A day after Ford stock fell on news that the company would likely miss analysts’ second quarter estimates, the company offered some more more projections about its potential to grow in Asia. Ford plans is to roll out numerous new models in China and Asia over the next few years, the Wall Street Journal reported.
Part of Ford’s strategy going forward is to custom design new brands for local markets all over the world. But a big question remains: can Ford make enough on these new models to justify the expense of developing them? The company will be selling some models for less than $14,500 in China, and less than $8,500 in India to be able to compete with local automakers. Ford is confident, however, that it can leverage economies of scale to grow profitably in Asia.
“We are making money there now and we can continue to,” Ford’s Asia Pacific and Africa President Joe Hinrichs told the Journal. “It’s all about the scale and the cost base.”
The company will have to spend heavily to support increased production capacity at its overseas plants as demand is already far outpacing supply. Ford’s capital budget will balloon to $6 billion per year by 2020, up from $3.9 billion last year, Ford execs have said.
But the company appears confident of its ability to surmount these challenges; Ford is aiming to boost global auto operating margins to 9% from 6.1% last year by 2020.