Lincoln to Build Cars in China, in Pursuit of Cadillac
March 13 2017 - 7:35AM
Dow Jones News
By Trefor Moss
SHANGHAI--Lincoln Motor Co. will start building cars in China by
late 2019, as it looks to better compete with German and U.S.
rivals to gain a larger share of fast-rising demand for luxury cars
in the world's biggest auto market.
In doing so, Lincoln hopes to catch up with General Motors Co.'s
Cadillac in shaking off a somewhat stuffy image back home to become
a fashionable best-seller in China.
The Ford Motor Co. unit said Monday that it would start building
Lincolns in the western Chinese city of Chongqing--where Ford
already operates in partnership with local state-owned auto maker
Changan Automobile Group Co.--by late 2019.
In January, Ford Chief Executive Mark Fields said the company
was abandoning plans for a car plant in Mexico amid pressure from
then-President elect Donald Trump for American firms to manufacture
at home. In a recent address to Congress, Mr. Trump complained that
the U.S. had lost "60,000 factories" to China.
However, a Ford spokeswoman said Monday that "Ford's philosophy
around the world is to build where we sell," adding that Lincolns
made in the U.S. would still be exported to China even after the
new locally built sport-utility vehicle enters the market. Ford
declined to reveal how many Lincolns it plans to produce in
China.
The company sold 33,000 imported Lincolns in China in 2016,
three times more than the year before, and local manufacturing
would help the company to meet future demand, the spokeswoman said.
Ford sold a record 1.27 million vehicles in China last year.
The German trio of Audi AG, BMW AG and Daimler AG-owned
Mercedes-Benz has dominated China's luxury-car market for years.
Lately high-end Chinese buyers have sought out new alternatives,
said Yale Zhang, managing director of Automotive Foresight, with
brands such as Cadillac, Lincoln, Jaguar, Land Rover and Volvo
among the prime beneficiaries.
Demand for premium cars is growing 30% a year in China, he
said--far outpacing the growth of the auto market in general, in
which analysts expect sales to increase by around 3%-5% this
year.
Cars imported to China incur a 25% tariff, making "local
manufacturing a necessary step" for any auto maker wanting to sell
in volume in a highly price-sensitive market segment, said Mr.
Zhang.
Imports would remain strong, he predicted, as they cater to an
extremely wealthy market segment in which an imported car is
considered a status symbol.
Imported Lincolns in China range in price from around $41,000
for an MKZ sedan to $143,000 for the top-end Navigator SUV.
Like Lincoln, Cadillac has also been enjoying a renaissance in
China, with GM opening a 160,000-unit Cadillac plant in Shanghai
last year.
GM's China sales grew 7.1% last year, but Cadillac sales jumped
46% to 116,406 units. In January, it sold more Cadillacs in China
than in the U.S. for the first time in the company's history.
In November, Volvo Cars owner Zhejiang Geely Holding Group Co.
announced that the Swedish brand's newest luxury vehicle, the S90,
would be manufactured in China.
Lincoln's move to produce a new SUV specifically for China also
reflects the popularity of SUVs there. SUV sales rose by more than
a fifth in January and February from the previous year, according
to the government-backed China Association of Automobile
Manufacturers. Auto analysts said they expect SUVs to start
outselling sedans in China for the first time this year.
Write to Trefor Moss at Trefor.Moss@wsj.com
(END) Dow Jones Newswires
March 13, 2017 07:20 ET (11:20 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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