Ford’s Mexican, S. Korean Subcompacts Are Due Soon
Ford Motor Co., joining the march across U.S. borders to build subcompacts, said Wednesday that its first small cars from Mexico are being introduced in California this month and that cars from South Korea will be here in May.
The Mercury Tracer is being built at what Detroit-based company officials described as a “state of the art” stamping, manufacturing and assembly plant in Hermosillo, about 400 miles north of Mexico City.
The new Hermosillo facility is the only plant in Ford’s North American facilities to handle those three operations under one roof, according to a company spokesman.
The Korean-built Festiva, a low-end Ford subcompact is being manufactured by Kia Motors. Both new cars were designed in conjunction with Mazda Motors of Hiroshima, Japan. Ford has a 25% equity position in Mazda and a 10% equity interest in Kia.
The two new cars are part of Ford’s strategy to capture an increasing share of the subcompact market that will “be booming in the next few years,” suggested Chris Cedergren, an automotive analyst with Westlake Village-based automotive consulting firm of J.D. Powers & Associates. “All of the domestics are going offshore to produce low-priced cars.”
“Ford has got to build offshore to give customers value,” said Art Davis, a Sarasota, Fla.-based auto analyst with Prescott, Ball & Turben. “When you manufacture in Mexico and Korea, you can give consumers value and still make a profit on the cars.”
In addition to bolstering Ford’s U.S. product line, the Tracer will help Ford satisfy Mexican “local content” requirements that severly limit the export of U.S.-built cars to Mexico. Ford will receive credits for Mexican-built subcompacts that are exported to the United States, and will be able to increase the export of generally higher-cost cars to Mexico.
Ford expects to sell 40,000 Tracers in United States this year and as many as 80,000 during 1988. However, Mexico’s extremely weak peso will likely slow the 30,000 sales anticipated in Mexico, company officials acknowledged.
Ford anticipates that its employment total will rise from 970 to about 1,600 when a second shift is added at the Hermosillo plant later this year. Ford and nine automotive suppliers who have built facilities in Hermosillo could add $150 million and $500 million annually to the Mexican economy, according to estimates made by Ford and the Mexican government.
The two new subcompact models will be introduced in California but will be on sale later this year elsewhere in the United States. The Festiva will carry a $5,765 base list price and the Tracer will have a $7,926 base list price.
