Ford Keeps Growing in China

TheStreet.com

HANGZHOU, China (TheStreet) -- Ford F and its joint venture partner said Thursday they will build a $760 million assembly plant in Hangzhou, bringing Ford's investment in China since 2006 to $4.9 billion.

The Hangzhou plant, built with Changan Ford Mazda Automobile, would open in 2015 with an initial production capacity of 250,000 units.

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Continuing rapid expansion in China means that when Hangzhou opens, Ford's passenger car capacity in China will total 1.2 million units annually, doubling its current capacity.

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Thursday's announcement comes two weeks after Ford said it would invest $600 million to expand capacity at its Chongqing facilities by 350,000 cars, and less than six weeks after the company opened Chongqing 2, a Focus plant, which increased China passenger car capacity by one-third to 600,000 units.

"These are incredibly exciting times for Ford in Asia," said Joe Hinrichs, president of Ford Asia Pacific and Africa, in a prepared statement. "So far, Ford's investments in China and across Asia represent its largest and most rapid global expansion in fifty years.

"Building this plant helps lay the foundation for ... growth and reconfirms our commitment to China, which is expected to have sales of about 30 million vehicles by 2020," he said.

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The Hangzhou plant will put Ford production closer to a large customer base in affluent coastal areas. Ford plans to bring 15 new vehicles and 20 new powertrains to China by 2015.

CFMA already operates two assembly plants in Chongqing, with a new engine plant and a new transmission plant under construction. When the facilities are completed, Chongqing will be the largest manufacturing location for Ford outside southeast Michigan.

Ford has room to grow in China because the market is expanding and because it is far behind competitors. In the first three months of 2012, market leader GM GM China sold 745,152 vehicles, while Ford China sold 121,393 vehicles. In March, overall China sales grew 4.5%, GM sales rose 10.7% and Ford sales fell 10%.

Over the past decade, China's auto sales growth has increased at double-digit rates, enabling the country to pass the U.S. as the world's largest auto market. But first-quarter sales fell back by 1.3%.

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-- Written by Ted Reed in Charlotte, N.C.

>To contact the writer of this article, click here: Ted Reed

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