In order to make China one of the top target markets for the luxury Lincoln line of cars, Ford Motor Co. is currently engaged in talks with Changan Automobile Group. They involve the production of Lincoln vehicles in Chongqing, according to insider reports.
The city, located in China’s southwest, could see major Ford manufacturing facilities in the future, as the company plans on making it a base in Asia for exports, an unnamed source divulged. If initial sales of Lincoln vehicles are a success, production could begin in early 2018.
The talks are still in a fledgling state and matters like profits haven’t been touched upon. Even if an accord is reached, the first vehicles might only be seen in 2020 or even later.
When asked about these talks, Zhu Huarong (President, Chongqing Changan Automobile) said there wasn’t a real plan yet. Furthermore, Ford themselves released an email stating that Lincoln hadn’t made any plans for production in China, and is still selling imports instead.
A Direct Heir to the US Market
However, Mark Fields (CEO, Ford Motor Co.) has stated that China is the preferred successor to the US in terms of Lincoln car sales, which have been in decline for a while now, since Ford stopped production of the famous Lincoln Town Car. Ford is currently investing $2.5billion in the brand, trying to pump some life back into it by bringing back the Continental with a revamped design for sales in Chinese markets.
According to the head of Lincoln, Kumar Galhotra in an interview in January, the requirements are very different in the US and China. However, Chinese business-people have, as a whole, an opinion of Lincoln vehicles that is higher than its direct competitors, Lexus and Audi.
When the brand was first sold in China, over 11,000 vehicles were sold in the first year, which according to Mr. Fields, is one of the fastest starts for a luxury brand in recent years.
Navigating Through Uncharted Waters
Expanding manufacturing to China would deny the 25% import tax imposed on Ford for each vehicle. A number of other carmakers build their brands in the country, so it seems like a logical, financially sensible step to take.
The Lincoln Navigator SUV is one of the most expensive of the Lincoln line currently in China, selling at about twice its US price. It is now set to return to showrooms in 2017 with a brand new design. Before that, at the end of 2016, Ford hopes to open 20 new showrooms in China.
Ford has also announced some leadership changes in China. The chief of the Asia Pacific division, Dave Scoch, is to take over all Chinese operations in addition to his current job description.
The current president of the Changan-Ford company, Marin Burela, is set to retire on the first of October 2016.
The profits made by Ford in the general region of China and the rest of the Asia Pacific sector is rising rapidly, with the market share rising by 0.2% from the first quarter.