Ford Targets Big Chinese Growth with EcoSport, Focus, Kuga

Another factory also will help.

by on Apr.24, 2012

Ford's new EcoSport - along with the Focus and Kuga models - is critical to its Chinese expansion strategy.

Off to a slow start in the world’s largest and fastest-growing automotive market, Ford Motor Co. is aiming to make up for lost time with an assortment of new product launches and a major expansion of its Chinese production network.

The maker gave a clear sense of the aggressiveness behind its campaign to double sales during its Beijing Motor Show news conference – and a subsequent media roundtable meeting with senior Asian managers.

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During the 45-minute auto show news conference, Ford officials pulled the wraps off a variety of models, including the new Focus subcompact, a completely restyled Kuga crossover and the all-new subcompact EcoSport CUV.  Joe Hinrichs, head of the maker’s Asia, Pacific and Africa operations also made a point of stressing Ford’s $6.7 billion commitment to its Chinese manufacturing network.

Ford's Joe Hinrichs: target first-time Chinese buyers.

Hinrichs later reminded reporters that the maker had outgrown the overall Chinese market in 2010 and 2011, “without any new product and without any new capacity.  It gives us great confidence as we get new product and new capacity and add more dealers that we can continue to outpace the market.”

Despite that confidence, industry analysts contend Ford was slow to recognize and respond to the emergence of the Chinese market  — especially when compared to key rivals General Motors and Volkswagen – and is now struggling to catch up.

For his part, Hinrichs defended the maker’s slow start, arguing that until it got CEO Alan Mulally’s One Ford strategy firmly into place it would have delivered the wrong products to the Chinese market.  Under One Ford, the carmaker has turned to a set of “global” platforms that are shared between markets around the world – with tweaks made to reflect local tastes and needs.

The strategy is now helping Ford hold down costs, asserted Hinrichs, not only loading up models such as the Kuga and Focus, but also delivering more affordable products for the first-time buyers that Ford believes it can win over.

The new Ford EcoSport – which will be sold in China and 100 other markets — is a good example of that strategy.  Based on the maker’s B-segment platform, it’s a size class smaller than Kuga but doesn’t come across like a stripped-down model.  The top-line EcoSport Titanium edition will feature such niceties as 16-inch wheels and available navi.  All versions get dual front and side airbags and Ford’s Sync voice control system.  Powertrain options will include the new 1.0-liter EcoBoost engine.

Even more small products could be in the works for the lower market niches, Hinrichs hinted.  That would make sense for a strategy that is putting a premium on first-time auto buyers rather in China’s numerous Tier III, IV and V cities – many of them in the country’s middle and western provinces.  With many established cities, like Beijing and Shanghai almost saturated with automobiles, many experts believe those new markets will be critical in keeping China’s automotive momentum going.

Hinrichs agrees, insisting that for Ford, “It is about competing for (those) first-time buyers.”

With new product on the way, Ford recently announced major expansion plans, including an all-new assembly plant in Chongqing.  Through its joint ventures with Changan Automobile Co., Ford expects to double capacity to 1.2 million vehicles annually when the $760 million plant is completed.

By 2020, most experts now predict, China’s car market should reach 30 million annually, and “two-thirds of those will be first-time buyers, so there’s a lot of opportunity to compete for them equally” despite Ford’s late start, said Hinrichs.

Meanwhile, the new Chinese capacity will provide the boost needed to bring Ford’s global sales up to a projected 8 million by mid-decade, stressed Hinrichs.

Ford is by no means the only automaker who is rushing to invest in China.  Indeed, the executive conceded that “There’s lots of concern about over-capacity.  If you add up everyone’s (recent) announcements the math doesn’t work,” even with a 30-million Chinese market.

But the maker is hoping that its global reputation will help it come from behind and pick up the share it thinks it deserves in China.

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