Ford (NYS: F) has finally opened its $490 million plant in China's Chongqing, making it the biggest global production location for the company, after Michigan. The unit will roll out the all-new Focus; the car will be ready for a Chinese launch by spring. Ford will introduce 15 new vehicles in the Middle Kingdom by 2015, and the cool new Focus looks like a smart move to start with. It will be a good addition to the company's existing local models such as Fiesta and the older version of Focus. Ford has definitely stepped on the gas!
The timing seems perfect considering a recent change in the Chinese government's policy. New projects by global automakers may not be received well by the government as it has restricted incentives to those projects approved before the end of January. But Ford needn't worry much, as most of its planned projects seem to have crossed the January hurdle. It broke ground last year for an engine and a transmission plant. The company is also strengthening its retail distribution network in the country. But it still has to fight it out with the mountain of competition. While Ford sold 519,390 units in China last year, General Motors (NYS: GM) hit the top-seller spot with 2.55 million vehicles in the small-car segment.
Focus now, what next?
With Focus driving in, is Lincoln in line as well? If reports are to be believed, it is. Although getting a foothold for Lincoln in China won't be easy for Ford, as luxury offerings from the likes of Toyota and Volkswagen have a good presence, I believe there is plenty of room for all players. The Chinese luxury car market has been on an upward trend and the number of billionaires and millionaires in China has risen manifold in the past two years. China is the next big attraction for luxury car makers, and Ford might do well thinking on these lines.
The Foolish bottom line
Ford has been late to the China party, but the new plant gives me hope that it can make it big. China is the biggest auto market in the world and Ford surely doesn't want to miss the fun.
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At the time thisarticle was published Neha Chamaria does not own shares of any of the companies mentioned in this article. The Motley Fool owns shares of Ford Motor. Motley Fool newsletter services have recommended buying shares of General Motors and Ford Motor. Motley Fool newsletter services have recommended creating a synthetic long position in Ford Motor. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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