility in Nanjing, a joint venture among Changan Automotive Group, Ford and Mazda Motor Corp. A nearby vehicle manufacturing plant is also under construction. By 2007, when production is slated to begin, the combined capacity of the Chongqing and Nanjing operations is expected to reach 360,000 units -- an 18-fold increase from just two years ago.

In addition, Ford has a joint venture with Jiangling Motor Corporation to produce commercial vehicles, giving the company a wide spectrum of vehicle manufacturing in China.

China's booming growth in the last few years has made it the world's third-largest auto market just behind the United States and Japan. It exploded by 70 percent in 2003, and has slowed to a more modest pace of 10 percent this year where, according to the company, it is expected to remain in the coming years.

Ford is not the only automaker looking to tap into China . All major foreign brands are competing there, including Toyota, Renault-Nissan, Honda, Volkswagen and PSA. DaimlerChrysler plans to invest $1.56 billion over the next three to five years, and General Motors announced in June that it would make a joint investment of more than $3 billion with its Chinese partner, Shanghai Automotive Industry Corporation. In this crowded field, with a 4.4 percent market share, Ford and Mazda combined rank seventh.

But the company's plan calls for a more ambitious strategy and, along with its other initiatives, Ford is building a strong dealership network.

"We are building dealer bodies that have high levels of sales and service satisfaction," said David Snyder, executive director, Strategy & Business Development. "We are doing well with this, but we need to do that on a much broader basis as we grow."

Despite Ford's rapid investments in China in recent years, the race for automotive dominance is just getting off the starting blocks. "Lasting success in China will not be won in a sprint," said Schulz. "It is going to be a very long endurance race, and we still are in the early laps."

10th April 2012, 09:43 AM
I kind of laugh at some of the quotes above.......
Typical Ford always playing catch up in other markets other than their own. Sure Nth America has been their saving grace forever BUT Hello the world has been your oyster for years and years.
Having done business with US companies for 20yrs + most of them have ignored Export markets and what shakes your head about this is the margins they can attain is triple to what they achieve in their own Domestic market, as Falc'man mentions they see the volume minimal compared top their own needs (ignorance at its best).
China has been an oyster as I mentioned not just the recent boom years but long before - VW invested some 20+ yrs ago - nearly every Cab is a Santana hence in time this established their brand and since introducing other models have become market leader.
Audi Merc Beemer Buick/GM and then the Chinese brands have taken the other sectors, Ford looking from the US would have thought why bother its only China !
Bosch and many other supplier type companies invested long ago as well - oh these guys are stoopid !

Now Ford have opened their eyes and announce Investment for they see growth - talk about being slow on the uptake.
Rangers and the type of vehicle should have been introduced straight away imo, I see the odd Mondeo/Fiesta but thats about it.
Distribution is difficult to set up due to the vast size of China but wouldn't you be licking your lips for the challenge - just a pity they didn't open their eyes 10yrs ago, always playing catch up.

10th April 2012, 11:03 AM
I agree, when I went to China in 2005 I saw only 2 Fords for my show visit (1 month between Beijing, Xi'an and Shanghai).

Better late than never I guess, at least with a booming market they can cash in. But I agree with Falcman, Australia hardly rates a mention in the scheme of things but the way some of these motoring journos dribble on (like the Dowling pair and that Hagon douchebag) the Falcon is at the centre of the universe and any modicum of silence from Ford on the subject means instant doom and gloom.

11th April 2012, 09:38 PM
When was that article posted Youssef?
Ford have had a presence in China but havnt pushed it along as well as its competition.

20th April 2012, 12:02 AM
It's not as simple as some of the comments here to suggest that Ford are playing catchup in the Chinese market. There are MANY enforced regulations and political posturing around ANYTHING to do with the manufacture of a product by a foreign owned company in China. VERY difficult doing business there, there is nothing in the article that represents any of the real reasons why things have been the way are in China.

20th April 2012, 09:53 AM
I understand it a bit JEM, logistics and Distribution is very hard to get in place and regulations can change from Province to Province depending what the Local Gov officials may agree to as well not just from the the Big Gov in Bejing.
In saying that Airmon saying they have a presence there - well after 5yrs travelling there every point of the compass on business Ford presence is a pin head in general through my observations.
So they are playing catch up from the small base they had started whenever that was ? so imo they missed the boat which has been typical in general for US companies in Asia Pacific....makes you wonder what their scouts in those regions long ago and up to 5yrs ago have been reporting back to the boardroom.

20th April 2012, 10:44 AM

That's still not really the crux of the issue. It's more around the Foreign, highly developed manufacturers with the 'know-how' or IP, and giving that up to Chinese brands by being forced to JV with Chinese companies.

Then there's the issue of $$$ not allowed to flow back to the Foreign Parent kitty and many many more severe protectionist type tactics employed by Gov/State officials etc.

20th April 2012, 11:00 AM
Aaah yes, the "open market" communist system. I'd forgotten about that. IP rights and JV's have long been a bugbear of US and European companies wanting to manufacture in China.

20th April 2012, 02:03 PM
Thanks JEM for your input obviously your in the know I just make assesments from my travels and doing business for US companies here in Oz the last 25yrs and now abroad in the Aftermarket.
The3n there's the web for some info though 2010 that I don't take as gospel as per below but gives some insight.


Smart Car in China Foreign-origin brands, most of which are manufactured in China through joint ventures, accounted for 64 percent of total sales in 2010, according to the China Association of Automobile Manufacturers. As of 2009, foreign car companies held 85 percent of the Chinese car market. GM was the No. 1 auto maker in 2009. Volkswagen was No. 2. GM sold a record 1.83 million units in 2009

Foreign car companies in China are required to form a partnership with a Chinese company to do business in China. Before making a deal for a joint venture, Chinese insist on a willingness to transfer technology to China and employ Chinese in upper management. Many companies initially balked at the idea of transferring technology but have since gone along with the scheme to enter the Chinese market.

Beijing requires foreign automakers in China to operate in joint ventures, in hopes their local partners will learn and grow. But communist leaders have been disappointed with the results: Today, China's market is dominated by General Motors Co., Volkswagen AG and other foreign brands. Local producers such as Chery Automobile Co. and Geely Holding Group, the new owner of Sweden's Volvo Cars, are growing fast but are far behind.

Volkswagen was the first foreign company to build a plant in China. Now it seems like every major auto company as a presence in Chinese. Mercedes-Benz, Ford, General Motors, Suzuki, Daihatsu, Honda, Subaru, Citreon Toyota all have plants in China. The majority of them have partnerships with one of China's "Big Three” automakers

Initially the market in China was still too small for economical high-volume production and many components had to be brought in because components made by local manufacturers are not very good quality. These problems are no longer the case. Still, there are laws prohibiting the sale of foreign cars on the same sales floor as domestic cars. In the early days the general feeling was invest heavily or be left behind. Most companies have tried to carve out a market share and position themselves for the future. Competition is expected to fierce with more losers than winners. So many foreign car companies have entered the fray that even for the winners profits have been cut to the bone. The companies hope to make the most profits by selling compact cars priced between $12,000 and $16,000.

American, European and Japanese care markers are increasingly looking to China as well as India and Russia to save their companies as demand for vehicles in the United States and Europe starts to shrink. Foreign auto companies are increasing were expected to one of the big winners after China joined the WTO, with tariffs being reduced from as high as 100 percent to 25 percent on cars and from 50 percent to 10 percent on parts in 2006.

Many Japanese, American and European auto makers are skipping the auto shows in Detroit, Tokyo and Frankfurt to show off their latest models at the Shanghai show.

Japanese, American and European automakers are increasingly designing their cars with Chinese buyers in mind. Nissan, for example, has designed the Teana sedan with a conservative but upscale look and relatively low price tag. Unveiled at the Beijing Auto Show in 2010, it is aimed at Chinese middle class consumers. Nissan CEO Carlos Ghosn told AP, “The Teana is a Chinese product. Without any doubt, the Chinese consumer now is becoming a big target for a lot products that we are developing.”

Luxury car makers are giving cars a longer wheel base and stronger suspension for a smooth ride on China’s rough roads. Sedans and minivans are being scaled to suit lower-income families.

20th April 2012, 02:41 PM

That's still not really the crux of the issue. It's more around the Foreign, highly developed manufacturers with the 'know-how' or IP, and giving that up to Chinese brands by being forced to JV with Chinese companies.

Then there's the issue of $$$ not allowed to flow back to the Foreign Parent kitty and many many more severe protectionist type tactics employed by Gov/State officials etc.

Understand very much thankyou and I'm sure there's a hell of lot more you cannot say.
May I say one thing I have learnt dealing with the Yanks for so long they have enjoyed being the force for soso long they find it very difficult to deal with Asia and in many case's have left it to its own device's but now that the tables have turned they find it hard to come to a compramise with Joint Ventures etc which is understandable but for years they had bent over other Joint Ventures in the past for they being the larger Import market but are eating humble pie having the accept another countries "system" or "deal" lets say be it they Commi's or not.
For eg I find it hilarious the Japs/Honda of all people accepted Chinas certain conditions see below
Honda in China

Honda was the first Japanese company to manufacture cars in China and is said to be the most profitable car company in China. It has a 50-50 partnership with Guangzhou Automobile Group, which it paid $100 million to obtain. The joint-venture is known as Guangzhou Honda.

Honda entered the market in China relatively late, but made up quickly for lost time and quickly became a major player there. In the first three months of 2005 Honda was the No. 2 car seller in China behind Hyundai. It sold 45,000 cars, a 58 percent increase from a year earlier. Honda sold 117,130 vehicles in 2003, making it the fifth largest automaker in China, with a 6 percent share. Sales grew by 31 percent in 2007.

In 2004, Guangzhou Honda made and sold more than 200,000 vehicles, nearly double what they sold in 2003, In 2001 they sold to 50,000 vehicles. In 1999 they sold 30,000 vehicles.

Honda has made an effort to work with its Chinese host rather than simply manage them and use them as a platform for its operations. Of the senior management team, two are Japanese and two are Chinese. The Chinese workers earn $240 a month, a good salary in China. Honda uses 110 Chinese suppliers, many on the Guangzhou area, and used local suppliers for 40 percent of its parts right from the start. .

Honda has two ventures in China: with Guangzhou Automobile Group and . Hong Kong-based Denway Motors. It has been marketings it cars the Western way through dealerships. As of 2004, it had dealerships in every province of China except for Tibet.

Honda says it aims to produce electric cars in China as early as 2012.

Honda Production in China

Honda has an annual capacity of 650,000 cars and minivans in China, like Jazz subcompacts for export to Europe and Accord sedans for the Chinese market. The prices for Honda’s vehicles in China are similar to those in the United States.

Honda has three plants in the Guangzhou area of Guangdong Province and one in Wuhan, Hubei Province . According to J.D. Power & Associates, China accounts for 17 percent of Honda’s global sales and the ranks fifth in unit sales.

Honda makes the Accord sedans, Odyssey minivans, CR-V vehicles, and Fit compact cars. In 2005 it began producing a small hatchback called the Jazz for export to Europe.

Honda obtained an engine plant in Guangzhou—formally used by Peugeot—through it partnership with Guangzhou Automobile Group. It poured $100 million into the plant. Production of Accords there began in March 1999. The factory now has a capacity of 270,000 vehicles. The plan has been export 50,000 cars made at the plant and sell the rest to Chinese markets. In 2006 123,000 Accords were produced at the plant In 2006, opened a second plant in Zengcheng, Guangzhou. The plant will cost $266 million and has a capacity of 120,000 vehicles a year, raising Honda’s capacity to 360,000. It produces Accords, Odyssey vans and Cuty and Fit subcompacts, Honda opened a new plant in Wuhan in Hubei Province in 2011.

Just carrying on with this China discussion for I find it very interesting and I wish for Ford to really challenge this market and become a force.