Ford Sales Were Up for 2007... In China

By Mike Caggeso
Associate Editor

Ford Motor Co. (F) posted a 30% increase of year-over-year sales in China, outpacing the average industry rate in that country, the world's fastest growing economy.

Overall, the Dearborn, Michigan-based carmaker sold 216,324 units [up from 166,664]. More than half of those sales were the Ford Focus, the company's compact model that's the fastest-growing "mid-sized" car in China.

In addition to its own nameplate, Ford owns the auto brands Lincoln, Volvo, Jaguar and Land Rover - the latter two are likely to be sold to India's Tata Motors Ltd. (TTM).

Ford also operates a joint venture with Mazda Motor Corp, Changan Ford Mazda Automobile Co., Ltd., which produces Ford, Volvo and Mazda vehicles for the Chinese market [note the exclusion of Jaguar and Land Rover]. Changan Ford Mazda also posted record annual sales - up 60% to 217,100 vehicles.

The two companies operate three assembly plants and one engine manufacturing plant in China.

"We will continue to invest in China and expand our operations to prepare for the next phase of our strategic growth program," Mei-Wei Cheng, Chairman and CEO of Ford Motor China, said in a statement. "We plan to continue to grow at a fast pace to further strengthen our position in China's auto market."

A New ‘Model' for Ford

Ford is still reeling from the shock of being surpassed by Toyota in U.S. market sales. Its stock plummeted to a 22-year low last week when the news broke. If Ford's going to regain traction, the company will have to rely heavily on its overseas operations.

U.S. sales were down 12% last year, which has made foreign partnerships crucial to the company's success. More than 7 million cars were sold in China in 2006, already outpacing Japan. And 4.58 million vehicles were sold in China in the first nine months of 2007, a 23.84% jump from 2006.

In addition to its Chinese operations, Ford also announced that it would put $500 million into the expansion of its manufacturing facilities in the India city of Chennai. The investment will bring total capital expenditures in India to $875 million.

"We have embarked on a strategy of growing our business across Asia Pacific," John Parker, Ford's executive vice-president for Asia Pacific & Africa told BusinessWeek. "We want to grow our manufacturing and supply footprint in China, Southeast Asia, and India."

Parker estimated that Asia, the Pacific and Africa would account for 70% of the growth in demand for passenger cars in the next decade. That's going to have to be the case if Ford's going to survive in a very competitive global market.

Competition in foreign markets will be tough. Last week General Motors Corp. (GM) proudly announced that they are the first automaker to sell a million vehicles in China inside a single year. The company has also announced plans for a $250 million research and development center in Shanghai. 

GM Chief Executive Officer Rick Wagoner expects that GM alone will get 75% of its car and truck sales from outside the U.S. in the next decade.

News and Related Story Links:

  • Forbes:
    Ford Confirms Tata Motors Likely To Take Jaguar, Rover
  • Ford Motor Co.
    Ford Motor China Sales Rise 30% in 2007