Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Ford Motor Company (F)’s China Strategy

Page 1 of 2

Car and truck makers sold 18.9 million vehicles in China last year, up 2.7% from a year ago, with growth sputtering from highs of 30% in 2010 and 42% in 2009. After overtaking the U.S. in 2009, China became the world’s largest auto market.

Ford Motor Company (F), General Motors Company (GM): These Automotive Companies Inspire the Best Brand LoyaltyFord Motor Company (NYSE:F) unfortunately, entered the market late; in 2003. Ford CEO Alan Mulally , who plans to steer $5 billion in four new plants in China, hopes to reach 6% of the market by 2015. In contrast, General Motors Company (NYSE:GM) entered the market first in 1999 and reached almost 15% market share in 2012. But this was in the 13 years when the Chinese market grew like a rocket. With annual growth in the single digits, it is going to be a tougher slog for Ford Motor Company (NYSE:F).

Ford Motor Company (NYSE:F) had a remarkable 2013 first quarter, growing 54% with massive contributions from the New Focus and the Kuga (sold as the Escape in the U.S.). Ford’s share is very small at 3% in China and it will have to grow by 25% each year for the next three years for the automaker to sell the 1.5 million cars it plans to make in 2015, representing more than three times the expected market growth.

Here’s how the automakers stack up:

Estimated Volkswagen GM Ford
2012 Market Share % 18.2 14.8 3.6
2012 Unit Sales Mn 3.4 2.8 0.7
2013 Q1 Growth % 21 12.6 54
2015 Unit Sales 5 3.8 1.5
2013-15 Growth % per year 9 8.0 25
2015 Market Share 19.2 15.4 6

Volkswagen (ADR) (NASDAQOTH: VLKAY) is likely to remain the strongest competitor in China, and, like Ford Motor Company (NYSE:F), is also planning to add seven plants in China by 2018. Volkswagen is aggressive in its global ambitions and if it’s chief executive Martin Winterkorn has his way, Volkswagen would surpass both Toyota Motor Corporation (ADR) (NYSE:TM) and General Motors Company (NYSE:GM) financially by 2018.

For Ford Motor Company (NYSE:F) to penetrate the Chinese market and get to its market share it will have navigate some important trends

Important trends in the Chinese market:
Respect the Chinese

Chinese buyers started cold-shouldering Japanese cars over political differences. Toyota Motor Corporation (ADR) (NYSE:TM) saw sales decrease when tensions broke out between China and Japan over the East China Sea. Ford Motor Company (NYSE:F) tipped the hat in the right direction by structuring meetings around the Chinese clock.

As Synergistics’ Auto Trends report shows, Audi’s success in China was largely due to its localization strategy – the product was different and it wasn’t a hand-me-down. It was designed for Chinese roads, the uneven quality of Chinese gasoline, and its seats were designed to fit Chinese and not European shapes.

GM is another example of localizing its China strategy. It elevated its Chinese partner by setting up a strategic management office in Beijing to oversee and execute China’s global strategy and also gave it equal share in its exports to India.

Page 1 of 2
Loading Comments...