Case study: Ford in China
Ford motor company one of the biggest auto-making multinationals in the world has made a tremendously successful entry into the Chinese market. In Nov 2006, it announced its accelerated plan in China and a strong yearly performance in 2006 at a growth rate of 100.8 per cent.
The origin of Ford’s presence in China can be traced to 1913 when Henry Ford sold his famous Model- T ‘s in Shanghai. Today Ford is back in China in a big way. Ford sells two car models Fiesta and Mondeo through its two Chinese joint ventures-Changan Ford Mazda (CFMA) Automobile Limited that has two units in-Chonqing and Nanjing-. And the Jiangling motor co Limited (JMC) in which Ford holds 30% shares. Ford motors (China) also imports some of its other brands for sale in China including Land Rover, Mazda, Jaguar and Volvo. It operates through over 150 dealerships all over China.
In April 2006, Ford pledged to increase its exports of Sports Utility Vehicles from the U.S.A to meet the increasing demand of the Chinese market. In 2005, Chinese customers purchased Ford SUV”s at a growth rate of 50% over the previous year. Maverick and Lincoln are its best selling brands. The other profitable segment is its locally produced car brands-Fiesta, Focus and Mondeo, which have captured the imagination of the Chinese passenger vehicle market.
Mondeo was named ‘2005 car of the year China,’ by motor magazine Motor Trend. Ford passenger vehicle sales both imported and locally produced touched record 64,223 units, an increase of 40% over 2004. Commercial trucks, which are made along with partner Jiangling Motor Co., sold a record 48% over previous year sales. The positive sales trend continued in 2006 with Ford brand sales touching average of 10,000 units a month.
In May 2006, Changan Ford Mazda Automobile co. Ltd. Ford’s joint venture celebrated its fifth anniversary. At the Chonqing plant, which has grown, ten fold from its initial capacity of 20,000 units. The partnership initially between Ford and Changan motors has also grown to include Hiroshima based Mazda motors ltd. Hence the company had expanded its name to Changan Ford Mazda Automobile co ltd.
China is emerging as the fastest growing market in the world. It is expected that demand for automobiles will skyrocket to 3 million in 2007.This year, China is set to be the world’ third largest vehicle market after U.S. and Japan. Currently China has 20 million vehicles, which is 4 vehicles for every 1000 people. Hence the huge potential for growth in the future.
The Changan Ford Mazda partnership is set to expand with the setting up of a new facility in Nanjiang in 2008. Together with the old company, the total capacity of the joint venture will then be 360,000 units. In 2006, Changan Ford was one of the fastest growing car companies in China exceeding a growth rate of 100.8%. At Auto China 2006, Ford unveiled the Ford S-Max which is the first model to introduce Kinetic design to auto enthusiasts in China. Earlier it was voted Car of the Year by 58 of leading motoring journalists across 22 European countries. The S-Max will roll out from The Changan Ford stable in 2007.
The outstanding performance of Ford Company’s business growth in China is attributed to its ‘enterprise approach’. This means that they are leveraging their strengths and best practices among their multiple partners, brands, skill bases and locations. In 2005, Ford Motor Company’s affiliated brands- Ford, Lincoln, Mazda, Volvo, Land rover and Jaguar sold over 220,000 units in China accounting for 4 percent of total car sales.
The company is making use of scientific resources of its host country. It set up the Ford Research and engineering center in Nanjing. It will support product development plans of the company worldwide. It represents another major milestone for Ford’s presence in China. It leverages Ford’s global expertise in research...