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Many vehicle brands under the Ford Motor Co. banner achieve record growth in China in 2005. The road ahead looks good

Record sales volume, solid business expansion and launches of exciting new products, were all part of the positive report by Shanghai-based Ford Motor (China) Ltd. on its 2005 operations.

Making maximum usage of its strong global brands, partnerships and many business units, the company is striving to create a totally new enterprise operation model and achieve its goal of becoming a major auto player in China in the next 10 years.

“In 2005, sales of all models under the Ford Motor Co. brand achieved record growth in China,” said Mei-Wei Cheng, Chairman and Chief Executive Officer of Ford Motor (China) Ltd.

Cheng was particularly pleased with the sustained growth momentum from 2004, despite intensifying competition, attributing this to the rapid introduction of new and upgraded quality products and services to meet increased demand.

Cheng said the estimated total sales of the Ford Motor Co.s affiliated brands in China reached over 220,000 units in 2005, exceeding the projected target.

Market expansion

In 2005, the total sales of Ford, Lincoln, Land Rover, Jaguar and Volvo brands hit a record 89,489 units. Each individual brand achieved significant growth over 2004, which is well above the domestic industry growth of an estimated 12 percent. Among them, Ford sold over 82,225 units of both imported and locally produced vehicles, 46 percent up from 2004. Mazda also showed strong growth, with 2004 sales of 96,000 units and sales for 2005 still to be confirmed.

ChangAn Ford Automobile Co. Ltd. (ChangAn Ford), the Ford Motor Co.s flagship joint venture with ChangAn Automotive Group (ChangAn Group), registered record sales of 61,013 units, a 41-percent increase from 2004. The China-produced Focus, launched in late September last year, was a big hit with customers, capturing over 30 major product awards by the end of 2005. It has now been elevated to a leading player in the countrys mid-size car market and is expected to contribute to the continued sales growth of ChangAn Ford in 2006.

In order to meet the growing marketing and sales needs, the distribution network of ChangAn Ford has also expanded rapidly. By the end of 2005, the number of the authorized Ford brand dealers reached 150, a 50-percent increase from the previous year.

Ford has also made great strides in Chinas commercial vehicle sector. The Ford Transit series produced by the Jiangling Motor Corp. (JMC) sold 18,000 units in 2005, a 48-percent growth over 2004.

Ford Motor Co., which holds a 30 percent share of JMC, plans to bring additional advanced products and technologies to support JMC, based on its impressive recent performance. JMCs total vehicle sales in 2005 were over 70,000 units, including JMC branded vehicles and the Ford Transit series, which is the companys best year to date.

Sales of the imported SUV models continued to do well. Highly praised by Chinese customers for its great value for money and outstanding features, the Ford Maverick, launched in October 2004, was a top seller in Chinas imported SUV market in 2005. In addition, the Lincoln Navigator, launched in May 2005, even created a new niche market segment called “President Class SUV.”

Fords Premier Automotive Group also enjoyed substantial growth in 2005, delivering total sales of 6,841 units. The growth rates of Volvo, Land Rover and Jaguar were 83 percent, 107 percent, and 220 percent, respectively. New models, such as the Volvo S40, Volvo XC 90 Executive, Land Rover Discovery 3, Range Rover Sport, Range Rover 06, Jaguar XJ8L Sovereign, and Jaguar XJ6L Sovereign, were successfully launched in China in 2005. These models are enthusiastically pursued by many high-end Chinese consumers due to their well-established premier brand images in all sophisticated markets around the world. Today, China is the fastest growing market for Land Rover and the second fastest growing market for Jaguar in the world.

In order to support Fords strong sales growth in China, Ford Motor Credit, named Ford Automotive Finance (China) Co. Ltd. (FAFC) in China, started business operations in July 2005. Using its global resources and expertise, FAFC is expected to provide sound financial services to both dealers and individual consumers of Fords affiliated brands in China. In 2005, the majority of ChangAn Fords dealers signed agreements with FAFC on bulk financing services. Financing individual car buyers took off in Beijing and Shanghai in 2005 and will be expanded to other major cities in China in 2006.

Cheng said Ford was capable of providing a comprehensive and competitive portfolio of products and services to meet the growing and diversifying needs of Chinese consumers.

Fords big plans

Several milestones were achieved by Ford in 2005, as it continued its expansion plans for the mainland. The company delivered an investment plan of over $1 billion in business expansion, announced by Bill Ford, the companys Chairman and CEO, during his visit to China in October 2003.

In October 2005, ChangAn Fords Chongqing plant completed the expansion of its annual capacity to 150,000 units from 50,000 units. The new production lines installed there, on which the brand new Ford Focus is being produced, comply fully with the high standards of Ford Motor Co.s Global Quality Operating System, and are flexible enough to build more new and diversified products in the future.

In April 2005, Ford Motor Co., ChangAn Group and Mazda jointly began construction of a new vehicle assembly plant in Nanjing, as the second manufacturing base of ChangAn Ford. With an initial annual capacity of 160,000 units, the advanced and highly flexible manufacturing facility will produce both Ford and Mazda cars.

By the first half of 2007, with further planned expansion in Chongqing and the operation of the new assembly plant in Nanjing, ChangAn Fords combined total production capacity will jump to an estimated 360,000 units—an 18-fold increase from just four years ago.

Adjacent to the Nanjing assembly plant, the three-party joint venture ChangAn Ford Mazda Engine Co. Ltd. broke ground in September 2005. As one of the largest and most sophisticated engine manufacturing facilities being built in China, the plant is planned with an initial annual capacity of 350,000 units and can produce both Ford and Mazda engines. To be operational in early 2007, the engine plant is expected to supply world-class engine products to the three partners vehicle assembly business in China.

“These expansion projects will lay a solid foundation for our further growth in China,” said Cheng. He added that this expansion revolved around making the most of all the best operational features of Fords many partners.

Looking at 2006 and beyond, Cheng noted that Ford will further accelerate its business development in China by building stronger operations and providing Chinese consumers with more new and exciting products.

“We are quite confident that Ford, as a whole, will again see a significant growth in total sales volume in China in 2006, reflecting our strong products, expanded dealer network, and solid support by Ford Automotive Financing China,” said Cheng.

It is also reported that Ford will unveil a vehicle powered by a brand new advanced diesel-electric motor in the Chinese market. This car is expected to only use 3.62 liters of diesel per 100 km, giving Chinese consumers something to smile about, as increased oil prices batter drivers wallets.