Breakthrough Web Design - 515-897-1144 - Web sites for businesses
News & Entertainment for Mason City, Clear Lake & the Entire North Iowa Region

Founded October 1, 2010


Ford seeks to catch rivals in China


This news story was published on February 27, 2012.
Advertise on NIT Subscribe to NIT

By David Pierson, Los Angeles Times –

CHONGQING, China — Ford Motor Co.’s new factory in this smog-shrouded boomtown is the size of 17 football fields and cost nearly half a billion dollars. It’s also the latest major push by a Detroit automaker in one of the global auto industry’s most important battlegrounds.

The facility, which opened Friday, is Ford’s fourth assembly plant in China and part of an effort to catch up with rivals, including General Motors Co., which now sells more cars in China than it does in the United States.

How Ford responds to the China challenge could help shape the company’s future. The world’s No. 1 car market, China posted vehicle sales of 18.5 million last year, compared with 12.8 million in the U.S.

“Now is the time we really need to set our sights to accelerate,” David Schoch, head of Ford China, said in Chongqing on Friday.

Whether Ford is arriving too late to the party remains to be seen. The company’s first passenger car wasn’t launched in China until 2003, when VW and GM were already selling hundreds of thousands of units.

“Ford is trying to play catch-up with the big boys,” said Namrita Chow, a Shanghai-based analyst at IHS Automotive. “They started much later and need to ramp up capacity and offer a much larger product line.”

The good news is that Chinese consumers love foreign nameplates, even if most of those Fords, Chevrolets and Buicks are assembled in China. That’s a rare success for U.S. companies looking to crack the China market. Foreign brands, which account for about 70 percent of sales, are considered to be of higher quality and more prestigious than homegrown Chinese vehicles.

“In China, cars are like rolling trophies,” said Bill Russo, a Beijing-based senior advisor for Booz & Co. and Chrysler’s former chief in China. “You have more face driving a foreign brand. … This is a country where economic success is communicated by what you buy.”

But Ford first must deliver more cars and showrooms for customers to find them. Ford sold just over half a million units in China last year, well behind GM’s 2.6 million and Volkswagen’s 2.3 million. GM has nearly six times the number of dealerships.

Chongqing resident Alan Zhang was determined to buy a foreign model, concluding that a Chinese car “doesn’t give me any status.” His first choice was a Volkswagen Golf. But he gave up after a VW dealer told him he had to wait five months and pay $3,000 to join a waiting list.

Instead, he strolled to one of GM’s 2,700 showrooms recently and plunked down $16,000 for a Buick Excelle with buttery brown leather interior.

As for Ford?

“Ford’s not bad,” said Zhang, a 28-year-old copywriter. “I just don’t see that many dealerships.”

In response, Ford plans to introduce 15 new vehicles into China over the next three years and boost its dealerships by nearly half to 680 showrooms. Many of those are planned for China’s lesser-known cities, where competition and growth are more favorable.

Ford is not alone in seeking to boost China sales.

Chrysler Group, which sold only 23,000 vehicles in China last year, is also planning to scale up its presence in the world’s second-largest economy, with plans to boost sales of its Jeeps and SUVs.

Meanwhile, GM, whose success in China has helped it regain its crown as the world’s largest automaker, added an entry-level brand in China last year called Baojun to bolster a lineup that already includes the hot-selling Buick and Chevrolet.

“China represents the future growth for all automakers, including the Detroit three, whereas markets like Western Europe are mature and little growth is expected,” said Michelle Krebs, an analyst for Edmunds.com. “Even North American growth won’t be huge. Other emerging markets like Brazil, Russia and India are also important, but based on sheer size and a constant trajectory upward of sales, China is the most important.”

Had Ford beefed up its presence in China sooner, it might have reaped the full rewards of two years of staggering sales in China — 2009 and 2010 — when the total number of vehicles sold grew by 46 percent and 32 percent respectively.

The Chinese market cooled markedly last year, with vehicle sales up only 2.5 percent compared with 2010. But Ford’s Schoch isn’t fazed.

“It’s not the torrid pace we saw in 2009 and 2010, but nevertheless there’s very good growth opportunities,” he said.

Leave a Reply

Your email address will not be published.

 characters available

One Response to Ford seeks to catch rivals in China

  1. Cottage cheese recipes Reply Report comment

    March 5, 2012 at 3:17 am

    Helpful information. Lucky me I found your web site unintentionally, and I am surprised why this accident didn’t took place in advance! I bookmarked it.