Ford Plans Big Push Into Green Cars, China Market

Ford Motor said it expects as much as a quarter of its sales to come from battery-powered cars by 2020 as it readies to roll out more hybrids, plug-in hybrids and pure electric cars.

The 2011 Ford Flex
Source: ford.com
The 2011 Ford Flex

Consumers in Asia will get their first chance to see the offerings at the Shanghai auto show this week, but in an interview with CNBC, Ford could not say when its pure electric car will go on sale in the world's biggest market.

That means it will trail companies like General Motors , which plans to start selling the Volt in China later this year and Nissan, which also hopes to begin selling its Leaf electric car soon.

As part of its plan to sell 15 new car models in China by 2015, Ford said it plans to double the number of dealerships and hire 1200 employees. While foreign manufacturers have until now mostly competed in the high-end of the market here, they are starting to map out strategies with their joint ventures to tap into surging demand in the second- and third-tier inland cities.

"We're doubling the number of dealers largely in those kinds of cities. So we're competing against all the competitors, Chinese OEMs and also the joint venture brands and the joint venture companies here," said Joe Hinrichs, president for Ford's Asian and African operations. He would not say whether Ford is planning to create a joint venture brand with its partner Chongqing Changan Automobile.

A shortage of key components from Japanese suppliers is expected to slow production in Asia next week and into May, but Hinrichs said he expects the cuts to affect "less than 10%" of Ford's production in Asia.

"It's not hitting us in China or India or Australia, the big markets. We're seeing some effects in the markets like the Philippines," Hinrichs said, adding that Ford is talking to alternative suppliers on concerns the shortages from Japanese companies may linger for months as power outages disrupt manufacturing over the the summer.

"We don't expect it to be a material impact to our profits. That's what we know today and we're watching this thing very closely everyday," Hinrichs said.

Auto executives will be shuttling around the world this week as two auto shows open almost simultaneously in Shanghai and New York. In a sign of its importance as a sales and manufacturing hub for all manufacturers, Shanghai is keen to impress visitors with its scale. The venue, which opens to the press on Tuesday, is roughly the size of 28 football pitches.

The end of government subsidies and new quotas from Beijing on car registrations are expected to slow auto sales in China this year, with many analysts forecasting a drop of as much as 10 percent year on year. Local manufacturers in particular say they are concerned that their consumers could be crowded out by higher ownership costs when inflation is rising.

"We're expecting the market to grow about five to 10 percent this year, which on the basis of 18 million units is still a lot. So people need to remember that. But it is slowing down as to what it was over the last couple of years. The rate of growth that was occurring the last couple of years wasn't sustainable for the industry, for the infrastructure, for the capacities that we have," Hinrichs said.

Data released last week showed consumer prices in China rose 5.4 percent year-on-year in March to their highest levels since July 2008.