Ford Motor (F.N) launched a new $500 million passenger car plant in southeast Thailand on Monday, a move aimed at raising its share of a lucrative small car segment in Asia dominated by Japanese firms.
The plant, a joint venture with Japan's Mazda (7261.T) for producing Ford Fiesta and Mazda2 models, will export 85 percent of its annual capacity of 100,000 cars a year.
David Alden, Ford's president for southeast Asia and Japan, said Thai-built Fiestas would be shipped to southeast Asian countries, Australia, New Zealand and South Africa from early 2010 when production started.
A half a billion dollar investment is a huge investment in any business, especially in the economic environment that we are facing, Alden told Reuters in an interview.
It is a pretty important strategic statement that we are making of the importance of the ASEAN countries, with Thailand as its production base.
ASEAN is the 10-country Association of South East Asian Nations.
The 1.4-to-1.6-liter-engine Fiestas to be exported from Thailand to Australia, New Zealand and South Africa will replace those now shipped from Cologne in Germany and Valencia in Spain.
Ford is the only Detroit auto company not supported by emergency U.S. government funding. The new General Motors (GMGMQ.PK) emerged from bankruptcy on Friday.
Alden's confidence in the market for the Fiestas was boosted by its launch in March in China, where 18,224 were sold in four months. But he was cautious about making sales projections, given the grip on the small car segment held by Japanese makers.
We look at our very successful launch of Fiesta in China as a template for our success and will build on the lessons learned in China, the Ford executive said.
We make no sales projections. We want to under-promise things and over-do them, he said.
Ninety percent of all passenger cars sold in Thailand, the biggest car market in southeast Asia, are built by Japanese companies led by Toyota (7203.T) and Honda (7267.T). Sub-compact cars, such as Fiesta, make up 45 percent of the Thai passenger car segment.
Ford sold 465 passenger cars in Thailand in the first five months of 2009, a paltry 0.6 percent market share. In contrast, Toyota sold 33,344 and had 43 percent of the market.
Ford's Rayong plant is on the same site as an existing truck factory, also jointly owned by Mazda, which produces 130,000 small pick-up trucks a year, mainly for export. With the additional passenger car capacity, the export-oriented plant will be equipped to build 275,000 passenger cars and commercial vehicles a year, up from 175,000.
Its cost raised to $1.5 billion the total investment Ford and Mazda have made in Thailand since 1995 through their joint venture, AutoAlliance Thailand.
Thailand is one of three Asian countries where Ford has made major investments in recent years.
It invested $510 million in a passenger car plant in China's eastern Nanjing that started production in January.
The Chinese venture, Changan Ford Mazda, is a tie-up with Chongqing Changan Automobile Co (000625.SZ) and Mazda.
It is also investing $500 million in Chennai in India, where annual capacities for its small car and engine production will be raised to 200,000 and 250,000 units respectively from 2010.
(Editing by Alan Raybould)