US automotive giant Ford is pursuing a strategy of investment in Asia’s growing vehicle market as sales on the home front continue to decline.

Ford’s plans for a new plant in China follow the opening of a $510m small-cars production plant in Nanjing in 2007 in addition to its existing plant in Chongquing. The firm has also announced it is considering a $1bn investment in a small-cars factory in Thailand.


In southern Asia, Ford announced plans in January to invest $500m to expand Ford India’s manufacturing facility in Chennai – to begin production of a new small car within the next two years – and construction of an engine manufacturing plant to become operational by 2010.

In the US, Ford plans to produce a total of 690,000 vehicles during the second quarter, representing a 15% decline on the same period last year. And in May, it announced job cuts that would affect up to 12% of its North American workforce.

Ford’s overseas investments reflect a trend among global auto makers for investing in Asia’s emerging markets. At this year’s Beijing auto show in May, car makers issued ambitious forecasts of up to 65% growth in China’s car sales in contrast to a decline in the US market.

Hyundai Motors opened a $867m plant outside Beijing in May, adding to its existing R&D centre in the city.

And Japanese firm Toyota expects to sell 700,000 vehicles in China this year, up 40% on 2007. Toyota president Katsuaki Watanabe said that 2007 year-end results showed a more geographically balanced profit structure, with growing contributions from resource-rich countries and emerging countries. “Growth of equity in earnings has been particularly strong and has more than doubled over the past four years, mainly due to the rapid growth of Chinese operations,” he said.

The new investments coincide with Toyota’s announcement that it is considering downgrading its US sales forecast to account for a worsening outlook for sales of large vehicles. It plans to reduce its annual North American automotive operating costs by $5bn by the end of 2008 to help offset its losses of about $2.7bn last year as US markets declined.