Ford speeds China expansion with 3rd plant, to catch GM

Ford Motor Co., the only major U.S. automaker to avoid bankruptcy, is boosting its bet on China with a new factory and models as it tries to catch General Motors Co.

Chief Executive Officer Alan Mulally is traveling to China on Sept. 25 to break ground on Ford's third plant in the country, two people familiar with the plans said. He will announce "news about Ford's continued expansion" of its small- car lineup in India today, spokesman Ray Day said in an e-mail.

"China had been an afterthought for previous management at Ford, but Mulally realizes how important it is," said Brian Johnson, a Chicago-based Barclays Capital analyst who has a "neutral" rating on Ford. "This is more of a five-year move than something that will move the dial this year or next."

Ford, the second-largest U.S. automaker, ranks 12th in China with 2.8 percent of sales, according to auto researcher J.D. Power & Associates. GM, which emerged from a U.S. government-sponsored bankruptcy July 10, outsells Dearborn, Michigan-based Ford by 3-to-1 in the country, building twice as many vehicles.

The new factory in Chongqing, southern China, will produce high-end sedans and sport-utility vehicles, China's state-run Xinhua news service reported. It will have annual capacity of as much as 300,000 units, Xinhua said.

Ford already has a plant in Chongqing with Chinese partner Chongqing Changan Automobile Co., and had a 30 percent rise in sales in the first eight months of this year, helped by new models and the government's stimulus spending, J.D. Power said. The country's overall vehicle sales may rise 28 percent this year, according to the government, likely passing the U.S. as the world's largest auto market.

Compete With GM

The high-end sedan will give Ford a car to compete against Detroit-based GM's Buick models, while the sport-utility vehicle will capitalize on demand for that category in China, said Johnson. Ford spokeswoman Whitney Small declined to confirm the new models or the new plant.