Changan Ford on Friday said it had signed a Memorandum of Understanding for land use rights to build a second passenger car manufacturing plant in the east China city of Nanjing.
Further details, including the investment amount, models to be produced and even the plot size are all being withheld pending government approval, said Changan Ford spokesperson Marina Guo.
Sources close to the deal indicated approval is not expected to be no problem. The plant will be a greenfield project.
The new manufacturing site is officially part of Changan Ford, a joint venture with Changan Automobile Group located in the southwest China city of Chongqing. Sources suggested, however, that it also may be used to make other Ford-owned brands such as Volvo, Mazda or Land Rover.
Ford also is negotiating with another joint venture partner, Jiangling Motor Corp., to produce the Freestar minivan, sources said. The venture currently makes the Transit van.
In Chongqing, the joint venture currently produces the subcompact Ford Fiesta and the Mondeo sedan, both of which are badged Changan Ford.
In choosing Nanjing, Ford overcomes one of the main obstacles to efficient production at the Chongqing site: transporting components to the plant. Chongqing is hundreds miles inland, and though linked to China's coast by the Yangtze River and by highways, moving goods there is still very expensive.
Nanjing, by contrast, is just a few hours inland from the port city of Shanghai, home to Shanghai Volkswagen and Shanghai General Motors. Major suppliers such as Delphi and Visteon have extensive operations in the area.
Said Guo: "The logistics cost is of course a consideration. Nanjing is a transportation hub. It also has plenty of talent and a developed industrial base."