Ford is preparing to enter China’s luxury car market with its full range of luxury cars. The announcement came after the company reported a net loss of $US25 million for the third quarter of 2003. Despite these losses, the company will have to invest heavily if it is to gain share from the current favourites in this highly lucrative market.
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Ford plans to sell its premium brands, including Land Rover, Volvo, Jaguar and Aston Martin, in the Chinese luxury car market. This is a strategic move to strengthen the company’s brand position in the increasingly globalised Chinese market. Ford is already present in the small and family car segments in China but is a relative latecomer to the niche luxury segment, which is currently dominated by Mercedes-Benz and BMW.
Competition in the luxury sector is fierce and the likes of Audi, Mercedes-Benz, BMW and Ferrari are already drawing up battle plans to conquer the Chinese market. Mercedes-Benz S600 models, the BMW 760 and Audi A8 were all launched in the last few months.
As traditional car markets remain stagnant, due to poor global economic conditions, the Chinese economy has steamed ahead with annual vehicle sales exceeding three million units. Moreover, demand for luxury cars has tripled in the past three years and will continue its rapid growth.
Nowadays, China accounts for about 20% of all luxury models sold worldwide. Newly prosperous social groups in China offer enormous market potential for the luxury car market. During the first half of this year, demand in the luxury segment has increased 70% compared to last year.
As the Chinese luxury car market grows, strong brand positioning is an effective way for vehicle manufacturers to improve market penetration and remain competitive. Top luxury vehicle manufacturers are already investing in local manufacturing plants, enabling them to launch a full range of models in China.
Ford began its vehicle production in China in 1997 and has since been trying to catch up with its rivals GM and Volkswagen. There is significant potential in the Chinese luxury car market, but Ford will have to invest heavily in product quality and service networks to gain share in such a competitive arena.
