Ford Breaks New Ground in China
Ford (NYSE: F) plans to bring its Lincoln line of luxury motor vehicles to China in the second half of 2014.
Ford said that it will provide a personalized option for affluent Chinese customers who seek a luxury experience that is tailored to their specific needs in order to compete with General Motors (NYSE: GM) in China.
This is an important part of Ford's global strategy. The automaker anticipates that in 2020 China will surpass the United States as the largest luxury segment in the world, with annual sales reaching 2.7 million units. By bringing Lincoln to China, Ford will make its largest expansion in 50 years as it attempts to gain a portion of the world's fastest-growing market.
Over the past few years, Ford has benefited tremendously from its Chinese enterprises. In China, the company's sales surged 18 percent in June, eight percent in May, and 24 percent in April. Ford's February sales soared even higher, reaching 28 percent in China. To help maintain that growth, the company plans to double its dealerships in China by 2015.
Earlier this month, Ford announced that July China wholesales had reached 42,560, amounting to a 32 percent increase. The Focus has proven to be one of the company's most popular vehicles in China, selling more than 800,000 units.
Ford is currently in the process of building a brand-new, $600 million assembly plant in southwest China. When completed in 2014, the plant will be capable of producing 250,000 vehicles per year.
While Ford sales continue to increase in Asia, here in America the company has been running into a few problems. Last month, Ford recalled the 2013 Focus twice in one week. The company has been struggling to satisfy the requirements set by the National Highway Traffic Safety Administration, which has been frustrated with Ford's recent recalls.
With two years of preparation before the first Lincoln vehicle comes to China, Ford has plenty of time to retool its automobiles for safety. Until then, the automaker would be wise to fix its existing problems and prevent new ones from occurring. Otherwise, any gains made by Ford's success in China could be offset by domestic declines.
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