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Ford studying indigenous brands for China market

June 4, 2012

TAIPEI: Ford Motor is in talks with local partners to introduce indigenous brands in China as it
plays catch-up in the world’s biggest auto market with the likes of General Motors and Volkswagen, its China chief said today.

Such a move would see Ford join other foreign car makers in launching indigenous China-only brands, in part to comply with government rules that allow them to make cars on the mainland.

“We are always in discussions with our joint-venture partners,” David Schoch, chairman and CEO of Ford’s China operations, told Reuters in an interview in Taipei.

“All I can tell you is we are studying indigenous brands, but our total focus in terms of brand enhancement is really on the Ford brand.”

China’s vehicles market, which includes cars, vans and trucks, will likely expand by around 5% this year and that pace of growth was likely to be sustained over the next few years, Schoch added.

China’s 2011 vehicles sales stood at 18.5 million.

Ford, which makes its Fiesta, Focus, Mondeo and other sedans in China in a three-way tie-up with Chongqing Changan Automobile Co Ltd and Japan’s Mazda Motor Corp, is a relative latecomer in China, where General Motors and Germany’s Volkswagen have a sizeable lead.

It also holds 30% of Jiangling Motors Corp , which makes Ford’s Transit vans.

Typically, China-only brands use older technology that foreign companies no longer use, enabling them to keep vehicle costs lower and at the same time help Chinese partners learn the ropes in developing and marketing modern cars.

Schoch was speaking after Volkswagen elevated China’s status within its sprawling empire and reasserted control over its wayward trucks brands with an extensive overhaul of senior management on Saturday, as it bids for global market dominance.

Auto sales growth

Ford, which avoided a bankruptcy filing and was the only US auto maker not to take a government bailout in 2009, shipped 519,390 passenger cars, including sedans, sports utility vehicles and multi-purpose vehicles, to dealers in China in 2011, up 7% from a year earlier.

Schoch said Ford’s car sales in China would outpace the China auto industry’s growth forecast of 5% for this year, but he declined to provide a specific figure. His forecast was at the lower end of a projection of 5% to 10% he made earlier this year.

“That is still fairly rapid growth and we don’t expect to see the rapid growth that we saw in 2008, 2009 and 2010,” he said. “We’ve seen in 2012, in the last several months, a slight slowdown not just in the automobile industry, but also in the general economy.”

Car sales in China climbed 5.2% in 2011, the slowest pace since the nation’s car culture took off at the turn of the century, as consumers shunned local brands after Beijing scrapped tax incentives for small cars.

Ford is for the first time taking part in Computex Taipei, the world’s second-biggest computer trade show, where it is showcasing and launching in greater China its car voice-activated entertainment system called Sync.

Sync has already been launched in other markets, such as North America. Helped by the sheer size of the greater China market, Ford expects to add 9 million SYNC customers in the next three years, up from the more than 4 million it has now.

The system will be able to connect with smartphones on models including the Fusion sedan, F-150 pick-up trucks and the Expedition SUV, the company announced in June in the United States.

The option, called Sync AppLink, is already available on the subcompact Ford Fiesta, and Ford had previously said it would be available on the 2012 Ford Mustang.

The Sync system, without the Synch Applink option, is available across the Ford and Lincoln line-up as an option on some models and is standard on others.



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