Ford Motor Co joined rival General Motors Corp in producing cars in China, betting one of the world's fastest-growing vehicle markets will bolster profits.
The world's second-biggest automaker began production of its compact Fiesta model in the southwestern Chinese city of Chongqing with a local partner. It aims to build about 20,000 cars this year and 50,000 in 2004, and also plans to make its Mondeo sedan at the plant, Executive Vice President David Thursfield said.
"I would suggest that we've come at the right time," Thursfield told reporters in Chongqing. "I'd be disappointed if we're not utilizing our initial capacity by next year."
Ford joins a crowded field. It's entering the market almost two decades after Volkswagen AG first began making cars in the world's most populous country and more than four years after General Motors started assembling Buick sedans in Shanghai. Still, the Dearborn, Michigan-based company's late entry might be a blessing, with car sales in China expanding by more than half last year, analysts say.
"The market has never been hotter, and in that respect it's good timing," said Mike Dunne, president of Automotive Resources Asia Ltd, an industry consultant. "The only drawback is that everybody is flying in at the same time. It's a double-edged sword -- terrific market prospects, but the competition will be unprecedented."
The price for the Fiesta, which comes with a 1.3 and a 1.6 liter engine, ranges from 88,800 yuan (US$10,730) to 127,800 yuan.
The cheapest model is less expensive than the Buick Sail, General Motor's comparable product in China.
Rising incomes may help sales. In Shanghai, China's biggest financial center, per capita income rose about 7 percent last year to US$4,500, state media reported last month. Across the country, household savings rose 17.8 percent in December from the same period in 2001 to a record 8.7 trillion yuan, the central bank said.
The Fiesta -- which features an automatic transmission -- also competes with Volkswagen's Polo, Honda Motor Co.'s Fit and Toyota Motor Corp.'s Vios models, among others.
Ford shouldn't count on success in China to give a significant boost to global sales and profit for years to come, Dunne said. Chinese customers bought about 1.2 million cars last year, compared with more than 8 million in the US Vehicle sales, which combines cars and trucks, totaled 3.2 million in China and 16.8 million in the US.
"By 2010 it may get interesting when China's market will be over 5 million" cars, Dunne said. "If you can get 10 percent, that's 500,000 units. But that's just a couple of factories in America. It will be a long time before Ford's volume in China contributes significantly to its global production.''
Ford entered the China market on the cheap, investing US$49 million with partner Chongqing Changan Automobile Co to build the factory northwest of the Yangtze River metropolis. In contrast, General Motors and its partner spent a combined US$1.6 billion on the No. 1 automaker's first Chinese plant.
Ford will have to expand in China if it wants to catch up with its rivals. General Motors sold 110,000 Shanghai-made sedans and minivans last year, almost double 2001 sales. Volkswagen sold more than 500,000 cars in China last year, and counts the country as its second-largest market after Germany.
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