Ford Rapidly Expanding in Asia-Pacific and Africa Markets

Ford says its Asia/Pacificand Africa markets, which include Australia, New Zealand, Japan, China, Taiwan, India, Thailand, Indonesia, the Philippines, Vietnam and South Africa, are expected to account for 60%-70% of its growth in the next decade.

To capitalize on this, Ford rapidly is constructing new factories. Since 2006, it has invested $6 billion in the APA region and opened two new plants in China. Seven more, five in China and two in India, are planned.

Joe Hinrichs, group vice president and president-Asia/Pacific and Africa, tells WardsAuto in an interview via email the auto maker will leverage its One Ford plan, which focuses on maximizing its global resources, to facilitate growth in these regions. Following is an edited version of that interview:

WardsAuto: What is your outlook for the Asia/Pacific and Africa market in 2013, and how will it affect your business performance?

Hinrichs: Although there are some uncertainties about the economy, we believe the APA market will continue to grow next year and for the next decade. It is important to remember that Ford intends to be in Asia/Pacific and Africa for the long term.

It is widely accepted that the auto industry takes off when the country's (gross domestic product) reaches $5,000-$6,000 per capita. Between China, India and the Association of Southeast Asian Nations, there will be 2 billion people by 2020 that are of driving age and have reached the (necessary) economic income level.

With this in mind, we expect 60%-70% of Ford's growth in the next 10 years to come from Asia/ Pacific and Africa. In 2010, one in every six vehicles Ford sold globally was sold in APA. By 2020, it will be one in three. We have invested over $6 billion in APA since 2006. Our expansions include building nine new plants (six vehicle factories and three engine/transmission facilities) in the region, including two vehicle plants launched in first-half 2012.

We are bringing more than 50 new vehicles and powertrains to APA by mid-decade.

This includes introducing 15 new vehicles and 20 new engines and transmissions to China by 2015, eight new vehicles to India by the middle of the decade, eight new vehicles to ASEAN during the next five years and four new vehicles to Taiwan in the next three years. We are continuously delivering on our plans, and we remain positive about the market.

WardsAuto: Do you see the need to increase, decrease or maintain your global manufacturing capacity in the coming year?

Hinrichs: In Asia/Pacific and Africa, as we have (already) outlined, we expect steady increases in the next year and for the next decade. The demand for world-class products is increasing in this part of the world and, as we do around the world, we will continue aligning capacity with demand. For APA, that means adding a significant amount of capacity the next several years.

WardsAuto: What sort of challenges remain in globalizing product platforms?

Hinrichs: We don’t look at globalizing platforms as a challenge. In fact, in Asia/Pacific and Africa, we greatly benefit from this key part of the One Ford plan. The sales success of the all-new Ford Focus in China is just the latest example.

A key component of the One Ford plan is to leverage our global assets, including production platforms, technologies, and resources, for all markets. We believe this is possible because consumer needs in different markets are converging – they all value quality, safety, fuel-efficiency and smart design and technology.

As such, our future products for all markets will be produced on global platforms with 80% parts commonality, which gives us the scale we need to deliver profitable growth to all our stakeholders.

WardsAuto: Rank the top five emerging markets. How has the list changed since 2009?

Hinrichs: We are focused on the markets in Asia/Pacific and Africa, which are the engine for global auto industry growth. According to (market forecaster) IHS, the industry will grow from 32 million (units) in 2011 to 53 million by 2020. APA will account for 46% of the global automotive industry and over 60% of its growth.

We have aggressive plans to take advantage of regional growth by developing a strong presence in China, India and ASEAN. These are the largest growth markets within our APA region.

WardsAuto: How will the dissolution of the joint venture with Mazda in China help Ford going forward?

Hinrichs: In September, Changan, Ford and Mazda received approval from China's National Development and Reform Commission (NDRC) for the restructuring plan for our joint venture in China.

Based on the plan, CFMA will be restructured into two JVs, Changan Ford Automobile and Changan Mazda Automobile. Changan Ford will assume all of CFMA’s Ford-related business, including development, manufacturing, marketing and sales of Ford-branded vehicles in China. Changan Mazda will assume all of CFMA’s Mazda-related business.

With our two partners, we now are working through the rest of the regulatory approval process with China’s Ministry of Commerce, State Administration of Industry and Commerce and Ministry of Industry and Information Technology to complete the restructuring.

The restructuring of Changan Ford Mazda allows us to further concentrate on our One Ford Plan by focusing on the Ford, Lincoln and JMC brands in China, while letting Mazda focus on its Mazda brand in China.

WardsAuto: Can Ford catch up to rivals such as General Motors and Volkswagen in China? If so, how?

Hinrichs: Our strategy isn’t about “catching” anyone.  It is to serve the customers of China and our other APA markets with a full family of products that are the best in quality, fuel efficiency, safety and smart technology. The momentum we are seeing in our sales growth in China is a great indication that customers want and value the products we are providing.

And we are just getting started. By 2015, Ford will bring 50 new vehicles and powertrains to APA. We will double our retail outlets in the region from 2010.

We watch our competitors carefully in all markets and learn from their successes and failures as we compete with the same competitors in all markets.

However, we know it is more important to stay laser-focused on our strategy and delivering what customers want. In the end, our customers will decide what level of market share we have in China once we provide a full portfolio of wonderful global One Ford products.

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