Ford Motor Co. (F: 11.48 0.00 0.00%) has announced to build a $300 million plant in central China with its commercial vehicle joint-venture partner, Jiangling Motors Corporation (“JMC”). The facility will start operations by the end of 2012 and has an annual production capacity of 300,000 units.The new plant will manufacture models carrying both Ford and JMC nameplates. Presently, the joint venture (30% owned by Ford) operates two plants, jointly capable of producing 210,000 units annually. These plants manufacture both JMC models and Ford’s Transit vans.
Ford’s investment in the new plant is a part of its major expansion plan in the emerging countries, including Argentina, Brazil, China, India and Thailand. Through the expansion plan, the company aims to tap the growing market in the emerging countries, especially those in Asia.
According to Peter Fleet, Ford’s president for the 10-country Association of South East Asian Nations (ASEAN), Asia is expected to account for 40% of growth in the auto industry over the next five to seven years.
Since 2009, Ford has invested $510 million in China and $500 million in India as part of its expansion plan. It intends to raise annual production capacity from 450,000-600,000 vehicles in China and double it to 200,000–250,000 units in India from this year.
Since last year, Ford has also invested $2.4 million in Brazil to increase output by 20% per year. The automaker plans to invest a total of $450 million in its Argentine and Brazilian operations.
During the first half of 2010, Ford posted its best-ever total sales in China. During the period, the automaker sold 301,524 vehicles, up by a robust 53% from the year-ago level.
Ford will announce its second quarter results on Friday of this week. We appreciate the automaker’s aggressive expansion strategy and impressive sales results. However, its effort to replace its older models and rolling out new ones entails high cost.
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