When car companies started scrambling to gain a foothold in China, one company seemed slow off the blocks. Ford has taken a low-key approach – so low-key that some analysts feared the blue oval had missed the boat, writes Mark Bursa.

But slowly and surely, Ford is playing catch-up in China. It has established successful local joint ventures and is gaining ground on its early-adopter rivals. Ford brand sales in China rose 46% last year to 82,225 vehicles, helped by strong imports and significant price cuts – and the fact that local production is starting to kick in.

Ford’s main car-making JV, Chang’An Ford Automobile in in Chongqing, added assembly of the new Focus to the existing Mondeo and Fiesta last year – all are current models, not older versions. Chang’An Ford is a 50:50 joint venture, and locally assembled vehicles accounted for 61,013 units of the 2005 total. Recent improvements at the plant have boosted capacity to 150,000 units a year, and the venture expects to produce 120,000 cars in 2006.

Meanwhile sales at its other JV, a venture that builds the Ford Transit in partnership with Jiangling Motors, saw sales rise 48% from a year earlier to 18,000 units last year.

It’s not just Ford brand vehicles that are gaining ground – total Ford group sales in China totalled more than 220,000 units last year. In fact, the group’s top brand in China is Mazda, which in 2005 saw sales rise 51% year-on-year to 133,778 units. Both Ford and Mazda outstripped the total market increase of 26% last year. Catching up indeed, though still less than one-third of GM’s total China sales last year.

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In addition to its own JV in Changchun with First Automobile Works (FAW) making Mazda 6 sedans and wagons, Mazda has this month started producing the Mazda 3 model at the Chang’An Ford plant. In the longer term, Ford and Mazda will work more closely together. Building work is under way on a new JV Ford-Mazda engine plant, announced in April 2005. The plant, in the Jiangning Economic and Technological Development Zone in Nanjing, will have capacity for 350,000 engines for both Ford and Mazda, with production starting in 2007.

This indicates the scale of the Ford group’s ambitions. In October 2003, Ford and Chang’An Automotive announced they would invest more than $1 billion to expand their operations in China. A new Ford-Mazda plant is planned to be built next to the engine plant, with a capacity of 160,000 cars a year. This is scheduled to come on line in tandem with the engine line, and will swell Chang’An Ford’s capacity to 360,000 units – an eighteen-fold increase on 2003’s level.

Add in Mazda’s projected growth with FAW – Mazda is targeting total Chinese sales of 300,000 in China by 2010 – and Ford group will have in excess of half a million units of capacity in China, putting it roughly where PSA will be in the same timeframe – and PSA has already been manufacturing in China for well over a decade.

Ford is also looking at the luxury sector – still relatively small in China, but growing. Lincoln, Land Rover, Volvo and Jaguar brand cars are all sold there, and Ford has just announced that the Volvo S40 sedan will also be built at Chang’an Ford in Chongqing – a logical move as the S40 is built on the same platform as the Ford Focus and Mazda 3. Volvo wants to build 10,000 S40s a year in 2007, at which level it says the venture will be profitable.

Is there a weakness in the Ford strategy? Possibly only the lack of a small car – something that would give Ford a crucial entry-level model to compete with GM’s Chevrolet Matiz, and the burgeoning number of locally-developed cars made by the likes of Geely, Chery and Tianjin Xiali.

This problem is not exclusive to China – Ford is light on very-small-car technology, and in Europe is not developing its own replacement for the ageing Ka – instead it’ll piggyback on Fiat’s new 500, which is to be built in Poland. Could this venture be extended to China? That would depend on Fiat’s approach – and Fiat is one of the few automakers that has got off to an even slower start in China than Ford.

In that respect, Johnny-come-lately Ford has the same problem in China as pioneering Volkswagen, which, despite a 20-year head start in China, has equally failed to come up with anything cheaper than a Polo. So maybe Ford’s late entry isn’t that much of a hindrance after all.

Mark Bursa