Ford Names New President For China Joint Venture To Deepen Alliance Amid Falling Sales
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Ford Motor Co on Thursday named Steven Armstrong president of the Changan Ford joint venture in China to deepen the alliance and push for more models, as the U.S. carmaker tries to stem a decline in sales in the world’s second largest economy. Sales of the joint venture with Chongqing-based Changan Automobile continued to decline in July. In the first seven months of this year, the venture’s sales dropped more than 60 per cent compared to the same period a year earlier.
Ford’s overall sales dropped 37% in 2018 in the world’s top auto market, mainly due to a lack of new products. Over the next three years, it plans to launch more than 30 new models in China, of which over a third will be electric vehicles.
The venture is also planning to revamp some of its existing manufacturing facilities to localise production of Ford’s premium brand Lincoln. This would have a planned annual capacity of 70,000 Corsair sport-utility vehicles including 12,000 plug-in hybrid variants, according to a document on Chongqing city authorities’ website.
“Steve’s leadership will help us further strengthen the Changan Ford JV as we bring more new vehicles to the China market, including our first global all-electric small SUV,” Ford Chief Executive Officer Jim Hackett said.
Armstrong, the current chairman of Ford Europe, will begin his new role on Oct. 1, and report to Ford China President and CEO Anning Chen. Armstrong replaces Nigel Harris, who will retire at the end of 2019 after more than three decades with the U.S. automaker.
In China, Ford also makes cars through Jiangling Motors Corp Ltd (JMC) (000550.SZ) which it has a stake in. It has said it would partner with Zotye Automobile Co Ltd (000980.SZ) to sell lower priced cars, but there seems not much progress.
According to U.S. consulting firm AlixPartners, 2018 capacity utilisation rates at China assembly plants operated by Ford were below 50%. Normally, rates of around 70-75% are considered the break-even threshold.
Questions & Answers
Q.How significant is the recent sales decline for the Changan Ford joint venture?
How significant is the recent sales decline for the Changan Ford joint venture?
Sales for the Changan Ford joint venture fell over 60 per cent in the first seven months of this year compared to the same period a year earlier. This decline follows an overall sales drop of 37% for Ford in China during 2018.
Q.What is Ford's strategy to address the falling sales in China?
What is Ford's strategy to address the falling sales in China?
Ford plans to launch more than 30 new models in China over the next three years, with over a third being electric vehicles. They will also localise production of Lincoln models, such as the Corsair SUV, at existing facilities.
Q.When will Steven Armstrong begin his new role as president of Changan Ford?
When will Steven Armstrong begin his new role as president of Changan Ford?
Steven Armstrong, currently chairman of Ford Europe, will commence his new position on October 1st. He will report directly to Anning Chen, the President and CEO of Ford China.
Q.What was the capacity utilisation rate for Ford's assembly plants in China last year?
What was the capacity utilisation rate for Ford's assembly plants in China last year?
In 2018, the capacity utilisation rates at Ford's assembly plants in China were below 50%. This is significantly lower than the typical break-even threshold, which is considered to be around 70-75%.
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