Ford to Build Ikon Cars in China, Source Says

In its first move to enter the potentially gigantic Chinese passenger car market, Ford Motor Co. will produce its compact Ikon at its newly established joint venture in China, according to a person familiar with the plans.

Chinese news reports have speculated that Ford would build its Focus compact car or the Mondeo, its mid-size European car, at a plant in central China’s Chongqing, one of China’s four largest cities. The Guangzhou Daily newspaper said on April 25 that Ford probably would build the Focus there.

But Ford has settled on the Ikon, a four-door sedan with a 1.6-liter, four-cylinder engine that is produced in India and South Africa, according to the Ford source.

Ford signed an agreement last month with its Chinese partner, Chongqing Changan Automobile Co., each pledging $49 million to set up the joint venture between Ford and the Changan Automotive Group. Chongqing Changan is the publicly traded arm of Changan Automotive.

The new plant will have a capacity of 50,000 cars and begin producing Ikons in 2003, the Ford source said. Ford probably will keep the name Ikon for the Chinese market and is deciding which Chinese characters to use for the name, the source said.

“We’re talking about producing some sort of family car, with some versatility,” said Paul Wood of Ford’s global affiliates communications. He said Ford would not publicly identify the car until late this year at the earliest, and pricing would be decided when production begins.

The Ikon would compete directly with the Buick Sail, which General Motors began producing in Shanghai on April 23. The Sail, also a 1.6-liter, four-cylinder four-door, will sell beginning at $12,000, so the Ikon probably would be competitively priced.

Until recently, Japanese and Western auto makers have concentrated on building trucks and vans in China, mostly for sale to governments and state-owned enterprises. Ford’s first joint venture in China was building Transit cargo vans in Jiangxi province.

But as Chinese cities grow, road networks expand and consumers become more wealthy, foreign auto makers are pushing to set up passenger-car production facilities in China.

Last year, China’s compact car market was 650,000 vehicles, but it is expected to grow to 800,000 this year, Wood said. Analysts, however, say hundreds of millions of Chinese could become car buyers as the burgeoning middle class grows in the next few decades.