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Stacy94PGT · 02-23-2004, 07:21

BBC News-UK Edition

The plant will be nearer the more prosperous eastern coast

Car maker Ford has signed a deal to build a second manufacturing plant in China's eastern Jiangsu province, according to company officials.
Production at the plant just outside Jiangsu's capital Nanjing will start once government approvals are obtained.

The new plant will offer easier access to China's prosperous eastern coast.

Ford entered China's market later than other car makers and has been trying to catch up with its key rivals General Motors and Volkswagen.

Far from market

It hopes to sell 200,000 cars in China in 2004, up from 120,000 vehicles last year.

Volkswagen sold around 633,000 of its own-brand cars in China in 2003.

Changan Auto and Ford joined forces three years ago in Chongqing to produce passenger cars.

But unlike its rivals, the plant is a long way from the booming cities on the eastern coast which means it is more costly to bring in raw materials and ship out cars.

From Nanjing, the company will easily be able to service Shanghai.

Models to be produced at the new plant will be decided upon at a later date.

Stacy94PGT · 02-23-2004, 07:25

Ford's new China plant may be too little too late

Reuters / Automotive News

SHANGHAI -- Ford Motor Co. plans to build a second car plant in eastern China to serve the booming area around the country's commercial hub, the company said Monday, playing catchup to archrival General Motors and others.

Ford, which aims to invest more than $1 billion in the world's fastest growing major car market in coming years, signed an agreement Saturday that secured it rights to use land in Nanjing, a three-hour drive from China's richest city.

The new plant would grant Ford access to the bustling eastern provinces as well as better talent pools as it strives to compete against entrenched rivals General Motors and Volkswagen AG in the coastal markets.

But analysts said Ford's move may be too little too late, with those two better-established rivals together controlling about half the country's car sales.

"They came to the market very late, and this makes their job of competing with GM and Volkswagen that much more difficult," said Angela Gu, an analyst at Automotive Resources Asia, an independent industry con******cy.

"But the new plant is not just closer to the main markets -- the labor pool is superior, too," Gu added.

Ford, knocked off its No. 2 perch on the global rankings by Japan's Toyota Motor Corp., declined to specify which models the Nanjing plant would make, or the investment involved.

A plant could cost $1 billion, analysts say.

Until now, most industry observers had focused on Ford's ambitious expansion at its maiden manufacturing base in the country, in the far-flung city of Chongqing.

Ford said last year it would expand output sevenfold at its joint venture with domestic player Chongqing Changan Automobile Co. Ltd.

The Nanjing plant would also be run by that venture, Changan Ford Automobile Corp. Ltd., company executives said.

YEARS BEHIND

Changan, which also has a partnership with Japan's Suzuki Corp., owns a minibus-making venture not far from the planned site of the Ford's new plant in an industrial estate.

"Once we've received final approval, we'll announce what models the plant will make," said Ford spokeswoman Susan Zhu.

Car sales in China smashed the 1 million-unit barrier in 2002 for the first time and exceeded two million in 2003. Car sales are expected to jump another 40 percent this year as the economy races ahead, putting money in the pockets of consumers.

Ford sold its first Model T on the mainland in 1913 before World War II cut short the company's China dream.

Its current factory, in the landlocked western city of Chongqing, rolled out its first cars only in January 2003, years behind the competition.

That plant is bumping up annual production from to 150,000. But this lags GM, which has unveiled plans to produce 766,000 units by 2006. And Volkswagen, the dominant player, wants to sell 1.6 million cars a year over a similar period.

Volkswagen controls 33 percent of the market, while GM trails in second place with just under 10 percent. Ford figures were not available.

But with around $10 billion in investment in the auto sector due to come on line over the next few years, some analysts questioned if Ford would ever see a return on its money.

"More and more cars are coming out, and we've already seen major price cuts last year," said Lin Wenjun at Capital International Holdings. "Ford's current models in China are just not competitive, and it's unlikely new ones will be either."

Ford and GM have been slugging it out at home and are now taking their battle to China.

Now the smaller U.S. automaker is fleshing out its offerings with luxury sedans and SUVs.

The company, which rolled out its Maverick and Mondeo models in China last year, plans to launch a model each year on the mainland and eventually sell a full range of cars in the country.

Its other worldwide brands include Lincoln, Mercury, Land Rover, Volvo, Jaguar and Aston Martin.

Mazda Motor Corp., of which Ford holds 33 percent, has said it would cooperate with the U.S. auto maker as it maps out a strategy for China.

Changan Ford spokeswoman Marina Guo declined to say if the Nanjing plant would be built in concert with Mazda but said the plant was always looking for opportunities to work with Mazda.