Changan Auto, Ford discuss expanding ties beyond China

* Discussing with Ford to expand partnership beyond China

* PSA and others seek to expand ties with Chinese partners

* China market remains major focus for foreign automakers

By Fang Yan and Ken Wills

TIANJIN, Sept 5 (BestGrowthStock) – Major Chinese automaker
Chongqing Changan Automobile (000625.SZ: ) is in talks with Ford
Motor (F.N: ) to expand their partnership beyond China, a senior
Chinese executive said.

Chongqing Changan, which makes Focus and Fiesta among other
models with Ford and Mazda Motor (7261.T: ), is joining SAIC
Motor Corp (600104.SS: ), seeking to expand the tie with its
foreign joint venture partner beyond the current terms and
conditions.

SAIC and its long-time partner General Motors [GM.UL] has
set up a joint venture in India making SAIC’s Wuling brand mini
trucks and vans, a move that could expand GM’s market share in
India and give the top Chinese automaker access to a fast
growing neighbouring market.

When asked whether Changan — a front runner in China’s
mini vehicle segment — is planning to team up with Ford to tap
overseas markets, Zhang Baolin, president of Chongqing Changan
said: “We are having discussions with each other on that. We
are doing some studies currently.”

Zhang made the remarks on the sidelines of an industry
forum in the northern municipality in Tianjin over the weekend.

Joe Hinrichs, head of Ford Motor’s operations in Asia and
Africa, told Reuters in April the Detroit automaker was looking
at a lot of future opportunities with Chongqing Changan.
[ID:nN24159793]

But he declined to say whether Ford was seeking to take
Chongqing Changan’s commercial vehicles outside China, a move
that would parallel rival GM’s earlier initiative.

Other foreign automakers, including PSA Peugeot Citroen
(PEUP.PA: ), are also looking to expand their ties with their
Chinese partners beyond China.

The French car maker hopes to export cars made at its
manufacturing venture with Dongfeng Motor Group (0489.HK: ) to
the rest of Asia and possibly Russia as early as next year, its
Asia chief Gregoire Olivier said. [ID:nTOE67U06V]

“China is becoming more and more important for foreign
automakers. It’s not only a major growth engine, but also a
low-cost manufacturing base which can help strengthen their
positions in other markets,” said Zhang Xin, an analyst with
Guotai Junan Securities.

CHINA REMAINS TOP PRIORITY

China, which eclipsed the United States as the world’s
largest auto market last year, has been a major bright spot as
the global industry struggles to recover from a steep downturn.

But car sales in China have started to show signs of
slowdown beginning from the second quarter as Beijing presses
the brake to keep the economy from overheating.

Despite a strong market rebound in August, many senior
industry executives expect car sales in the country to return
to a more rational growth pattern with annual sales increase of
15-25 percent in the foreseeable future.

The China market, however, would remain a major focus for
foreign automakers for many years to come given the country’s
low per capita car ownership, they say.

“Even 15 percent is still a very good growth. When you look
at the European market, it’s gigantic,” PSA Peugeot’s Olivier
told Reuters.

“China will still be our major focus for many years and
vast exports from China is unlikely untill the market really
starts to cool down.”
(Reporting by Fang Yan and Ken Wills; Editing by David Fox)
([email protected]; Reuters Messaging:
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Changan Auto, Ford discuss expanding ties beyond China