Ford China to Invest $600 Million to Raise Capacity 60%

Ford Motor Co. (F)’s China unit will invest about $600 million to increase the capacity of one of its passenger-car factories by almost 60 percent as it looks to expand its operations in the world’s largest auto market.

The automaker, along with joint venture partner Changan Automobile Group Co. (CFORDZ), will raise capacity at its factory in the southwestern Chinese city of Chongqing by 350,000 units to 950,000 vehicles annually by 2014, Ford said in an e-mailed statement yesterday. Construction is expected to begin immediately, it said.

Expansion in the world’s largest vehicle market is part of Chief Executive Officer Alan Mulally’s push to increase annual global sales by 50 percent to 8 million vehicles by 2015 and have one third of its deliveries in Asia by 2020.

“The Chinese auto industry remains the biggest growth market in the world,” David Schoch, chairman of Ford China, said in the statement. “Expanding our production capacity in Chongqing is a key part of our aggressive growth plans in China and Asia.” Ford will introduce 15 new vehicles and 20 new engines and transmissions in China by 2015, the automaker said.

China’s vehicle sales this year will probably miss their 8 percent growth forecast as the slowing economy and rising fuel costs curb buying, Gu Xianghua, deputy secretary general of the China Association of Automobile Manufacturers, said last month, citing his personal opinion.

Vehicle sales growth in China slowed last year from 32 percent in 2010 after the government withdrew a two-year package of tax breaks and rebates that helped the country overtake the U.S. Total auto sales, including those of commercial vehicles, grew 2.5 percent in 2011, according to the industry group.

To contact the reporter on this story: Siddharth Philip in Mumbai at sphilip3@bloomberg.net

To contact the editor responsible for this story: Young-Sam Cho at ycho2@bloomberg.net

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