Ford Motor Co is boosting its bet on China with a new factory and models as it tries to catch General Motors Co.
Chief Executive Officer Alan Mulally is traveling to China on Sept 25 to break ground on Ford's third plant in the country, two people familiar with the plans said. He was expected to announce "news about Ford's continued expansion" of its small-car lineup in India yesterday, spokesman Ray Day said in an e-mail.
"China had been an afterthought for previous management at Ford, but Mulally realizes how important it is," said Brian Johnson, a Chicago-based Barclays Capital analyst who has a "neutral" rating on Ford. "This is more of a five-year move than something that will move the dial this year or next."
Ford, the second-largest US automaker, ranks 12th in China with 2.8 percent of sales, according to auto researcher JD Power & Associates. GM, which emerged from a US government-sponsored bankruptcy July 10, outsells Dearborn, Michigan-based Ford by 3-to-1 in the country, building twice as many vehicles.
The new factory in Chongqing, southwest China, will produce high-end sedans and sport-utility vehicles, Xinhua news service reported. It will have annual capacity of as much as 300,000 units.
Ford already has a plant in Chongqing with Chinese partner Chongqing Changan Automobile Co, and had a 30-percent rise in sales in the first eight months of this year, helped by new models and the government's stimulus spending, JD Power said. The country's overall vehicle sales may rise 28 percent this year, according to the government, likely passing the US as the world's largest auto market.
The high-end sedan will give Ford a car to compete against GM's Buick models, while the sport-utility vehicle will capitalize on demand for that category in China, said Johnson. Ford spokeswoman Whitney Small declined to confirm the new models or the new plant.
"It might seem counterintuitive that as the rest of the global auto market is downsizing Ford is upsizing in China," Johnson said. "But it makes sense because there is more room to grow in the high-end of the Chinese market."
The worst recession following World War II helped drive GM and Auburn Hills, Michigan-based Chrysler LLC into government-sponsored bankruptcies this year as auto demand fell. China has been a bright spot for GM, with its sales in the country rising 24 percent this year through July, according to JD Power.
Chrysler started producing Jeeps in China in the 1980s, and GM began selling Buicks in 1998 and Chevrolets in 2004. Ford didn't sell passenger vehicles in China until this decade, JD Power said.