Joining hands with Jiangling to force passenger cars Whether Ford can return to the first camp of the joint venture

Ford, a reporter from the Economic Observer, is bent on returning to the first camp of the joint venture and is readjusting its strategic layout in the Chinese market. Recently, Jiangling Ford Automotive Technology (Shanghai) Co., Ltd. (hereinafter referred to as "Jiangling Ford Shanghai"), a joint venture between Ford and Jiangling, was officially established.

According to the company's information, the registered capital of Jiangling Ford Shanghai is 200 million yuan, and the business scope includes engineering and technical research and experimental development; sales of automobiles, new energy vehicles, new energy vehicle electrical accessories, charging piles and other products. Shareholder information shows that the new company is jointly held by Jiangling Motors Co., Ltd. and FordMotor Company, with a shareholding ratio of 51% and 49% respectively.

In September last year, Jiangling Motors announced that in order to enhance the brand image of the Ford brand vehicles produced by Jiangling Motors, establish excellent marketing capabilities and networks, and improve customer satisfaction and brand value, the company plans to jointly establish a joint venture with Ford. The company will mainly provide distribution services for ford brand vehicles produced by Jiangling Motors, and can also operate through wholesale sales by dealers or direct sales by end customers. The establishment of Jiangling Ford Shanghai is the landing action of this announcement.

The establishment of a new joint venture with Jiangling is an important step for Ford to seek to power passenger cars. To this end, Jiangling Ford also found a marketing veteran who was responsible for the sales of Volkswagen, Volvo, Hyundai and other car companies to serve as the general manager of the joint venture company.

For a long time, Jiangling Motors has taken commercial vehicles as its main business, and the passenger car products released in the past two years are mainly SUVs. For Jiangling Motors, although it has experienced the defeat of the passenger car brand Yusheng and proposed a plan to focus on the commercial vehicle business, it has always wanted to make some gains in the passenger car field, and joining hands with Ford is an important breakthrough. For Ford, how to regain the attention of Chinese consumers through more new products and services is a problem that needs to be solved urgently.

Break the "one business, one multiplier" pattern

Ford's partnership with Jiangling began 27 years ago. In 1995, Jiangling Motors was the first in China to introduce its strategic partner, Ford Motor Co., Ltd. in the United States, by way of ADRS distribution. After Ford Motor purchased the additional B shares issued by Jiangling Motors for $40 million, it accounted for 20% of the total share capital (the current shareholding has increased to 32%).

After Ford took the stake, the two sides began a series of cooperation in automotive technology. Two years later, Jiangling Motors and Ford Motor officially launched China's first Sino-foreign jointly developed car, Quanshun. Since then, Jiangling Ford has laid the development direction of light trucks and light buses.

In 2001, Ford Motor and Changan Automobile established a second joint venture company, Changan Ford. Ford's layout in China has officially formed a "one business, one ride" pattern: Jiangling Ford is mainly engaged in the commercial vehicle market, and Changan Ford is mainly engaged in the passenger car market. The two complement each other, allowing Ford to eat a lot of dividends from the incremental period of China's auto market.

During this period, Jiangling Motors also tried to build its own passenger car brand. In 2010, Jiangling Motors' own brand Yisheng was listed, becoming a pioneer in Jiangling Motors' development of passenger cars. However, the performance of Yisheng after the listing was not satisfactory. From 2012 to 2014, when Jiangling Motors separately disclosed the sales of the Yisheng brand SUV, the annual sales of the Yisheng SUV were 0.8 million units, 14,200 units and 26,700 units, respectively.

In the face of the rise of China's SUV market, Ford no longer adheres to the "one business, one ride" pattern and begins to export passenger car models to Jiangling Ford. In 2014, Jiangling Motors released the Ford Roadbreaker ( an off-road SUV ) . However, at that time, the off-road wind did not rise in the Chinese market, and its price of up to 300,000 did not cause many ripples in the market.

In 2016, Jiangling successively launched ford Torveros (MPV), Yisheng S330, and in 2018 launched SUV Collar and other products. But it still failed to make a name for itself in the passenger car market. Among the annual sales volume disclosed by Jiangling Motors from 2015 to 2020, the combined average annual sales of The SUV and ford brand SUVs of the Yisheng brand are only 36,200 units. In the same period (except for 2020, the statistical caliber of the year has changed), the sales of Commercial Vehicles of the Ford Quanshun brand are also not stable, and the overall trend of rising first and then falling, with an average annual sales volume of 57,400 vehicles.

However, compared with Changan Ford's sales volume falling from more than 900,000 to more than 200,000 units, Ford's Quanshun brand commercial vehicle sales performance is relatively stable. During the same period, although the sales volume of Changan's own brands declined, it remained at an average of about 1.5 million vehicles per year. And due to the sharp decline in sales of joint venture brands, the overall sales volume of Changan's own brands continued to climb to 75%. "Everyone knows that all of Changan's energy is now focused on its own brand. In the future, at Jiangling Ford, we can imagine that Ford will inject more passenger car models, which will be more conducive to Ford's trade-off and balance between the two joint ventures. Zhang Junyi, managing partner of Oliver Partners and automotive industry analyst, believes.

After combing through the Economic Observer reporter, it was found that Jiangling Ford's expansion of passenger cars began in October 2020. In the same month, Jiangling Ford's passenger car business officially launched dealer recruitment; in December, Jiangling Ford Passenger Car Marketing Company was established; in March 2021, Jiangling Ford Passenger Car's new sales channel, FamilySpace Home Space Ford Experience Store, was unveiled; in April, Jiangling Ford Lingyu was listed; in September, Jiangling And ford motor announced that they would establish a new joint venture company; in November, Ford Lingrui officially appeared at the Guangzhou Auto Show.

Behind a series of actions, the outside world can clearly see that Ford is speeding up the breaking of the original "one business, one ride" pattern, and wants to support Jiangling Ford to "get on the top".

Ford is cautious in China

In 2019, Ford Motor released the "Ford China 2.0 Strategy", proposing to improve the performance of the Chinese market in a more local way of "more Ford, more China", and proposed the product 330 plan, that is, the plan to release 30 new cars in the next three years, and also proposed to set up new institutions such as innovation centers, research and development centers, design centers, and new energy centers to promote the revitalization of the Ford brand in the Chinese market.

With the development of the Jiangling Ford Passenger Car Program, Ford's passenger car business in the Chinese market has been divided into four major segments, namely Changan Ford, Jiangling Ford, Ford Electric Vehicle and luxury brand Lincoln Motor.

From Changan Ford's point of view, in the first 11 months of this year, its sales have rebounded to about 270,000 vehicles and are gradually picking up. Not long ago, on December 26, Ford's blockbuster pure electric model Mustang Mach-E officially opened for delivery in the Chinese market. But how this car will perform in the aftermarket is still unknown. Lincoln Motors, on the other hand, will sell 91,600 units in China in 2021, up 48% year-on-year. Overall, If Ford wants to further expand the market, it needs a new entry point.

According to the sales report released by Jiangling Motors, the cumulative sales volume from January to November 2021 was 292896 units, an increase of 4.1% year-on-year, of which the cumulative sales of SUV models from January to November were 47,625 units, an increase of 21.35% year-on-year. From the perspective of sales structure, Jiangling Ford contributed nearly 20% to Jiangling shares. Among Ford's major passenger car segments, Jiangling Ford showed some signs of strong growth.

But will the expansion of Jiangling Ford's business affect Changan Ford? This issue has been a concern from the outside world. There is a view in the industry that Ford may import more products into Jiangling, and even do not rule out a "two-car strategy" model similar to Changan Ford. At present, the passenger cars launched by Jiangling Ford have a variety of SUVs such as Road Shakers, Collar, Collar S, Lingyu, Lingrui and MPV models Turui.

Xiang Dongping said in a recent media interview that Jiangling Ford will focus on creating two major market segments of SUVs and pickup trucks to achieve the new four modernizations of "specialization, differentiation, personalization and youth". Among them, differentiation refers to the differentiation of product and service communication; personalization is to be a brand with distinct personality, strengthen the brand building of Jiangling Ford passenger cars, and hope to create a culture that matches SUV, off-road, and pickup products; rejuvenation is to innovate, break through and subvert to better respond to the needs of young people. "In fact, it is a relationship of internal competition and cooperation. In fact, Ford is doing this work is to play a game with Changan, if Ford and Changan cooperate very well, then it does not need to engage in a new joint venture." In Zhang Junyi's view, Ford's move is also a helpless move.

In fact, Ford is still cautious in expanding into passenger cars. This is mainly reflected in the scale of investment and equity structure of Jiangling Ford Shanghai. The registered capital of Jiangling Ford Shanghai is only 200 million, which shows that the joint venture company is not a joint venture company like Changan Ford in the traditional sense, and Jiangling Motors' capital is slightly higher than That of Ford Motor, and its company nature is more like a sales company.

Another auto industry source said that If Ford wants to start over, it must rely on some core models. In addition, whether Ford can develop in China depends on its investment and efforts in new energy, "Overall, Ford still started slowly."

The constraints of the international environment, the rise of independent brands and the lack of new energy models are testing Ford's development in the Chinese market. Whether it can return to the first echelon of the joint venture brand with The joint venture with Jiangling Ford is also worthy of long-term attention.