Ford Trims Production in China as Market’s Growth Slows

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Ford Motor Co., still playing catch-up in China, has reduced production there as vehicle sales cool in the world’s largest auto market.

“We have seen a little bit of a slowdown in showroom traffic,” David Schoch, president of Ford’s Asia-Pacific unit, told reporters Thursday the automaker’s Dearborn, Michigan, headquarters. “If there is softness in the market, I won’t let stocks build and we’ll cut production. We have had some production cuts, but it’s nothing material.”

He declined to say how much output was lowered or which models were affected. The reductions were during the first quarter, Schoch said.

Ford is on a building boom in China as growth in that market is slowing. Ford will open four factories and introduce a record 18 models in China this year, where it commanded 4.5 percent of the market in the first quarter, trailing leaders General Motors Co. and Volkswagen AG. Ford last month cut its forecast for 2015 industrywide China sales by 500,000 cars and trucks, predicting market growth of 7 percent.

“We are seeing signs of some slower growth,” Mark Fields, Ford’s chief executive officer, told analysts April 28. “We are seeing more pricing pressure in some segments. But I think we have a lot of confidence in our future there because we have a strong product portfolio.”

Second-Half Outlook

The company expects sales growth in this year’s second half to come from new models, redesigned for China, such as a seven-passenger Edge sport utility vehicle and a stretched version of the Taurus sedan, Schoch said. Ford is counting on the new products rather than matching competitors’ price cuts, he said.

“I don’t want to necessarily reduce prices because our products are very good,” Schoch said. “I want to make sure that they hold their value.”

Ford’s Asia-Pacific pretax earnings fell 65 percent in the first quarter to $103 million from $291 million. The automaker said it had a 3.4 percent market share in the region during the quarter, equal to a year earlier.

In China, Ford said its sales increased 7 percent in the year’s first four months to 393,714 vehicles. In April, sales fell 10 percent at its joint venture with Jiangling Motors Corp., while rising 7 percent at its Changan Ford Automobile venture.

The second-largest U.S. automaker began selling its Lincoln line in China late last year and unveiled its new Taurus sedan at the Shanghai auto show last month.

Sales and earnings will rise in the year’s second half as the new factories come on line and the company starts seeing a payoff from new models, Fields said.

“You may see a business in Asia-Pacific that’s about breakeven for the second quarter,” Fields told analysts. “But I think we’re well positioned for the balance of the year.”

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