Recently, according to industry insiders, Ford China has started layoffs and will compensate employees based on the N+3 policy（N represents years of work experience). The number of people affected exceeds 1,300. In response to this news, Ford China stated: “China is a crucial market for Ford Motor Company. We remain committed to sustainable development in our business in China. We are building a more streamlined and flexible organizational structure and investing resources into our core businesses where we have advantages, striving to achieve our business goals in China.”
Of note is that behind the news of “layoffs”, Ford Motor Company is undergoing a new round of transformation in the Chinese market. On May 11th, Ford and Jiangling Motors signed a framework agreement in Nanchang, announcing that they will further expand Jiangling’s product export business on the basis of their existing cooperation.
“Our strategy going forward in China will change,” said the Ford CEO Jim Farley while speaking during the automaker’s Q1 2023 earnings call. “We’re going to go to a much lower investment, leaner, more focused business in China, with higher returns.” According to him, Ford will pay more attention to the commercial vehicle business in the Chinese market while planning to use its factories in China as export centers for economical electric vehicles and fuel commercial vehicles.
According to data from Ford China’s official website, Ford’s total sales in the Chinese market for 2022 were 496,000 vehicles, a year-on-year decline of 20.6%. In 2021, this number was 625,000 vehicles. Additionally, Lincoln, a luxury brand under Ford’s umbrella, had accumulated sales of 79,300 vehicles in China in 2022 with a year-on-year decline of 13.4%, compared to the previous year’s figure of 91,600 vehicles. It is worth mentioning that in 2016 Ford set a peak record with sales of 1.27 million cars sold in China.
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While facing a significant decline in sales in China, Ford is also increasingly under pressure to transform towards electrification in the Chinese market. In multiple financial reports, Ford has stated that it will invest over $50 billion from 2022 to 2026 for the development and manufacturing of electric vehicles and batteries. By the end of 2023, the company aims to achieve an annual production rate of 600,000 electric vehicles. It is expected that by 2030, half of Ford’s global vehicle sales will be electric.
However, Ford’s electrified products in the Chinese market are very limited, with only a few new energy vehicle models such as the Ford Territory EV, Mondeo Energi plug-in hybrid version and Ford Mustang Mach-E. Moreover, its main electric vehicle model – the Ford Mustang Mach-E has not caused much attention in the Chinese market. According to public information, the Mustang Mach-E was launched in China in April 2021 with a starting price of RMB 265,000. In April this year, its starting price even dropped to RMB 209,900. However, according to data from Chinese auto media DCD Automotive., only 332 units were sold in April this year.
With the backdrop of declining sales and electrification transformation in China, Ford’s losses in China reached $600 million (approximately RMB 4.175 billion) in 2022. In response, Ford stated in its financial report that China is the world’s most advanced electric vehicle market and the company is investing in electric vehicles in China.