Ford slightly cuts production in China in 1st Quarter of 2015

Article by Andrew Christian, on May 27, 2015

Ford Motor slightly reduced its production in China during the first quarter because of a slowdown in the market and a move by rivals to cut prices, according to Ford’s Asia Pacific region chief Dave Schoch. However, Ford still anticipates that in the long term, it will have significant growth in China. It’s on track to almost quadruple its annual production capacity from 2011 to 1.9 million units by the end of 2015.

Schoch said that Ford’s internal projections indicate that the region will make up about 60% of the brand’s sales growth worldwide within the next 5-10 years. Last April, the automaker cut its sales forecast for China industrywide by 500,000 vehicles. Ford also now predicts a growth this year of 8% or lower.

At Ford’s headquarters, Schoch revealed to reporters that in the last few months, there have been a “little bit of a slowdown” in traffic at its showrooms. He explained that prices won’t be reduced since they want to ensure that their “very good” products hold their value.

What Ford will do is prevent stocks from building up and will opt to cut production and simply match supply and demand. Schoch admitted that the output of some models has already been cut this year. However, he won’t name the models or the segments they’re in.

He also said that these production cuts were “nothing material.” Ford actually did reduce the cost of its Explorer SUV in China by over 8% last week. In comparison, General Motors did a drastic reduction of as much as 20% for 40 models.

As the gross domestic product of China declines into single digits, other automakers (including Volkswagen) have also cut their prices. Meanwhile, Ford’s deliveries in China have grown during the first four months of this year by 7% to almost 394,000 vehicles.

Ford is actually in a plant opening frenzy in China. Last March, it opened its sixth assembly plant in China to roll out an Edge crossover version with three rows – just one of an unprecedented 18 vehicles that will be presented in Asia Pacific in 2015.

The company is planning for its Lincoln brand to have a major growth spurt this year from its current 14 dealerships to 60 by the end of 2016. It made its debut in China in 2014.

Ford Motor Credit is being launched throughout the country to reel in a younger generation of Chinese buyers who are more open to borrowing money for a vehicle. Schoch said that only 20% sales have been financed and that numerous buyers still come in with literally “bags of cash.”

Topics: ford, china, production

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