Even amid trade tensions, Ford pushes pickup trucks in China

Keith Bradsher
Mark Fields, chief executive officer at Ford Motor Co., speaks during a Ford Media Night event ahead of the Beijing International Automotive Exhibition in Beijing, China.
Qilai Shen | Bloomberg | Getty Images

Liu Qipeng has a passion for rock climbing and camping, but for those activities, a Chinese-branded vehicle just won't do.

So even in this era of rising trade tensions between Washington and Beijing, Mr. Liu, 38, a chemicals recycling entrepreneur in southeastern China, chose to wait for the chance to buy what might be the most American of rides: a Ford F-150 Raptor pickup truck imported from the United States.

"I like this model because it is very masculine and powerful," Mr. Liu said, adding that his friends "start to lean toward Ford when they plan to change their cars."

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Ford Motor is putting the premium version of the F-150 on sale on Saturday in a country where pickup trucks are virtually unheard-of except on farms. Detroit's automakers see a potential new world of Chinese drivers, who in recent years have embraced sport utility vehicles and want to drive bigger, beefier cars.

As President Trump and President Xi Jinping of China meet in Florida this week to address growing trade tensions, Ford's interest in sending American-made pickup trucks to China underlines the debate's complexities. Despite lopsided trade between the countries, Chinese consumers show a persistent and lucrative appetite for American brands.

Fords and Chevrolets — mostly made in China, but profitable either way for Detroit — are common sights on the streets. "They think American-brand vehicles are reliable, strong and tough," said Yale Zhang, the managing director of Automotive Foresight, a consulting firm in Shanghai.

It goes beyond cars. Apple's iPhone has faced growing competition but remains a sign of affluence and success. Chinese consumers wear Nikes and buy lattes at Starbucks. For many buyers, the brands connote sophistication and an indication that they have made it.

Ford, which will import the pickups from Dearborn, Mich., is not alone. General Motors this year began to import Chevrolet Silverado full-size pickup trucks from Flint, Mich., and the Chevrolet Colorado midsize pickup from Wentzville, Mo. Ford plans to start importing the Ford Ranger midsize pickup next year as well. Both have modest expectations compared with the United States, where nearly 2.7 million pickup trucks were sold last year, almost eight times as many as in China last year, according to LMC Automotive, a global consulting firm.

For years, Chinese consumers saw pickup trucks as polluting rural rattletraps suitable only for bringing in produce from the farm. Pickups made in the country sell for as little as $7,000. Many provinces ban trucks, including pickups, from being driven in cities by day.

Interest in the cars began to grow early last year, when central government officials urged Chinese provinces to lighten restrictions on pickups as part of a broad plan to encourage consumption in the economy, including purchases of automobiles. Chinese-brand automakers had also called for a relaxation of the rules as a way to develop their pickup truck businesses.

Ford plans to introduce its "Built Ford Tough" marketing campaign in China this spring, said Peter Fleet, the company's vice president for marketing, sales and service in Asia and the Pacific. Its marketers experimented with various Mandarin translations of the phrase before concluding that the English version worked.

"The research came back resoundingly clear: No, we understand 'Built Ford Tough,'" Mr. Fleet said.

Cars are a particular sticking point between the United States and China because Beijing charges heavy taxes and duties on imported cars. While Ford has not released the official price for the Raptor, Mr. Liu said that he had been told it would be about $81,000. A similarly equipped Raptor sells for $50,000 in the United States. Chinese import and value-added taxes would make up most — but not all — of the difference.

The price could be even higher if Ford were importing cars from the United States instead of pickup trucks. China classifies pickup trucks as trucks and not as passenger vehicles, a category that in the country encompasses cars, sport utility vehicles and minivans. That truck classification exempts pickups from a Chinese consumption tax on passenger vehicles with large engines that can go as high as 40 percent.

Mr. Liu said that if he faced a consumption tax like that, he would not buy the Ford pickup.

"If it has a 20 percent tax, I wouldn't consider buying it, because one of the major motives for me to buy it is that it's a very cost-effective model," he said. "It's a toy for me after all, not a must-have."

China also exempts pickup trucks entirely from fuel economy averages. It sets a much higher corporate fuel-economy average — 38 miles per gallon — than the United States for all the cars, minivans and S.U.V.s that each automaker sells in the country.

This has forced manufacturers to design and sell models with engines that are much smaller and less powerful than in the United States but also more fuel efficient.

By contrast, Mr. Trump announced last month that he would roll back increases in American fuel economy averages that President Barack Obama had mandated.

Attitudes toward pickups are softening in parts of China. Ford said six provinces had exempted pickups from urban driving restrictions widely imposed on trucks in the country.

That liberalization could help the fight against air pollution. It could shift the mix of vehicles purchased by farmers away from heavily polluting tractors and toward pickups instead, said Hui He, a senior researcher in the San Francisco office of the International Council on Clean Transportation, a nonprofit research group based in Washington best known for its role in exposing Volkswagen's diesel emissions deception.

Mr. Liu lives in the southern city of Guangzhou, in Guangdong Province, which has not changed its rules. He said that while he owned other vehicles, he planned to drive his pickup around town sometimes as though it were a car and would see whether the police tried to stop him.

"As long as the local authorities don't ban me from driving it here," he said, "I'll drive it."