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U.S. rebound lets Ford turn eyes to Asia


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U.S. rebound lets Ford turn eyes to Asia

Automaker hopes to leverage S. America, Europe gains in China

Bryce G. Hoffman / The Detroit News

Dearborn -- With Ford Motor Co.'s North American turnaround well under way, the automaker is widening its focus to the rest of the world.

Fixing the company's U.S. auto business has been Job One since Alan Mulally took over as CEO in 2006. But the company faces other challenges, particularly in China, now the world's largest auto market, where Ford arrived late to the game and has struggled to catch up with more established players, including Volkswagen AG and General Motors Co. Ford also is trying to squeeze into the already overcrowded Indian market.

Mulally traveled to India last month to launch a new small car designed specifically for that country, and he tapped Joe Hinrichs, one of Ford's rising stars, to lead a new push into Asia.

Ford is looking to its more successful operations in Europe and South America to help fund its Asia drive. Last month, Ford eclipsed VW to become the top-selling brand in Europe; this month Mulally made his first visit to South America, Ford's most profitable region, to announce investments in Argentina and Brazil.

"The entire Ford business is profitably growing, which allows us to invest even more in these growth areas," Mulally told The Detroit News.

"One Ford" strategy aims to better leverage the company's worldwide assets. It is beginning to turn out a new generation of global vehicle platforms that will underpin cars and trucks sold worldwide, a key strategy for expanding Ford's reach in emerging markets. The first of these -- the new Ford Fiesta -- is in showrooms in Asia and Europe and will be coming to America later this year.

"We can now use all of our integrated capability around the world and our global platforms to bring those fabulous products to the fastest growing markets in the world," Mulally said after returning from South America.

While there, he announced that Ford will invest another $450 million in Argentina and Brazil, bringing the company's total new investment in the region to $2.6 billion over the next five years.

Last year, Ford made $755 million in South America. Analysts say the automaker needs those profits to bankroll its expansion in Asia.

"It's one of the crown jewels in Ford's global operations," said Michael Robinet of CSM Worldwide.

Global platforms

Speaking from São Paulo, Robinet said Ford's recent moves are all about pulling its South American operations closer to its core business, ensuring they benefit from the global platforms Ford is launching in more established markets even as it leverages the region's lower cost manufacturing and engineering to supply a new generation of inexpensive cars and crossovers to the world.

It is a different approach than most other automakers are taking, he said, noting that many still see South America as something of a backwater.

"At the top of Ford's to-do list is Asia, but they need to continue their work to expand their business in other areas to pay for that," Robinet said.

Hinrichs, who was promoted to president of Ford's operations in Asia, the Pacific and Africa in November, told The News that there are huge opportunities for Ford in Asia today.

"Over the past decade, we've seen tremendous progress in South America, Europe and North America. We can now bring all of those learnings, as well as the power of Ford globally, to grow Asia," he said. "Alan has made this a very high priority for the company and for all of us."

China, which has become the fastest growing car market in the world, is at the top of Hinrichs' list.

"In the segments that we compete in China, we actually do pretty well. But we only sell five products there," he said. "We just need to bring a lot more of our great global products to the market, and also continue to work on the affordability and cost structure of our business in China."

Growth in China

J.D. Power and Associates last week forecast that sales of Chinese passenger vehicles -- cars, SUVs and minivans -- would grow to 13.55 million passenger vehicles in 2015, an increase of more than 55 percent over 2009.

Last year, Ford announced that it was investing $490 million in a new assembly plant in Chongqing that will produce the Focus when it is completed in 2012.

Ford is showing off the new Focus this week in Beijing at Auto China 2010, China's premier auto show, along with the Start concept -- a four-passenger microcar designed for Asia's congested cities.

While Hinrichs said Ford exceeded its plan goals for China in 2009, he said the company needs to expand its dealership network there to take advantage of its growing brand strength.

Earlier this month, Ford announced its best quarterly results yet for China, with sales increasing 84 percent year-over-year to 153,362 vehicles.

India is another big priority for Ford, which is why Mulally went there for the launch of the Figo, a car built specifically for the low-cost Indian market.

Ford invested $500 million in its Chennai plant last year to ready it for production of the cheap and cheerful subcompact, which is already boosting Ford's sales in India. March sales were nearly triple February's total, but still came in at just under 10,000 units.

"We've had some really good products there, but we haven't been competing in the heart of the segment -- until now," Hinrichs said. "It's a good time for us to be there with a great product. Just like China, we're working on a plan to aggressively roll out more products, expand our portfolio, expand our distribution network and really take advantage of the growth in India."

Putting Hinrichs in charge of Asia is the strongest signal yet of Ford's new focus on the region, said Robinet, who believes Ford is being realistic about the gains it can make there. And it could not come at a better time, with two of Ford's biggest rivals in the region -- Toyota Motor Corp. and GM -- distracted by problems in the United States.

GM is restructuring its core business after filing for bankruptcy last year, while Toyota is struggling with a slew of recalls affecting millions of vehicles that have tarnished its reputation worldwide.

"Toyota has slowed down its expansion in Asia, but others like (Italy's) Fiat and Volkswagen are accelerating theirs," Robinet said. "Now is the time for Ford to make its move, particularly in India and China. They are trying to make up for some lost time."

From The Detroit News: http://www.detnews.com/article/20100426/AUTO01/4260333/1148/U.S.-rebound-lets-Ford-turn-eyes-to-Asia#ixzz0mCypz4SA

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