Ford races to catch up in China

Ford Motor is on track to double the number of dealerships in China by 2015, its country chief said yesterday, as it launches a half-billion-dollar plant and races to narrow the gap with foreign rivals in the world's largest auto market. Ford, which unveiled the new Focus at the opening of a plant in the southwestern municipality of Chongqing, is adding an average of two outlets a week to bring the total to 680 by 2015, said David Schoch, chairman and CEO of Ford's China operations. "Obviously, it's not only important for us to grow the production capacity and get the new products in, but we have to improve the retail distribution network," Schoch told Reuters. Ford, which steered clear of a bankruptcy filing and US government bailout in 2009, is a relatively late-comer in China, where General Motors and Volkswagen have built a sizeable lead. It sold 320,658 vehicles in China last year, compared with Volkswagen's annual tally of 2.26 million and GM's 2.55 million. In an effort to narrow the gap, Ford plans to bring 15 new vehicles to China by 2015, starting with the new Focus, which is scheduled to hit showrooms across China in the second quarter. The introduction of new models, said Will Periam, strategy director for Ford's Asia Pacific and Africa operations, will enable Ford to compete in about 50 per cent of the overall market segments in China, up sharply from 22 per cent. Lunar new year Schoch said the US automaker also aims to outpace the Chinese market, which he expects will increase between 5 to 10 per cent this year despite a steep downturn in January. He attributed Ford's 41.9 per cent sales decline in January to the timing of the long Lunar New Year holiday period as well as the company's lower-than-expected inventory in the wake of a strong December when it vastly outpaced the market's growth. In December, Ford's China sales rose 10 per cent from the year-ago period, compared with a 1.4 per cent industry-wide gain during the same period. "The combination of those two affected our sales performance last month," said Schoch, who has been at the helm of Ford China since November 2011. "You almost have to look at January and February together." The 15-day Spring Festival marking the Lunar New Year is China's most important holiday period, and most companies shut down for about a week so workers can return to their hometowns. The holiday disruption was also blamed for a 23.8 per cent drop in China's passenger car sales in January, the biggest monthly decline in more than three years. Ford is also studying the option to sell Lincolns in China where the luxury car segment has been enjoying a bull run, fuelled by rapidly rising incomes, company executives said. BMW, Mercedes-Benz and Audi all registered more than 35 per cent gains in car sales in China last year even though the overall market sputtered after years of frantic expansion. Ford makes cars in China in a tie-up with Chongqing Changan Automobile and Mazda. Ford, Changan and Mazda applied to the Chinese government to split up their three-way tie into two 50-50 entities. Approval has been held up because Changan has been unable to get a new car production licence for its planned new venture with Mazda. Best evidence of ‘One Ford' strategy's success With the opening on Friday of the $490 million (Dh1.7 billion) Chongqing facility, Ford's annual capacity in China will rise by 150,000-vehicles to a new total of more than 600,000 vehicles. Ford's new Focus, using a shared platform around the world, allows the car to be made in Asia, Europe and North America sharing 80 per cent of common parts and 75 per cent of the same supply base. Chief Executive OfficerAlan Mulally has often said Focus is the best evidence yet of the company's "One Ford" strategy of radical and sweeping simplification of design, engineering and production systems. The car will expand Ford's product portfolio, which now includes the previous generation Focus as well as Mondeo, X-Max, Fiesta and Transit models.