INTERVIEW: 70% of Ford’s Global Growth to Come from Asia and Africa
China is currently the world’s largest auto market with Chinese consumers purchasing more cars than their counterparts in the United States. It is estimated that 70% of these consumers are first-time car buyers which presents a tremendous opportunity for car companies like Ford. To gain an insider perspective of how Western automobile companies market their cars to Chinese consumers I interviewed Chantel Lenard, Vice President of Marketing for Ford Asia Pacific and Africa:
(Backaler) In your current role, what countries are you most focused on globally? Based on your experience working in China, what do you feel makes Chinese consumers unique in comparison to consumers in other developing countries?
(Lenard) Globally, the entire Asia Pacific and Africa (APA) region is very important to Ford’s growth. Within this decade, we expect 70% of our global growth to come from APA, with a large percentage of that to come from China. To achieve this growth, we will be introducing 15 new vehicles to Chinese consumers by 2015, each with class-leading quality, safety, fuel economy and smart technologies. At the same time, we are accelerating our investments to expand our manufacturing and distribution capability in the world’s largest auto market – we are building four new plants in China currently, two new assembly plants (in Chongqing and Nanchang respectively), one engine plant and one transmission plant, both located in Chongqing; we are also doubling the number of our dealers by 2015 from 340 in 2010.
China is an evolving auto market with many diverse regional markets at different stages of development. 70% of these customers are first-time buyers who did not grow up knowing a lot about cars and yet they are becoming increasingly discerning and demanding customers given the explosive growth of the industry in the past 30 years. This makes a marketer’s job both exciting and challenging!
(Backaler) Ford is both an early mover and a late entrant in China. It was an early mover in the sense that its history in the Middle Kingdom dates back to the early 1900’s when the Model T first arrived, followed by another push through a series of auto-part joint-ventures in the late 70’s – early 80’s. Yet, it wasn’t until 1995 when Ford formed a joint-venture with Jiangling Motor Corp that it actually began producing automobiles in China. How has Ford been able to manage how its brand is perceived by Chinese consumers? What impact does its history in China have on its reputation?
(Lenard)Ford indeed has a long history with China and it’s something we are very proud of. In our Shanghai office there is a letter from 1924 written by Dr. Sun Yat-Sen to Henry Ford inviting him to help build an auto industry in China. Dr. Sun wasn’t the only Chinese leader to engage with Ford. In 1978, Henry Ford II met with Deng Xiao Ping to discuss cooperation to grow China’s auto industry after China’s “Reform and Opening.”
Ford has a long history with China and a high level of brand awareness among Chinese consumers—and we look forward to a long and bright future here as well. Now we have a partnership with Changan (Changan Ford Mazda Automobile) to produce Ford brand passenger vehicles and a strategic investment in JMC to produce commercial vehicles in China. The Ford brand will continue to define itself through the brand-new vehicles we are launching by 2015 and beyond – these vehicles represent the modern-day version of Henry Ford’s original vision for Opening the Highways to All Mankind – great vehicles which are fun to drive but attainable to the ordinary consumers in China, just like the Model T which put the world on wheels over a century ago.
(Backaler) How is Ford able to manage the balance between maintaining its image as a global company, while adapting its products and business practices for local consumers? Is there a specific example from your time in China in which you successfully launched a localized product for the first time? What challenges did you face in the process?
(Lenard) Starting in 2009, China became the world’s largest auto market and today, every global competitor in the auto industry is actively courting the Chinese customer. What this means is that the Chinese consumer is highly discerning as they face a wide range of options when it comes to choosing an automobile.
At Ford, we have found that Chinese customers want and value the very same things that our customers globally are asking for: high quality, fuel-efficient, safe, well-designed cars with smart technologies that create a fun, connected driving experience. With every new “global vehicle” we design, we take into account the needs of Chinese consumers. The new Ford Focus, which will come to China in early 2012, has been designed with the Chinese customer in mind. This means that our China designers, engineers, product planners, and a whole host of other team members have an active role in making sure all the new vehicles in our product pipeline meet the needs of Chinese drivers.
(Backaler) For China in particular, given the size of the market, how do you segment Chinese consumers. Does Ford classify Chinese consumers based on city-tiers, regional clusters or by other means?
(Lenard) There are many different ways of segmenting the market, especially an evolving market as big and diverse as China. At Ford, product type, customer type, and city-tiers are just a few of the ways we look at the market. By product type, the small car, or C segment is the largest segment in China today, representing approximately 40% of passenger car sales. The Ford Focus is a strong player in the C-segment today, and we look forward to growing our share of this large segment with the launch of the all-new Ford Focus this year. When we look at consumer types, a very high opportunity group is first-time buyers — representing nearly 70% of new car buyers. With these consumers, we have an opportunity to establish a relationship with them with their first Ford purchase, to hopefully keep them as Ford buyers for life. City-tiering is an important way in which we plan our distribution network strategy. As vehicle purchases increase in second, third, and fourth-tier cities, we are investing significantly to expand our dealer network in these cities to capture these growing opportunities as well.
