Ford to alter China strategy, Farley says

Ford Motor Co., looking to reverse financial losses amid a five-year sales slump in China, plans to retrench in the world's largest vehicle market with a new strategy focused on the commercial business, electric vehicles and exports.

Ford CEO Jim Farley said China remains important to the company but that it plans to spend less there while concentrating only on areas of the business that generate the highest returns. He said he and his leadership team recently returned from China to finalize those plans.

"We're not going to try to serve everyone," Farley said on a call Tuesday discussing Ford's first-quarter earnings. "It will be a lower investment, leaner, much more focused business in China."

Farley cited the company's joint venture partnership with Jiangling Motors Group as an example of what it will do moving forward, with plans to use Chinese operations as "export hubs" for affordable EVs and commercial vehicles to markets such as South America, Australia and Mexico.

Last month, the company announced the next-generation Lincoln Nautilus for North America would be exported from China, a first for Lincoln. Executives have said the luxury brand is profitable in China.

Farley said the region remains key to Ford.

"We believe that not only is it the biggest EV market in the world, but customers digitally are ahead of the rest of the world, and so it's a really important market for us," he said. "And what we really see in our presence there is battery tech, digital experiences for the customer and advanced product, both software and hardware integrated."

Earlier this year Ford shook up its China leadership team, promoting Sam Wu to CEO following the retirement of Anning Chen. Wu previously served as managing director and COO.

Chen became CEO in 2018, shortly after the automaker's sales in China began falling. The company's sales in China totaled 1.19 million as recently as 2017 but have struggled for traction since, with market share coming in at 2.1 percent in 2022.

Ford's biggest joint venture in China, with Changan Automobile Co., captured just 1 percent of Chinese light-vehicle sales last year, down from 4 percent in 2016, according to LMC Automotive and the joint venture's financial reports.

The company has introduced a number of new models there in recent years, like the Ford Evos and Lincoln Zephyr, but has been hurt by the coronavirus pandemic as well as increased competition from local EV makers.

Ford lost $572 million in China last year. The automaker no longer breaks out earnings by geographic region and stopped reporting China sales this year.