Ford Motor Company today announced it would build a new assembly plant in Hangzhou, China, adding 250,000 units of capacity. This latest $760 million investment by Ford and its communist-government required joint venture – Changan Ford Mazda Automobile – will add assembly operations on China’s eastern coast, far from CFMA’s current eastern inland location in Chongqing.
The latest announcement comes just weeks after CFMA said it would invest $600 million to expand capacity at its Chongqing facilities by 350,000 passenger cars. Earlier this year, the company opened Chongqing 2, to build the Focus. That move increased its China passenger car capacity by one-third to 600,000 units.
The bold expansion – and the future sales promises behind it – come as Ford China sales have decreased for three straight months. Ford China sold 121,393 vehicles in the first quarter based on wholesale results, down from 140,566 sold from January to March in 2011, a decline of -14% in the world’s largest auto market, which is off 1.7% for the same period. In March, Ford China sold 49,439 wholesale vehicles, compared to 55,292 vehicles in March 2011, a -11% decline in a market off -16%.
“So far, Ford’s investments in China and across Asia represent its largest and most rapid global expansion in fifty years,” said Joe Hinrichs, president of Ford Asia Pacific and Africa. “This expansion will help us realize an increase in global sales by about 50% from 2010 to about 8 million vehicles annually by mid-decade. Building this plant helps lay the foundation for that growth and reconfirms our commitment to China, which is expected to have sales of about 30 million vehicles by 2020.”
Construction of the new plant in Hangzhou will begin later this year, with the first vehicle coming off the line in 2015. Ford says it will introduce 15 new vehicles and 20 new powertrains in China by 2015.
CFMA already operates two assembly plants in Chongqing, with a new engine plant as well as a transmission plant currently under construction, making Chongqing the largest manufacturing location for Ford outside southeast Michigan. The joint venture also has an assembly and an engine plant in Nanjing, China.
All major automakers have announced ambitious expansion plans in China, the world’s largest auto market. However, in 2011 the Chinese auto market only grew by 5%, by far the lowest growth rate of the 21st century, as the communist central government deliberately slowed the economy in an attempt to fight inflation.