Ford to Build a Third Factory in China as Part of an Expansion of Its Partnership

SHANGHAI, China July 22, 2004; The AP reported that Ford Motor Co. plans to build a third factory in China, part of an expansion of its partnership with Changan Automobile Group, the U.S. automaker said Thursday.

A deal on the new facility, which was to be signed Thursday, would allow their joint venture Changan Ford to acquire land in the eastern city of Nanjing for the project, said Kenneth Hsu, Ford's China spokesman.

Ford and Changan Automobile Group plan to expand investment in their 50:50 joint venture by up to US$1.5 billion over the next few years. The new auto plant is part of that expansion.

Hsu would not comment on Japanese news reports that Mazda Motor Corp. will take a 12.5 percent stake in Changan Ford, but he did say that Mazda representatives were to attend the signing ceremony.

Ford has a 33.4 percent stake in Mazda, and Mazda has been discussing a business plan for the Chinese market with Ford.

Hsu said he could not comment further on the Nanjing deal.

Ford's global rivals are also building up their China operations, despite recent signs that auto sales are slowing. Volkswagen AG plans to invest up to 5.3 billion euros in China by 2008 and General Motors Corp. has announced a US$3 billion, three-year investment plan.

Ford now builds Mondeo and Fiesta sedans at Ford Changan's plant in Chongqing, a sprawling municipality in western China. It also builds Ford Transit light trucks in Jiangxi province with Jiangling Motors Co., a Chinese light truck and van maker in which Ford has a 30 percent stake.

A report last month in the Japanese financial newspaper Nihon Keizai Shimbun said the Nanjing project would include a passenger car plant, with an annual capacity of 200,000 units, and an engine factory, with annual output of up to 500,000 units.

The factory would begin operation in 2006, it said.