Ford Motor Co. is looking to make hay overseas while General Motors and Toyota Motor Corp. regroup. It’ll invest about $3.5 billion in production plants in China, India, Brazil, Argentina and South Africa over the next five years.
The spending is part of a long-term strategy to focus on boosting production in foreign markets that now comprise about 54% of Ford’s annual worldwide sales of $120 billion or so. By decade’s end, overseas markets are likely to account for 60% or more of the company’s total sales, as the U.S. market for Ford autos pokes along and sales abroad go full steam.
In China -- the world’s biggest market -- around 14 million new vehicles will be sold this year. By 2020, up to 25 million new cars and trucks will hit the road there every year. Over the span, look for Ford to roughly double its current 1.9% market share in China.
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Auto sales in India won’t be far behind China’s, so it’s no surprise that Ford has the two countries high on its list for new plants. It plans to spend around $500 million on new facilities in the two nations.
One new Ford production facility, just opened in India in February, will churn out a small car dubbed the Figo designed to appeal to the country’s millions of motorists. Look for the company to gain a firm foothold in a market where no automaker yet has a chokehold on sales.
The importance of building sales in fast growing markets isn’t lost on any automaker, but Ford is perhaps the best positioned financially to step up investments in production facilities. Thanks to a reorganization plan launched in 2006, the company made nearly $3 billion in net income in 2009 after it lost around $30 billion during the previous three years. Ford is likely to see far larger profits this year and next.
Worldwide sales are already paying dividends for Ford, but ramped-up production and sales will make it an even stronger competitor down the road, especially now that it has developed streamlined common parts and designs. “The ‘One Ford’ concept is allowing it to build vehicles that can be tailored to suit the tastes of different markets, but also take out huge amount of costs that instead can go to the bottom line,” says Rebecca Lindland, director of the automotive group at IHS Global Insight, a worldwide business consultancy.
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