Ford bets on Mus­tang to power China prof­its

Au­tomaker seeks to get mileage out of model’s clas­sic im­age

Global Times - Weekend - - AUTO -

Ford Mo­tor Co is bet­ting on one of its most dis­tinc­tively Amer­i­can mod­els, the Mus­tang mus­cle car, to boost the com­pany’s sales and prof­its in China.

Ford be­gan sell­ing the Mus­tang in China in early 2015, and it is a niche ve­hi­cle, sell­ing at a rate of about 3,000 cars a year. Still, that makes the Mus­tang, which starts at 399,800 yuan ($57,670) the top seller in a sporty car seg­ment against more ex­pen­sive ve­hi­cles like the Audi TT and the Nis­san Skyline GT-R. In 2016, Mus­tang out­sold the Chevro­let Ca­maro from Gen­eral Mo­tors Co by nearly 15 to one.

With styling that harks back to 1960s Detroit mus­cle cars, the Mus­tang stands out in a Ford lineup dom­i­nated by prac­ti­cal sedans and sport util­ity ve­hi­cles.

Ford’s sales in China grew by 50 per­cent in 2013 and 20 per­cent in 2014, but in 2015 the pace slowed to 3 per­cent. In 2016, Ford added the Lin­coln lux­ury brand to its China lineup and ex­panded sales by 14 per­cent.

In­dus­try an­a­lysts said Ford’s China mar­ket prof­its and prof­itabil­ity were rel­a­tively healthy, with op­er­at­ing mar­gins for Ford’s joint ven­tures with Chongqing Changan Au­to­mo­bile Co Ltd and Jian­gling Mo­tors Corp in the 14-16 per­cent range over the past three years.

But com­pe­ti­tion in the world’s largest car mar­ket con­tin­ues to heat up as global au­tomak­ers, from GM to Volk­swa­gen AG to Toy­ota Mo­tor Corp, add more mod­els to prod­uct ranges. In­dige­nous Chi­nese au­tomak­ers, too, are launch­ing mod­els that can com­pete more head-on with global car­mak­ers’ prod­ucts.

Ford of­fi­cials said the com­pany’s China op­er­a­tions did not have spe­cific profit ob­jec­tives but were try­ing to keep mar­gins in their cur­rent “healthy” range.

“In terms of hav­ing a pric­ing power on your brand, you want peo­ple to be choos­ing your brand for ra­tio­nal rea­sons, but if you could also [com­bine] that with emo­tional rea­sons, that’s when you get some pric­ing power,” Peter Fleet, Ford’s ex­ec­u­tive in charge of sales and mar­ket­ing for the Asia-Pa­cific re­gion, told Reuters.

The Mus­tang and the F-150 Rap­tor, a high per­for­mance ver­sion of Ford’s F-150 large pickup truck, pro­vide the emo­tion, he said.

The for­mula works for Dong Zirui, a 27-year-old small rental car busi­ness owner in Tang­shan, North China’s He­bei Prov­ince, who bought a Mus­tang late in 2016.

“The Mus­tang is a rear-wheel-drive car,” said Dong, who de­cided to buy the Mus­tang when he spot­ted pho­tos of it on­line. “It’s a sav­age when you try some drift­ing stunts with the car.” But Dong said he can fit his wife and young son in the car when he needs to.

Deal­ers say the Mus­tang brings in two types of buy­ers to Ford stores: younger driv­ers, mostly younger than 30 years of age, from up­per mid­dle class fam­i­lies, who have re­cently fin­ished their stud­ies and have fi­nan­cial sup­port from their par­ents, as well as driv­ers in their 30s and 40s who have work or life ex­pe­ri­ence out­side China.

“Ford has a cleaner sheet in China, so there might be an open­ing for those halo cars to help the com­pany im­prove its brand im­age,” said James Chao, Asia-Pa­cific chief for re­search firm IHS Markit Au­to­mo­tive, re­fer­ring to China being a rel­a­tively young mar­ket.

As Chi­nese con­sumers typ­i­cally make car pur­chas­ing de­ci­sions based on word-of-mouth ad­vice from fam­ily and friends, Mus­tang buy­ers can be in­flu­en­tial opin­ion lead­ers for Ford.

Guo Xin, a 30-year-old rally car racer and stunt driver for films and com­mer­cials in Beijing, said he liked the Mus­tang so much that in 2011 he helped form a Mus­tang Club of China that now has some 2,000 mem­bers.

“Grow­ing up I used to see the Mus­tang in movies,” said Guo, who drives a 2006 Mus­tang and also owns a 1966 Mus­tang.

Guo’s clas­sic Mus­tang would turn heads even in Detroit. But he can­not take it out on pub­lic roads. Used cars brought in from out­side China can­not be reg­is­tered in the coun­try.

Photo: CFP

A Ford Mus­tang GT sits on the floor of the Ford booth at the 2017 North Amer­i­can In­ter­na­tional Auto Show in Detroit, Michi­gan on Tues­day.

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