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China car market may need 'Two Fords'

Nov 22 2012, 12:13 IST
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Six years ago, the Six years ago, the "One Ford" mantra saved Ford Motor Co from collapse. (Reuters)
SummarySix years ago, the "One Ford" mantra saved Ford Motor Co from collapse. Now,...

India we have done on a legacy platform out of Germany, and it's been a great vehicle for us, but you won't see us do that again because we have now our global strategy.".Since 2006, Ford has poured around $5 billion into China, aiming to boost production capacity to 1.2 million vehicles and double the number of dealers by 2015.Still, some analysts express concern that Ford may not succeed in the region unless Mulally is willing to deviate from his "One Ford" strategy. The new low-cost compact for China also will be based on a global platform, executives said."By Ford's own standards, these investments are aggressive," said Ashvin Chotai, managing director of Intelligence Automotive Asia.

"But it's not going to make a big dent in China," he added.

"There needs to be flexibility around their global strategy to make it effective in China.

"FORD'S ORIGINAL VISION

Mulally's "One Ford" plan helped avert bankruptcy in 2009, and the company is drawing from the same playbook to restructure its European operations, which are expected to lose at least $3 billion over the next two years.Under "One Ford," overall product development became two-thirds more efficient from 2006 to 2012, Ford has said.

Mulally's insistence on developing global cars harkens back to Henry Ford's Model T, which was exported around the world in 1913. The 1915 model sold for just over $700 in China, at a time when rivals were charging around $2,000.But Ford's fortunes in the country waned after the automaker bypassed an offer from modern China's founder, Sun Yat-sen, to help the country build an indigenous auto industry in 1924.Nearly a century later, Ford's brand identity is one obstacle in China, said Shaun Rein, author of "The End of Cheap China" and a corporate consultant in the country. The high cost of Ford's lineup is another hurdle.

The Fiesta, Ford's cheapest model, starts at $12,300. About one-fifth of China vehicle sales this year were priced less than $12,000, according to J.D. Power and Associates.

Next year, Ford will launch the Fiesta-based Ecosport compact, which will be the lowest-priced SUV in its portfolio.

Ford also plans to introduce "several low-cost models," including the "Value B" compact, by 2015, according to Dave Schoch, who will become president of Ford's Asia Pacific operations on Dec. 1."We recognize that we've played at this higher end and we have a huge opportunity to expand our segment coverage in the market," he said in an August

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