Ford Motor to Boost China’s Auto Industry

Published By : 03 Apr 2015 | Published By : QYRESEARCH

A joint venture between Ford Motor Co. and its Chinese partner Chongqing Changan Automobile Ford Motor Co. is going to revive the struggling Chinese domestic car maker’s factory. This deal is of worth 6.6 billion yuan ($1.08 billion). The investment highlights the demand for foreign-brand cars in China. 

A number of foreign automobile companies have invested in China, even though the sales numbers have slowed down in the market, reflecting the slower economic growth in China. The reputation of western automakers for quality has helped them gain more market share than the local brands.

A spokesman from Ford mentioned that the company aims for a long term growth in China. The investment in the domestic factory will lead to the manufacture of Ford-branded passenger cars by 2016. Through this deal, Ford will acquire the plant from Harbin Hafei Automobile Industry Group Co. and will increase the annual production of passenger cars in China by 200,000 units. Experts mention that this deal might help Ford which needs the extra capacity.

Analysts explain that the deal is an outcome of the Chinese government’s efforts to make the successful car makers acquire some of the underused car plants in China. However, Jochen Siebert, managing director of consulting firm JSC Automotive, warns that this indicates the government’s upper hand while allocating capacity to the foreign automobile car makers. 

Volkswagen AG and General Motors Co. are the biggest selling foreign car makers in China. Last year, SAIC Motor Corp., China’s largest domestic auto maker had an increase in its profit by 13% because of the high demand for the cars build by its joint ventures with these two brands.
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