In an attempt to compete for market share in Southeast Asia, Ford Motor Company has opened a new $500 million manufacturing plant in Rayong, Thailand. A joint venture with Japanese automaker Mazda, the facilities will produce both Ford’s Fiesta and Mazda’s Mazda2 models and is expected to export approximately 85,000 vehicles per year.
Ford’s president for Southeast Asia and Japan, David Alden, says that the Thai-built Fiestas will allow the automaker to compete for the lucrative and rapidly-growing small car market and will be exported to the member-nations of The Association of South East Asian Nations (ASEAN) which include Indonesia, Malaysia, Singapore, Thailand, The Philippines, Vietnam, The Peoples Democratic Republic of Lao, Myanmar and Cambodia.
The new plant will also export to Australia, New Zealand and South Africa which, until now, have been receiving Fiestas manufactured at Ford’s facilities in Valencia, Spain and Cologne, Germany.
In a recent interview, Alden characterized the new half-billion dollar investment as an ‘important strategic statement that we are making of the importance of the ASEAN countries,’ which has a combined population of 560 million and a combined gross domestic product equaling approximately $1.1 billion.
Alden expressed confidence in the Fiesta’s potential to compete against entrenched Japanese automakers in the region but offers no sales predictions. ‘We want to under-promise things and over-do them,’ Alden said in the interview.
Since launching the Fiesta in China this past March, Ford has sold 18,224 units in that country which Alden says bodes well for the Thailand initiative. ‘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,’ he said.
Ford faces an uphill battle against Japanese automakers Honda and Toyota in its quest to gain market share. The sub-compact auto segment constitutes an estimated 45% of the Thai passenger car market and some 98% of sub-compact autos sold in Thailand. Thus far in 2009, Ford has only sold 465 units in Thailand which equals only a 0.6% market share. Toyota, on the other hand, has sold 33,344 vehicles during the same period which equals a 43% market share.
Since 1995 Ford has been aggressively pursuing Asian markets. The new Fiesta production facilities are located on the site of an existing production plant which is jointly owned by Ford and Mazda and which produces approximately 130,000 small pick-up trucks annually, primarily for export.
In addition to production facilities in China and Thailand, Ford is also investing $510 in its Chennai, India manufacturing facilities and expects to produce 200,000 small cars and 250,000 automotive engines annually beginning in 2010.