Ford to expand retail financing unit as sales soar
Ford Credit seen as key driver of carmaker's strategy in China
Ford Motor plans to expand its retail financing business in China to boost growth after robust first-quarter growth which saw sales increase 121 per cent year on year to 33,511 units, the company said yesterday.
The carmaker said the result was mirrored by its other brands - Volvo, Land Rover and Jaguar - which are part of its Premier Automotive Group (PAG).
The combined sales of the PAG brands were up 143 per cent over the same period last year for the quarter.
Ford sees its wholly owned subsidiary, Ford Credit, which launched its retail financing business in July last year, as a key driver to its China strategy.
'Individual financing is critical for growth. Nowadays, less than 10 per cent of total car sales rely on individual financing. We're planning to extend our financing business to a dozen cities in China by the end of the year,' said Kenneth Hsu, a spokesman for the group.
'Compared with Japan and the United States, where 50 to 90 per cent of total car sales rely on individual financing respectively, individual financing is still at very preliminary stages of penetration in China,' he said.
Ford retail financing has been introduced to customers in Beijing, Shanghai, Guangzhou, Shenzhen, Nanjing, Wuhan, Suzhou, Wuxi, Changzhou cities, and will expand into Tianjin and Qingdao, the company said yesterday.
While the central government has tightened credit since it launched a series of macroeconomic policies in 2004, effectively taking individual financing by banks out of the market, Mr Hsu said carmakers could still register separate financing arms under the name of their car companies.
Meanwhile, the company said its aim was to become one of the top three carmakers in the country.
Its joint venture with Changan Auto - Changan Ford Mazda Automobile - now has a 200,000-unit production capacity, up from 20,000 units three years ago.
The partnership will have an additional production capacity next year of 160,000 units with the completion of a new vehicle assembly plant in Nanjing.
With the existing 200,000-unit production capacity, total annual sales are estimated to be in the region of 360,000 units after next year.
'[The joint venture] is the major driving force of Ford Motor Company's China operation,' said Cheng Mei Wei, chairman of Ford Motor (China).
'Our goal is to become one of the top three auto makers in the Chinese market.'
The company, a relative latecomer to the China market, has just 1.7 per cent market share, which compares with rivals Volkswagen and General Motors Corp which have 17.3 per cent and 11 per cent market share respectively.
The group aims to double sales of vehicles in China this year.
The group posted a first-quarter net loss of US$1.19 billion, compared with a profit of US$1.21 billion a year ago. It plans to close 14 plants and cut up to 30,000 factory jobs in North America.