Automakers know where their bread is buttered. That’s why Ford Motor Co. is making a move to close the distance on General Motors and Volkswagen AG by committing to build a new $760 million assembly plant in Hangzhou, China. China is the world’s largest automotive market.
Ford expects to double production
By building the Hangzhou plant, Ford expects to double its manufacturing capabilities in China to the point that 1.2 million vehicles can be produced there annually. Initial plant capacity will be 250,000 units. Production at the new assembly plant is slated to begin in 2015.
The U.S. automaker will build the new plant in partnership with local automaker Changan Ford Mazda Automobile, which is itself a two-company joint venture composed of Chongqing Changan Automobile Co. and Mazda Motor Corp.
New models and powertrains
The Hangzhou factory, which will be Ford’s fifth passenger car production facility in China, is scheduled to go into operation just in time for a stable of new Ford models and powertrains to be introduced. In total, Ford plans to introduce 15 new vehicle models and 20 new powertrain options by 2015. Additional information regarding production plans will likely be revealed at next week’s Beijing Auto Show, experts note. Three new SUVs and the new Ford Focus are anticipated reveals.
Ford’s Hangzhou plant announcement today comes two weeks after the automaker revealed its plans for a $600 million expansion of its Chongqing plant, which will add 350,000 units of passenger car capacity. Just six weeks before, Ford opened its Chongqing 2 plant, where the new Focus will be build. The Chongqing plant has capacity for 600,000 units.
Ford China, which was founded in 1995, has invested $4.9 billion in China since 2006.
Millions in additional sales
Joe Hinrichs, president of Ford Asia Pacific and Africa, envisions tremendous sales growth in China.
“So far, Ford’s investments in China and across Asia represent its largest and most rapid global expansion in fifty years,” Hinrichs said in a written statement. “This expansion will help us realize an increase in global sales by about 50 percent from 2010 to about 8 million vehicles annually by mid-decade. Building (the Hangzhou plant) helps lay the foundation for that growth and reconfirms our commitment to China, which is expected to have sales of about 30 million vehicles by 2020.”
Catching up to the competition
General Motors is the leading automotive seller in China. In the first quarter of 2012, GM moved 745,152 units, according to Reuters. Over the same period of time, Volkswagen group sales in China rose 15.6 percent year-on-year to 633,000 units. By comparison, Ford China sold 121,393 vehicles in the first quarter, and 519,390 in 2011, which was a 7 percent increase over 2010 totals.