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Ford plans $600 million expansion in China

By Alisa Priddle, Detroit Free Press –

DETROIT — Ford announced it will spend $600 million to expand in Chongqing, China, just weeks before the Beijing auto show, where Chrysler will announce the brand’s return to the Chinese market.

Ford’s investment, with joint-venture partner Changan Ford Mazda Automobile, will expand capacity in Chongqing by 350,000 vehicles to 950,000 annually and bring Ford’s total investment in China to $4.1 billion.

Ford and Chrysler are playing catch-up in the world’s biggest auto market, where General Motors and Volkswagen are the largest foreign automakers working with Chinese partners.

GM and its 11 joint-venture partners in China on Thursday announced record March sales of 257,944 vehicles and first-quarter sales of 745,152, also a record for GM.

Chrysler, by contrast, sold only 10,477 vehicles — all Jeeps — in the first quarter, but that was a 23 percent increase from a year ago, said spokesman Ariel Gavilan. And 2011 sales were up 81 percent from the year before in China, Chrysler’s largest market outside North America.

In Beijing on April 23, Chrysler will show a Jeep Wrangler concept with a dragon on the hood and a Chrysler 300C concept sedan to mark the Chrysler brand’s return to China after not competing for a couple of years.

Chrysler plans to start selling the 300 in China this summer, followed by the Chrysler Grand Voyager minivan later in the year. Both will be exported from Chrysler factories in Ontario.

Ford sold almost 520,000 vehicles in 2011 in China, barely one-fifth of GM’s 2.5 million sales.

Chongqing is Ford’s largest manufacturing hub outside southeast Michigan. Ford also has assembly plants in Nanjing.

Construction will start immediately on a new assembly line, body and paint shop to augment the two assembly plants and engine plant already there. Another engine and transmission plant is under construction.

The new line should be ready in late 2014.

Ford plans to introduce 15 vehicles and 20 engines and transmissions in China by 2015 with technologies to reduce fuel consumption and emissions by 20 percent in a country where poor air quality is a crisis.

“This expansion is an investment in Ford’s long-term future, globally and will help us to achieve our goal of increasing worldwide sales by nearly 50 percent by mid-decade to about 8 million vehicles per year,” said Joe Hinrichs, president of Ford Asia Pacific and Africa, in a statement.

“Ford continues to lay the foundation for long-term growth in the world’s largest automotive market,” Hinrichs said.

At the Beijing auto show, Ford will show the new Focus that began production in Chongqing in February as well as three utility vehicles — the EcoSport, Kuga (sold as the Escape in the U.S.) and the new Explorer. Ford already sells the Edge in China.

“With a current growth rate of about 5 percent, the Chinese auto industry remains the biggest growth market in the world,” said Dave Schoch, head of Ford China.

About 18 million vehicles were sold in China last year, and while growth has slowed in the first few months of 2012, the long-term outlook for car sales remains strong.

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