Ford Motor Company knows a thing or two about building an empire on the back of a rock-bottom-priced automobile sold to customers in rural regions. That's why the company's strategy in China has been baffling to some analysts. Fords are expensive in China, and there are only a few models that you can get there. This is a problem for Ford, especially as the market for new cars in China, once hotter than the sun, cools a bit. With other markets plumbing new depths, Bloomberg reports that Ford is going back to something like Henry's own game plan.
If you want to become a volume leader in the world," says Ford Motor China Ltd. Chairman and CEO Joe Hinrichs, "you'll have to compete at the lower price points because that's where the growth is." Ford is spending nearly $5 billion to build factories in Asia, with the goal of bumping sales to five times current levels by 2020. It's a strategy intended to beat back the aggressive moves of General Motors and Volkswagen deeper into the Chinese countryside.
"Nearly every established Western automaker has a jump on Ford selling cars in China. Ford hasn't helped itself by offering a limited selection of models at higher prices than the competition, either, though that's beginning to shift with low-priced offerings like the hot-selling Figo B-segment entry. Hinrichs thinks there's gold in the Chinese countryside, and that's why Ford's adding three utility vehicles to its Chinese offerings, importing the Explorer, and expanding local production to get vehicles in Chinese showrooms that don't have import duties tacked on.
With the car market in Europe teetering on the razor's edge of failure and North America still an open question, automakers are looking for more steady success, and executives seem to think that Asia has potential. Ford's going to try and make up lots of ground in what may prove to be the fight of its life, rather than merely an exceptionally ambitious growth plan in a market the Blue Oval was late in embracing.