Ford cuts production in China as demand cools
Despite plans to add capacity and increase sales in China through 2020, Ford Motor Co. has had to cut production there as demand for cars has cooled in recent months.
Dave Schoch, Ford’s president of Asia Pacific, said Thursday in a roundtable with reporters that the Dearborn automaker has had to cut back on some models, and he’s working hard to avoid price cuts that other automakers have had to put in place.
“There’s been a little bit of a slowdown in showroom traffic,” he said. “We have had some production cuts, but it’s been nothing material. ... I don’t want to necessarily reduce prices because our products are very good.”
Schoch didn’t provide details about what models were affected, but said it came in the first quarter.
Ford’s sales in China last month were flat, and the industry has experienced a slowdown as economic growth slows and competition increases from domestic automakers. When it released its first quarter earnings last month, Ford cut its forecast for 2015 industrywide China sales by 500,000 cars and trucks to between 24 million and 26 million.
The rest of the year and beyond should be a different story, Ford says.
In China, Ford expects overall industry sales will reach 32 million vehicles by 2020, up from 23 million in 2013. Ford predicts its capacity will reach 1.9 million vehicles there this year, up from 1.5 million in 2014.
“There’s still plenty of opportunity there,” Schoch said.
In its entire Asia Pacific region, Ford expects capacity will grow to 2.7 million vehicles this year, up from 2.1 million last year.
Most of its sales growth will come from its new models. Ford launched its Lincoln luxury brand in China last November, and already two of Ford’s top-10 selling global Lincoln dealers are in China. It sells the MKZ, MKC, MKX and Navigator there.
The automaker plans to introduce 15 vehicles in China this year, including a just-launched 7-passenger Edge, Everest SUV and Taurus sedan with a roomier back seat, all designed specifically for Chinese customers.
To meet the expected added capacity, Ford has opened a number of manufacturing plants in multiple countries.
It opened an engine and assembly plant in Sanand, India, this year. In March, Ford opened a new assembly plant in Hangzhou, China, that will make the Edge. Later this year it will open a plant in Xiaolan for its JMC commercial truck venture, of which Ford owns 32 percent. Next year, it will launch a plant in Harbin as part of its Changan Ford joint venture.
Schoch said Ford estimates by 2023, there will be 2 billion eligible drivers in the Asia-Pacific region and that there are currently 1.5 billion there today. Ford expects in the next 5 to 10 years, 60 percent of its total company growth will come from the Asia Pacific region, led by China.
“We are gaining momentum in Asia and continue to make investments in products, facilities and people,” he said.