Ford Motor Co. Friday said it expects a recovery in vehicle markets across Asia next year after a slump in demand due to the global economic crisis.
"Obviously, the worldwide economic slowdown is having an impact on volume in Asia-Pacific. We forecast volume across Asia (including Japan and South Korea) to be about 18 million-19 million units (for this year), which is down from 21 million-22 million units in the previous year," John Parker, Ford's executive vice president for Asia Pacific and Africa, told Dow Jones Newswires in an interview.
"The fourth quarter last year was very severe. We're seeing some recovery in China and India, but the rest of the markets at this point in time are still down."
With the economy in some countries showing signs of bottoming out, Ford expects overall volume to recover to around 21 million units next year.
"We're expecting some recovery in 2010," Parker said.
Ford currently has around 2.3% to 2.4% of the Asian market, equivalent to 450,000 to 500,000 units.
With weakening demand, Ford has reduced production across its plants in Asia by around 20%-25%, but there have been no plant shutdowns, said Parker.
"In the short term, we have adjusted our production to keep our inventory in control to recognize the demand situation," Parker said.
"However, all of our launches and new projects are still on track. We're moving ahead with our regional plans."
Investing In $1.5B Projects In Asia
Ford is investing around $1.5 billion in new small-car facilities in China, India and Thailand, as part of attempts to grow its business in the region.
"We're working on future plans to grow our business in Asia Pacific, which is a critical portion of Ford. We want to substantially improve our market share. The $1.5 billion investment (in Asia) makes it clear that we're working hard on it," Parker said, but declined to provide a sales growth projection.
Ford has a 15% market share in North America and a 10% share in Europe.
"We'll have incremental capacity available. Hopefully we'll see an economic recovery and greater demand. We'll adjust our production to take advantage of new capacity that we have."
China, India and Southeast Asia are its key growth engines in Asia, said Parker.
Ford plans to start production of small cars at its Thai plant late this year. The new plant, designed to have a total capacity of 100,000 units, will produce Mazda 2 compact cars and a new Ford Fiesta sedan. It will raise the total capacity of AutoAlliance, its joint venture with Mazda Motor Corp. (7261.TO), in the eastern seaboard province of Rayong to 275,000 units.
The company is scheduled to kick off production of small cars in India around the end of the first quarter next year, which will double vehicle capacity to 200,000 units. The investment in India will also boost engine plant capacity to 250,000 units over the next two years from the current 60,000 units.
Plants in Thailand and India will produce cars for both the domestic and export markets.
Late last year, Ford's new $500 million plant in China started operations. The plant, which produces Ford Fiesta and Mazda 2, has annual capacity of 120,000 units.
"Sales of Fiesta launched in China, Australia and South Africa exceeded our expectation...when we roll out the project in Thailand, we hope to get a similar result," said Parker.
Fiesta sales in China have been nearly double what Ford initially planned, while its sales in Australia and South Africa have been more than double its target, he added.
Ford plans to relocate its Asia-Pacific headquarters to China from Thailand by early next year.
The move will allow the company to improve business opportunities and bolster its market share in China. Ford's sales in China account for about half of its sales in Asia-Pacific, said Parker.
Thailand will remain the center for Southeast Asian countries and its production won't be affected, he added.
