Last week, Ford and its joint-venture Changan Ford Mazda Automobile said it would expand its already huge manufacturing complex in Chongqing by 350,000 passenger vehicles, raising total capacity in China to 950,000 vehicles annually.
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%.
This is the third straight monthly decline for Ford in China, and it comes at a time when Ford is aggressively expanding its capacity there, an unfortunate development for shareholders and the Ford balance sheet, which needs the cash flow from increasing sales to build new plants. Ford debt is still rated as junk by the three major agencies in spite of improving profits in North America.
China had a March selling rate of 18 million units, down 16% from what was a strong February because the week-long New Year Celebration moved to January for this year.
The Chinese selling rate averaged 18.6 million units a year in Q1. On a non-seasonally adjusted year-on-year basis, the sales decline of 1.7% in Q1 was caused entirely by weak commercial vehicle sales. LMC’s China vehicle sales forecast remains unchanged at 19.47 units this year, up 8.2% from 2011.
Changan Ford Mazda Automobile (CFMA) sold 27,374 Ford-brand wholesale vehicles in March compared to 33,113 last year.
Jiangling Motors Corporation (JMC) Ford’s commercial vehicle investment in China, sold 22,005 wholesale vehicles this month compared to 21,892 wholesale vehicles in March 2011.
Last week, Ford and its joint-venture Changan Ford Mazda Automobile (CFMA) said it would expand its already huge manufacturing complex in Chongqing by 350,000 passenger vehicles, raising total capacity in China to 950,000 vehicles annually. The $600 million investment will increase Ford’s total investment in China to roughly $4.1 billion.
This will make Chongqing by far the largest Ford production site in the world – a latter day super-sized Rouge for communist customers. The latest expansion includes a new assembly line, body and paint shop. Construction on the extension is expected to begin immediately and the first vehicle is expected to come off the line in late 2014. CFMA already operates two assembly plants and an engine plant in Chongqing, with another engine plant and a transmission plant currently under construction.
“Ford’s aggressive plans in China are on schedule,” said David Schoch, chairman and CEO of Ford China.
General Motors and its communist government-mandated joint ventures in China sold 257,944 vehicles in March, and 745,152 vehicles in the first quarter of 2012, setting both March and quarterly sales records. In the U.S., GM sales were just over 608,000 for Q1.
In 2011, market leader General Motor’s China sales were at 2.55 million and Volkswagen Group was second at 2.26 million. Among the Japanese Big Three, Nissan in China is twice as big as Honda, which sold 618,000 cars in China last year. Toyota is 40% larger in terms of vehicle sales.
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.
See:
- Ford to Expand Chongqing Plant, Raising Capacity to 950,000
- GM Sets March and Quarterly Sales Records in China
- Honda Says it Will Double Sales in China By 2015
- Ford China Sales Up 28% in February, But Down 15% YTD
- Ford China Sales Plummet 42% in January? GM off 8%
