Ford to build $760 million plant in China
Factory will boost capacity to 1.2M vehicles a year
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DETROIT -- Ford Motor Co., in a bid to catch up with General Motors and Volkswagen AG in the world's largest auto market, said it will build a $760 million assembly plant in Hangzhou, China.
The project will help Ford double its manufacturing capacity in the country to 1.2 million vehicles a year.
In a statement released today, Ford said it will build the plant in collaboration with Changan Ford Mazda Automobile. The company is a three-way joint venture with Chongqing Changan Automobile Co. and Mazda Motor Corp. The plant will have initial capacity for 250,000 units.
Ford has not said what vehicles it will build when production begins in 2015. But the company announced a new product offensive last year that will include 15 new models and 20 new powertrains by 2015. The automaker may offer a hint of its production plans next week when it displays three as-yet unnamed SUVs at the Beijing auto show along with the new Focus.
The Hangzhou factory will be Ford's fifth passenger car plant in China. It already has three plants operating in the country with another set for construction. Ford also has a commercial vehicle plant with another under construction. The automaker further has a powertrain plant with another being built.
Today's Hangzhou plant announcement comes just two weeks after Ford unveiled a $600 million expansion of its Chongqing plant, which will add capacity for 350,000 passenger cars. And six weeks ago, Ford opened its Chongqing 2 plant, the home of the new Focus. That moved increased Ford's capacity to 600,000 units.
Ford China was founded in 1995. It has invested $4.9 billion in the country since 2006, a spokesman said.
20 million by 2020
"So far, Ford's investments in China and across Asia represent its largest and most rapid global expansion in fifty years," Joe Hinrichs, president of Ford Asia Pacific and Africa, said in the statement
"This expansion will help us realize an increase in global sales by about 50 percent from 2010 to about 8 million vehicles annually by mid-decade. Building this plant helps lay the foundation for that growth and reconfirms our commitment to China, which is expected to have sales of about 30 million vehicles by 2020."
Construction of the Hangzhou plant will start later this year. Hangzhou is a provincial city of about 4 million people in the Yangtze River delta. Venetian explorer Marco Polo once visited the city.
Ford said the new plant would give it "closer access to the large customer base in China's affluent coast areas."
Ford playing catchup
"The Chinese auto market remains one of the most vibrant in the world," said Dave Schoch, CEO of Ford China. "This expansion will allow Ford to deliver on our plan to bring 15 new vehicles and 20 new powertrains to China by 2015."
Ford has a long way to go to catch up to China's market leaders GM and VW. In the first three months of 2012, Ford China sold 121,393 vehicles compared with GM China's 745,152 units.
In the first three months of 2012, Volkswagen group sales in China rose 15.6 percent year-on-year to 633,000 units.
Ford cracked the half million mark for the first time in 2011 with 519,390 vehicles sold, an increase of 7 percent over 2010.
"Ford got a late start in China," Jeff Schuster, senior vice president of forecasting for researcher LMC Automotive in suburban Detroit, told Bloomberg. "GM has a lineup there that is more robust in Ford's lineup. Ford needs to work on its brand image in China and expand its product offerings."
Ford vehicles currently sold in China include the Edge (made in Canada) and the Fiesta, Focus, Mondeo, S-Max and Transit, all made in China by the joint venture.
The Focus is Ford's biggest seller in China, with about 190,000 units in 2011.
David Sedgwick and Bloomberg contributed to this report.
PRESS RELEASE: Ford China to Build US $760 Million Assembly Plant in Hangzhou
HANGZHOU, China, 19 April, 2012 -- As part of its largest expansion in 50 years, Ford Motor Company today announced it will build a new state-of-the-art assembly plant in Hangzhou, China, doubling its production capacity in China to 1.2 million passenger cars annually by 2015.
Ford and its joint venture Changan Ford Mazda Automobile (CFMA) will invest US $760 million in the new plant, bringing Ford's total investment in China to approximately US $4.9 billion to date. The Hangzhou plant announcement comes just two weeks after Ford said it will invest US $600 million to expand capacity at its Chongqing facilities by 350,000 passenger cars, and less than six weeks after the company opened Chongqing 2, the home of the New Focus, which increased its China passenger car capacity by one-third to 600,000 units.
"These are incredibly exciting times for Ford in Asia," said Joe Hinrichs, president of Ford Asia Pacific and Africa. "So far, Ford's investments in China and across Asia represent its largest and most rapid global expansion in fifty years. This expansion will help us realize an increase in global sales by about 50 percent from 2010 to about 8 million vehicles annually by mid-decade. Building this plant helps lay the foundation for that growth and reconfirms our commitment to China, which is expected to have sales of about 30 million vehicles by 2020."
Construction of the new plant in Hangzhou will begin later this year, with the first vehicle coming off the line in 2015. Building a world-class assembly plant in Hangzhou further diversifies Ford's manufacturing footprint in China while giving it closer access to the large customer base in China's affluent coastal areas.
"The Chinese auto market remains one of the most vibrant in the world," said Dave Schoch, chairman and CEO of Ford China. "This expansion will allow Ford to deliver on our aggressive plan to bring 15 new vehicles and 20 new powertrains to China by 2015, giving Chinese consumers more choice in Ford's next-generation of high quality, fuel efficient, fun-to-drive vehicles. This latest plant expansion again highlights that Ford is ready to go further for its customers in China"
In addition to the recently announced capacity expansion project in Chongqing, CFMA already operates two assembly plants in Chongqing, with a new engine plant as well as a transmission plant currently under construction, making Chongqing the largest manufacturing location for Ford outside southeast Michigan. The joint venture also has an assembly and an engine plant in Nanjing, China.
Ford continues to ramp up its aggressive expansion in the world's largest automotive market, delivering high quality, safe, fuel-efficient and fun-to-drive vehicles to Chinese customers. Further evidence of this will be showcased at the upcoming Auto China 2012, where Ford will unveil four new global vehicles at one of the largest and most important auto shows in Asia.
The Hangzhou plant will further complement Ford's existing manufacturing base in China. In February, CFMA opened its second assembly plant in Chongqing, which houses a fully integrated facility including stamping, body assembly, paint, trim and final assembly operations.
Ford's joint venture CFMA is widely considered one of the leading passenger car manufacturers in China, known for its high-quality cars, as well as the development and introduction of advanced environmentally friendly technologies.
You can reach Bradford Wernle at bwernle@crain.com.
