Seeks to grab share from now-dominant VW and GM

As a latecomer to the Chinese market, Ford Motor Co aims to close the gap between rivals like Volkswagen and General Motors by greatly boosting production capacity in the country and launching an aggressive new product offensive.

The US carmaker said at the ongoing Beijing Auto Show that it will begin producing SUVs within the next 12 months at its three-way joint venture in China with Chang'an Automobile Group and Japan's Mazda.

To tap the surging demand for various types of vehicles, the company will make the EcoSport and Kuga in China and import the large Explorer, said David Schoch, chairman and CEO of Ford Motor China.

As part of Ford's ambitious plan to bring 15 new vehicles to China by 2015, the move is expected to expand its limited locally built product lineup, which currently only contains three cars and an MPV: the Fiesta, the Focus, the Mondeo and the S-Max.

Ford has lagged behind in China's rapidly expanding SUV segment since it only imports one SUV to China - the Edge. The SUV segment has grown faster than any other in the nation's auto market in the past two years.

Last year, about 1.6 million SUVs were sold in the country, up 20 percent from the previous year, according to statistics from China Association of Automobile Manufacturers.

Ford is now bringing a full line of SUVs of every size to the Beijing Auto Show, signaling its ambitions to take a lead in this segment.

The EcoSport is based on the same platform as the subcompact Fiesta, and the Kuga is about the same size as the compact Focus, while the Edge and Explorer are bigger vehicles.

To manufacture more new products in China, Ford has intensive investment plans to increase local production capacity.

The company announced on April 5 that it will invest $600 million in a new plant in Chongqing to augment its two existing vehicle plants in the southwestern city.

It also has an engine plant and a transmission plant under construction there.

Fourteen days later, the company released another plan to build a $760 million facility in Hangzhou.

The two new plants will push the carmaker's total output in China to more than 1.2 million vehicles per year by 2015.

And Chongqing will be Ford's biggest manufacturing site outside its home base of Detroit when all the plants are completed.

Responding to concerns about investment risks from a market that is slowing and may even be in decline, Schoch said that he is very confident in Ford's growth in China and also the continuation of the industry's growth in China.

The market is projected to grow to 30 million units annually by 2020, nearly double the 18 million units that are expected to be sold this year, he said.

"Keep in mind we are here for the long term. That's why we are investing in China the way we are now," he said.

In addition to the Chongqing-based joint venture, Ford also has a 30 percent stake in Jiangling Motor Corp (JMC), which manufactures both Ford Transit vans and vehicles carrying the JMC nameplate. JMC is also building a new plant with a 300,000-unit annual capacity that is set to be operational next year.

Schoch denied rumors that Ford will build its SUVs in JMC, saying that the company, based in Nanchang, Jiangxi province, will focus on commercial vehicles.

Ford sold about 520,000 vehicles in China last year, far behind Volkswagen and GM, which both delivered more than 2 million vehicles in 2011.

hantianyang@chinadaily.com.cn

(China Daily 04/26/2012 page17)