Ford's announcement that it would spend $760 million on a new factory in Hangzhou, China that will pump out 250,000 cars a year isn't that surprising. Nor is Ford's goal to use that new factory as the cornerstone of a Chinese offensive that will double its output there to 1.2 million vehicles a year by 2015. The real question is what took Ford so long?
As we'll see during previews for the Beijing Auto Show next week, China ranks as the world's largest and most important market for new vehicles. While most Chinese car buyers still demand affordable transportation, it's also the sales leader for companies like Rolls-Royce, Ferrari and Bentley. Even with tough government restrictions on foreign companies that force them to build engineering centers and partner with Chinese companies to build up a local industry, automakers such as General Motors and Volkswagen consider China key to their futures.
Of the world's largest automakers, none has missed out on China more than Ford, which held back on China expansion in the last decade before the worldwide recession, and has struggled ever since. In China, sales of Ford models trail not only its global competitors but native firms such as BYD and Chery. The new push from Dearborn comes as Chinese officials warn the industry that they'll allow fewer new plants in the future, on fears that manufacturers may have overbuilt. The real test will come when Ford opens its new plant and finds whether it arrived just in time or a few years too late.
Other stories this morning:
BYD "Qin" to replace slow-selling F3DM: A few years ago, several commentators were ready to crown BYD the next king of the auto industry, which would sweep into America with Chinese-built hybrids like the F3DM. Since 2009, BYD has sold 80 -- worldwide. (Autoblog Green)
Audi to make Q5 SUV in Mexico/VW risks overreaching with Ducati purchase: Audi did as expected on Wednesday, announcing plans for a Mexican plant and buying Italian motorcycle maker Ducati, provoking the day's best quote about Volkswagen chairman Ferdinand Piech: "The Ducati deal shows that Piech is an engineer and engineers are sometimes like little babies." (Bloomberg)