Fords to minimize production in China amid slow growth.
Ford Motor Company has decided to minimize the production of certain vehicles in China after the first quarter of the fiscal year of 2015. The reason behind cutting down on production is that their growth in the region does not boast of positive results.
Ford’s auto position in the Chinese market has weakened that has forced the company to reduce the production of certain car models allowing them to cut down on the prices unlike other international brands in the market.
Previously, the company had targeted China as the next potential market for its cars. Ford had already established three new manufacturing plants in the region in order to have a strong position. China is said to be the largest market for vehicles in the world boards of numerous potential. Ford has already invested $1.08 billion in a manufacturing plant in China which will allow them to produce 200,000 car models per annum.
However, now the company needs to redefine its strategy since now they need to decrease the production. The vice president for Asia Pacific of F Company, Dave Schoch states that a decline has been observed in the showroom traffic. Even then, the company does not wish to minimize the cost of its product. The reason behinds this is that by reducing cost it will hamper the product value. If this continues to happen, then the company will further minimize production.
Mr. Schoch clarified that only a few model of certain vehicles will be affected by this decision made by the company. He further added that the productions cuts are not applicable on all models; however, the names of the cars have not been revealed who will undergo this minimization. Moreover, the company is now also monitoring the performance of rivals and devising ways to cope up with the situation.
He further mentioned that at this point it is quite difficult for them to maintain a 10-12 per cent growth. So now they need to narrow down their focus and opt for a sustainable growth of 7 per cent. Despite the company has not been doing well since a long time, Mr. Dave Schoch is still optimistic about the future of this company. He believes that the company will fight back by coming up with new models of its flagship vehicles like Ford Edge and Taurus in FY15. Although he knows that the company might have to spend a great amount of money in order to redeem its position.
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