Ford to Focus $1.8 Billion on China Smart Cars
October 12 2015 - 6:40AM
Dow Jones News
SHANGHAI—Ford Motor Co. is betting that a new generation of
smart cars will help its rides stand out in China, where its sales
have been slipping amid industrywide weakness and rising
competition.
The U.S. car marker said on Monday it will invest 11.4 billion
yuan, or $1.8 billion, over the next five years to research how to
add greater smartphone connectivity, autonomous driving and other
smart car features to its Chinese products. With that investment,
the next generation of Ford vehicles for China will be designed
around customers there, said Ford Chief Executive Mark Fields.
Ford is hoping the R&D spending push in China will help it
develop smart-car features specifically tailored to Chinese
drivers. Currently Ford is seeking to install smart-car systems in
China using technology it developed and uses in other markets.
"We see China as a very big growth market," he said on Monday.
"It's a great opportunity to grow not only our core business of
selling cars and trucks but also provide services to people that
may not want a car but still want to be mobile."
Potential features include allowing drivers to control more car
systems through their smartphones and to use their mobile chat
functions, particularly during traffic jams. A video showing
snarled traffic from China's recently ended Golden Week holiday
went viral in recent days and illustrated the depth of the
problem.
The announcement came at a time that growth of China's car
market has stalled amid a cooling economy and local curbs on car
ownership to stem pollution and traffic. China's new-car sales fell
3.4% to 1.42 million vehicles in August from a year earlier.
Ford and rivals such as General Motors Co. and Volkswagen AG
have recently cut prices and run their plants there at less than
full capacity. During the first eight months of this year, Ford
sold 531,702 passenger cars in China, down 1.2% from 537,997 cars
it sold in the same period last year.
Mr. Fields said he expects growth of China's new-car sales will
slow from the double digit rates of past years. "I do see the
slowdown this year. But we are starting to see customers come back
to the market place," said Mr. Fields.
Mr. Fields, who took the top job in July, is pushing the company
to find new ways globally to attract a younger generation who
aren't necessarily in a position to own vehicles. Congestion, air
pollution, the lack of parking lots and the emergence of on-demand
car-booking app providers like Uber Technologies Ltd. have turned
some young consumers off ownership.
Ford hopes to introduce next year a connectivity system called
Sync 3 that would offer hands-free control of phones,
entertainment, climate control and navigation. Enhanced voice
recognition technology, a more smartphone-like interface and
easier-to-read graphics will help to deliver an easier way to stay
connected, said Ford.
China has fewer than one private passenger car for every 10
people, compared with roughly eight per 10 people in the U.S. Ford
in September launched a pilot carpooling program in crowded
Shanghai and Beijing. Ford and its partner Dida Pinche, a Chinese
online carpooling service provider, has completed 170,000 rides,
said John Lawler, Ford's China chief.
Also, to respond to the Chinese government's call to reduce
emissions, Ford will start to offer two fuel efficient vehicles in
China next year: the Ford C-MAX plug-in hybrid electric car and the
Ford Mondeo hybrid electric car.
Five years ago, Ford unveiled an ambitious $5 billion plan for
China with an aim to double its annual car-manufacturing capacity
there to 1.2 million vehicles. Since then, Ford's share of China's
auto market has doubled to 5% from 2.5% in 2010, according to
China's auto manufacturers' group.
--Rose Yu
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(END) Dow Jones Newswires
October 12, 2015 06:25 ET (10:25 GMT)
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