Out with staid, in with harmony
Updated: 2013-05-03 07:41
By Wang Chao (China Daily)
Ford is to introduce more affordable SUVs to China and is emphasizing design changes to better reflect the Chinese aesthetic. Provided to China Daily
As Chinese auto buyers go big, Ford throws out the old game plan to entice buyers
Ford Motor Co cars, notably its sport-utility vehicles, fit the stereotypical American blend of motor masculinity, a sense of freedom behind the wheel and plenty of passenger room.
Indeed, as the company undergoes major expansion in China, it is using a familiar game plan: Introducing its reputable SUVs to the Chinese market, which is shifting away from compact cars toward larger, oil-chugging vehicles.
But change is now the name of the game at Ford, says Jim Farley, Ford executive vice-president for global marketing, sales and service and Lincoln. Farley says Ford is putting all its chips on making any changes it can afford to woo more Chinese customers.
With company predictions that the annual Chinese market will soar to 30 million cars and trucks by 2020, Ford is in the process of building an engine and transmission assembly plant in Chongqing as well as assembly plants in Hangzhou, Zhejiang province, and Nanchang, Jiangxi province.
Ford is also emphasizing design changes to reflect the Chinese aesthetic.
For instance, Farley says, the design for the front of the car is tailored to the Chinese buyer and "looks impressive but also has to be harmonious".
"In the Euro-centric culture, the (interior) instruments panel is on the driver's side; in front of the passenger's seat, there are other designs. But the Chinese customer wants the two sides to be balanced. One side should not be more important than the other."
"The bet we are making is 'change'," Farley says. "We will have 15 new products in China by 2015. The first major mission is a full line of SUVs."
The company has fared well this year. At the end of March, it had delivered 54 percent more cars than last year (the average growth rate for car sales in China is 17 percent). Based on a report by the China Association of Automobile Manufacturers, sales of SUV models last year rose 26 percent to 2 million units.
"The timing is perfect for us to introduce more SUV models, such as the Kuga and EcoSport, the more affordable SUVs," Farley says.
Farley, who joined Ford in 2007, says he was aware of the change in company momentum and planning during a recent phone call with a company engineer. The engineer was asking for technical information about one of Ford's cars for the European market when Farley interrupted him and told him that China must be discussed before Europe.
"There was a moment of silence over the phone. We suddenly realized that something had changed within Ford," he says.
Ford does seem to thrive with change. Among the big three in the United States auto industry - General Motors, Ford and Chrysler - only Ford was not rescued by the 2009 government bailout, although it was on the verge of bankruptcy.
Ford officially entered the Chinese market in the mid-1990s as the world's second largest carmaker after GM. It is now the seventh largest globally.
From 1999 to 2011, the Chinese auto market boomed from 2 million vehicles to 18 million, but Ford delivered only 500,000 in 2011, far behind GM, which delivered 2.55 million.
But the company realized that leading in one particular sector is much more realistic than confronting rivals in every product line.
"The SUV market is growing very fast and people are having a big aspiration for that, and this is the area in which Ford is uniquely positioned, even more than our competitors," Farley says.
Special treatment for the Chinese market also include earlier launches of new models. The company had previously introduced products a year after its US and European debuts, but it is now putting the Chinese customer higher on its global launch list.
"Now we are launching in China the same time as all of our global SUVs, sometimes even earlier than the US market," Farley says.
The emphasis on SUVs, which usually have much higher margins than sedans, can possibly bring a quicker infusion of revenue to Ford, but it may need time to build a higher volume, analysts say.
As the Chinese market grows, competition has intensified.
Alan Mulally, CEO of Ford, said in an interview with CNBC last month that his team is spending more and more time in China and feels good about China's market situation and product diversity.
"China becoming the second asks us to change everything," Farley says. "As Ford doesn't design cars for any specific market, the biggest change is to incorporate the Chinese elements and make compromises for other parts of the world. We have to make this tough choice."
Besides Ford's subtle design changes for the Chinese buyer, it is also going more and more green.
With the Chinese government aggressively offering incentives for auto companies to produce fuel-efficient cars to cope with pollution and traffic congestion, Ford is looking at these government benefits as opportunities with its fuel-efficient engines, such as the EcoBoost.
"Before, this engine was only applied to very expensive products, but now we are trying to bring this to vehicles in China. This is a big bet for the company.
"Previously, Chinese customers were not very interested in fuel economy, but now things are changing. More and more people are aware of the air quality. For them, green is very tangible. Plus, some families have two cars at home. They are getting more and more concerned about the overall cost of fuel."
(China Daily 05/03/2013 page16)