Ford to expand China sales effort
The automaker plans 66 dealerships in emerging cities.
By Eric Rosenbaum, TheStreet
Ford (F) plans to add 66 dealerships in China before the end of the year, according to a Ford document reviewed by The Wall Street Journal. The 25% expansion of Ford's China sales effort will focus on what are considered the tier-two and tier-three cities in western and northern China.
In all, Ford will have added approximately 100 dealerships in China with its partner, Changan Automobile, by the end of the year. The total number of Ford dealerships in China will be roughly 340 by year's end, according to the Ford statement reviewed by the Journal.
The tier-two and tier-three cities in China include Nanning, Shijazhuang, Harbin and Anyang, cities with populations of more than 1 million. Car demand isn't the only consumer trend being tapped in the Chinese tier-two and tier-three cities. It's part of a much larger trend in China, including education, health care and real estate, as the tier-one cities become saturated.
In some cases, such as real estate, the tier-one cities have become overheated, and businesses are looking to exploit the tier-two and tier three-cities as a way to sustain growth.
Consumer spending is also on the rise across China after the government launched an ambitious health insurance plan this year. In the past, Chinese consumers have been less lax with their wallets because of the need to save for health expenses.
In an interview with the Journal, Joe Hinrichs, the head of Ford's Asian-Pacific and Africa operations and the chief executive of Ford China, said that these cities should grow steadily over the next few years as consumers spend more. "So getting dealers in those locations, and ultimately bring(ing) out products that are attractive and interesting to those markets, is a key part of our strategy moving forward," Hinrichs said.
Ford will also launch four new models in China, including the the Ford Edge crossover next month. Ford's weakness in the tier-two and tier-three cities is a lack of economy-priced vehicles, which the company plans to remedy in the coming years, Hinrichs said.
Ford expects sales of vehicles in China to reach 18 million this year, up from fewer than 13.5 million in 2009, and hit a growth rate of 10% next year, according to the Journal.
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The solid report comes a month after the retailer closed all of its Canadian operations.
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