Ford revamps China strategy
• US car maker envisages shifting its focus to electric vans and vehicles for the country’s congested and heavily polluted cities
Ford was overhauling its China plans as its global “One Ford“strategy was holding it back in the world’s biggest vehicle market, two high-ranking company insiders told Reuters.
US car maker Ford is overhauling its China plans as its global One Ford strategy is holding it back in the world’s biggest vehicle market, according to two high-ranking company insiders.
The review of its China operations, part of a broader strategy rethink under new CEO Jim Hackett, is likely to result in Ford focusing on electric vans, which China is encouraging in its polluted and congested city centres, as well as electric cars.
A shift to e-vans and etrucks in China would also fit with Ford’s reckoning that a best play globally for electrification and autonomous driving might be in commercial and delivery vehicles — a part of the market where it is already strong in the US and Europe.
The One Ford strategy — which helped the car maker’s turnaround under former CEO Alan Mulally — did not fit all situations, the two insiders said, particularly in China and India, two crucial markets where Ford’s sales have slowed.
“That’s why nobody internally talks about One Ford [in those markets] anymore,” said one of the insiders. The sources are familiar with Ford’s Chinese strategy, but neither wanted to be named as they are not authorised to speak to reporters.
In a sign that Ford is turning away from what is essentially a global push of its Ford and Lincoln brands, the Michigan manufacturer wants to drive its truck-making Chinese partner, Jiangling Motors Corporation (JMC), more towards electric commercial vans.
Such a move was “potentially lucrative” as China’s big cities effectively banned gas and diesel trucks and vans, and “none of the foreign auto makers has made any major investment or strategic move in this emerging electric commercial vehicle segment”, said Yale Zhang, head of Shanghai-based consultancy Automotive Foresight.
Sherif Marakby, Ford’s vicepresident of autonomous vehicles and electrification, told Reuters he could not comment on specific partnerships that had not been announced.
“But we are absolutely open to [electric vehicle] partnerships in different markets, and we continue to talk to other companies and tier-one suppliers.
“Don’t be surprised to see more partnerships in electric vehicles in different markets,” Marakby said.
In India, Ford and local car maker Mahindra & Mahindra said in September that they would launch a strategic alliance in a market shifting to vehicle electrification.
In August, Ford said it was considering a joint venture with Anhui Zotye Automobile to build electric vehicles in China under a new brand, tapping Zotye’s low-cost electric vehicle technology.
One of the insiders said Ford was seeking Chinese regulatory approval for this.
It has also brought in Jason Luo, a Chinese-born American, from US-based airbag maker Key Safety Systems to run its China operations. He had been tasked, one of the insiders said, with building closer ties with local partners including JMC and Changan Automobile, working more effectively with regulators, and responding faster to changing consumer tastes.
“One big issue at Ford China is our decision-making process is too slow,” one of the insiders said. “We try to manage everything, all aspects of the business under One Ford,” and that hobbled the firm’s ability to move quickly, costing market share.
Ford’s China sales are forecast to decline 4.6% in 2017, according to LMC Automotive, a far cry from double-digit growth just five years ago.
Ford has no affordable electric plug-in cars for the Chinese market, despite it being little secret that Beijing planned new quotas for all-electric battery cars and heavily electrified plugin hybrid vehicles. Those quotas were announced in September.
Nor does Ford have a highvolume brand of affordable entry cars for China, such as the Baojun cars sold by General Motors and its China partner SAIC Motor. Baojun sold more than 2-million vehicles in 2016.
With JMC, its nearly onethird-owned venture with JMC Group, Ford was slow to expand the light commercial vehicle maker into low-cost passenger cars, a market that has now become saturated with Chinese-branded cars and foreign-operated China-only brands like Baojun and Nissan’s Venucia.
Ford’s missteps were partly through a rigid adherence to the One Ford mantra and a lack of local knowledge, one of the insiders said, noting company executives sent into China often lacked the cultural ties to work with Chinese regulators, policy makers and partners.