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Ford must do more to revive China operations
Yang Jian | 2018/10/26

SHANGHAI -- Ford Motor Co. is taking the right first steps to fix its troubled operations in the world¡¯s largest new-car market by making its China business a standalone unit and hiring a new China CEO with extensive experience in  the local market.  

But the company must do more: Ford¡¯s China turnaround depends how fast it can roll out the right new products in the market.

Ford started producing cars in China at about the same time as most other global automakers. In 1997, it began producing commercial trucks, and in 2003 it launched passenger vehicle production locally.

For the next several years, its performance in the market was lackluster because of limited product offerings. 

The situation improved dramatically in 2011 after the company introduced the new Ford Focus. With demand for compact sedans robust, the Focus quickly became the top-selling car in China. 

In the next two years, when local consumers developed a keen appetite for small crossovers and compact SUVs, Ford launched the EcoSport, Kuga and Edge. As demand for these vehicles stayed strong, Ford¡¯s annual sales in China topped 1 million for the first time in 2014 and reached 1.27 million in 2016.

But for the past two years, Ford¡¯s China sales have spiraled downward because of a dearth of new products. 

For the first three quarters this year, the company¡¯s China deliveries fell 30 percent year on year to 585,000 vehicles. In September, its local sales plunged 43 percent to 64,383.

With Ford rapidly losing market share, the China operations¡¯ plight gained urgency among management. The company this week announced the elevation of its China business and the appointment of Anning Chen as its new China CEO. 

In 2009, Chen, a former Ford manager, joined Chery Automobile Co. where he become the state-owned Chinese automaker¡¯s CEO last year. In his new role next month, Chen will report directly to Jim Farley, Ford¡¯s president for global markets. 

Creating a Ford China business unit will allow the company to better focus on China and enable fast decision-making for local operations, Ford said. 
But such a move is nothing unusual. Other global automakers, including General Motors and Volkswagen Group, made similar organizational changes several years ago. 

To be sure, Ford has also taken steps on other fronts to shore up its China business. 

It will start local production of Lincoln vehicles in late 2019. 

It has also formed an electric vehicle joint venture with private Chinese automaker Zotye Automobile Co. to churn out low-priced EVs to comply with the carbon credit program Beijing plans to implement next year. 

More important, the Ford brand is to launch sales of a new model after a lull of several years: The Territory, the brand¡¯s first entry-level midsize SUV Ford has developed for China, will arrive early next year.

For an automaker, reviving sales is all about bringing in new products that cater to consumer demand -- this is the lesson Ford should have learned from its ups and downs in China. 

But that alone cannot ensure Ford¡¯s sales recovery in China. To reverse its accelerating sales fall in the market, the U.S. automaker must roll out the new products it has in the pipeline at a faster pace than its competitors. 

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