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Ford begins work on new automobile unit

(China Daily/Agencies)
Updated: 2009-09-26 08:05

Ford Motor Co began work on a third Chinese car plant as it strives to challenge General Motors Co and Volkswagen AG in a country set to pass the US as the world's biggest auto market.

The $490-million plant will make revamped Focus cars when it opens in 2012, Ford Chief Executive Officer Alan Mulally said on Friday at a ground-breaking ceremony in Chongqing, southwestern China. The factory, which will be able to make 150,000 vehicles a year, will boost Ford's overall car capacity in the country to 600,000.

Mulally attended the event after also visiting India this week as Ford steps up investments in emerging markets that have withstood the slump in global auto sales. China vehicle sales may rise 28 percent this year, according to the government.

"Ford knows it needs to catch up with GM and Volkswagen" in China, said Chen Liang, an analyst at Huatai Securities Co. "China is a bright spot for many global automakers because demand has been strong."

Ford and partners Chongqing Changan Automobile Co and Mazda Motor Corp already have a plant in Chongqing that can build 267,000 vehicles a year and another in Nanjing that can produce 180,000.

The factories make Fiesta, Mondeo, Focus and S-MAX autos for Dearborn, Michigan-based Ford as well as models for Hiroshima, Japan-based Mazda. Changan owns 50 percent of the venture with Ford holding 35 percent and Mazda 15 percent.

Related readings:  Ford to build new assembly plant in China  Ford enters small car race in India  Ford to beef up China presence with third plant in Chongqing  Geely to buy Volvo from Ford

"The China market is very important for the long term," Mulally said. "We've been expanding as fast as we can."

Changan Ford Sales Co boosted Ford-brand car sales to 144,601 in the first eight months, according to a Sept 2 statement. GM, the biggest overseas automaker in China, increased total vehicle sales in the period 50 percent to 1.11 million. They rose 33 percent to 913,000 vehicles for Volkswagen.

Ford also has a separate China venture that makes Transit vans.

Nissan Motor Co, Hyundai Motor Co and Volkswagen all have announced plans to expand in China as rising wages and government stimulus measures spur auto sales.

China's full-year industrywide vehicle sales may reach 12 million. In the US, industrywide sales may be about 11 million this year and rise to 12.5 million next year, Mulally said in New Delhi on Sept 23.