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China gets Ford plant

Automaker's venture to purchase second assembly plant site

By Eric Mayne / The Detroit News

Ford Motor Co.’s China-based joint venture agreed today to buy a second assembly site to build Ford and Mazda vehicles for the world’s fastest-growing automotive market.

Changan Ford signed an agreement to acquire property in Nanjing near China’s thriving eastern seaboard. China’s central government is reviewing the project, but its approval — required before the deal can proceed — is expected.

A second plant will help Ford narrow a huge sales gap with rivals General Motors Corp. and Volkswagen AG, which already have large manufacturing networks in China.

Automakers have earmarked $12 billion for China, which recorded more than 4 million light vehicle sales last year and passed Germany to become the world’s third-largest automotive market.

The Nanjing plant is expected to begin production in 2006 with annual capacity of 200,000 units. Changan Ford also has a factory in the western city of Chongqing.

Ford would not disclose the amount of the new investment but said it is part of a $1 billion expansion in China.

“This step will help realize the long-term goals that Chairman and Chief Executive Bill Ford laid out,” in October 2003, said Jim Padilla, chief operating officer.

Ford signed a letter of understanding to build the plant in February. The automaker is not identifying which vehicles will be built at the Nanjing plant. But research firm Global Insight expects the plant to assemble a pair of small cars — the Ford Fiesta and Fusion.

The Fusion planned for the Chinese market will be different than the vehicle sold in the United States under the same name.

The plant is also expected to build the Mazda Demio small car. Ford controls Mazda.

When the Nanjing factory ramps up, the Changan site will end Fiesta production at Chongqing, which builds the Mondeo sedan as well and is expected to turn out the Ford Focus and Mazda3 passenger cars.

Global Insight expects the Nanjing site to eventually produce vehicles from upscale Ford-owned brands Volvo and Land Rover.

“China is like the Mexico market in some ways where there is demand for high-end vehicles, and low-end models for the general population,” said Rebecca Lindland, Global Insight’s senior automotive analyst.
 
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