From L3: Jason Luo, Chairman and CEO, Ford China, Bill Ford, Ying Jianren, Chairman of the board, Tech-New Group, Jim Hackett, Peter Fleet, Jin Zheyong, Chiarman of the board, Zotye Auto
If China’s auto industry is a poker game, then Ford is going all in.
It was a busy week in early December for the U.S. automaker, to say the least, as Executive Chairman Bill Ford and CEO Jim Hackett traveled to China to announce a slew of plans and deals.
First came the new expansion strategy on December 5 (see Go broader and leaner: Ford’s “China 2025 Plan” to focus on SUV and electric push, connectivity, distribution and ownership experience). Then came three separate agreements with Zotye (see Zotye-Ford JV to go into production in September 2019), Alibaba (see Ford Alibaba tie-up looks to explore new ways to sell and own a vehicle) and Chang’an (see Chang’an and Ford deepen partnership, to localize production of Lincoln) two days later.
It was Hackett’s first trip to China since being appointed CEO just over six months ago, while Ford also talked about the future of the auto industry at the Fortune Global Forum on December 6 and met with Alibaba Founder and Chairman Jack Ma prior to signing the deal with the e-commerce giant.
The week-long trip that took Ford and Hackett to Shanghai, Guangzhou, Hangzhou and Beijing was unpreceded for the U.S. automaker ever since it entered the Chinese market more than 20 years ago, and reflects Ford’s determination to become more local and efforts to rejuvenate the Blue Oval which has had a lackluster two years since the end of its “1515” strategy that brought 15 new vehicles to China between 2011 and 2015.
And it will be much more than the 50 new vehicles it is introducing in China by 2025, including a slew of locally-produced SUVs and electrified vehicles from Ford and Lincoln brands and the upcoming Zotye-Ford JV.
Ford’s total sales in China through to October were off by 5 percent while sales at its key JV Chang’an-Ford are 14 percent off. The only highlight has been the Lincoln luxury marque, which has seen sales jump by 85 percent through to October and delivered its 100,000th vehicle since officially entering the market three years ago.
Ford as a mass brand frankly has lacked behind rivals in terms of timely introduction of new or refreshed models that appeal to the latest Chinese consumer demand and has been impacted by the so-called “dumbell” effect where Chinese brands and luxury brands on the two extreme ends of the market are squeezing shares away from multinational mass brands that sit in the middle. Launching more locally-produced vehicles at a quicker pace is obviously one solution to address that problem, but the fact that Ford is streamlining its distribution services into one organization, launching its own quick service brand to diversify aftersales service and teaming up with Alibaba is a response to the rapidly changing consumer habits in China in buying, using, owning and servicing a vehicle. One only has to look at the success that SAIC Motor’s Roewe and MG brands have had since teaming up with Alibaba to understand how crucial Chinese tech giants like Tencent and Baidu are becoming for both Chinese and multinational automakers.
When in China, do what the Chinese do. Ford has realized that to be successful in China, it has to be more Chinese. The events in that week simply represent the start of that new journey.