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RadicalX

Ford Is Speeding Up Plan To Build Lincolns In China To Avoid Tariffs

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Ford was to start building Lincoln models in China as soon as possible.

 

Ford is accelerating its plan to start producing Lincoln models locally in China in order to avoid tariffs.

 

The company was originally planning to start production of Lincoln models in China in late 2019 along with a local partner but is currently trying to speed things up, even by the slightest, to help avoid the tariffs brought by the Chinese administration in retaliation to the measures taken by the US government.

“What we want to do is accelerate that,” Joy Falotico, head of Lincoln and Ford’s chief marketing officer, said during an interview with Bloomberg. “We will look for opportunities, but it’s a big undertaking and I think it won’t be a significant change in our plans.”

 

Lincoln is currently lacking the local production facilities most of its competitors have in China, so even a small move would help them improve their position in the world’s largest market for cars. US-built vehicles saw their prices soaring after China imposed 40 percent tariffs on them. Ford is currently absorbing some of the cost but Lincoln sales have slowed significantly in the region.

Lincoln revealed the new Aviator at the Los Angeles Auto Show, which is one of the three SUVs the brand is planning on launching in China in the second half of next year. Ford’s CEO Jim Hackett said that the US administration’s metals tariffs will cost the company around $1 billion in profit annually. Last August, Ford scrapped its plans to export the Focus Active from China to USA.

 

https://www.google.com/amp/s/www.carscoops.com/2018/11/ford-speeding-plan-build-lincolns-china-avoid-tariffs/amp/

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Tariffs just underscore for the need for local production, the next necessary step if Lincoln is to grow Chinese sales.

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41 minutes ago, jpd80 said:

Tariffs just underscore for the need for local production, the next necessary step if Lincoln is to grow Chinese sales.

yes

for ford too

Edited by RadicalX

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15 minutes ago, RadicalX said:

yes

for ford too

If you think about it, the Ford plants are already there, they just have to switch to more suitable products and add the Lincolns.

Perhaps, Ford's Chinese partners can come up with more cost effective products for South America too...

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I don't think they can speed things up any further because all of this is really tied to the new Aviator and Corsair which are on a specific launch schedule and they need every minute they have.  China was already making it expensive to sell imports and EVs without building them in the country so they've been on this path for awhile.  MKZ is on its way out but I'm not sure what will happen with Continental which was selling better in China than the US.  For all I know Continental will be dropped quietly when FlatRock moves to 1 shift next year.  Lincoln had plans to sell a Chinese built small Crossover in the US around 2023 but I think it's safe to assume that arrangement won't happen.  Right now I'm not clear on how Lincoln is going to thrive in China, but I think the road just got much longer and more expensive.  

 

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13 hours ago, Assimilator said:

I don't think they can speed things up any further because all of this is really tied to the new Aviator and Corsair which are on a specific launch schedule and they need every minute they have.  China was already making it expensive to sell imports and EVs without building them in the country so they've been on this path for awhile.  MKZ is on its way out but I'm not sure what will happen with Continental which was selling better in China than the US.  For all I know Continental will be dropped quietly when FlatRock moves to 1 shift next year.  Lincoln had plans to sell a Chinese built small Crossover in the US around 2023 but I think it's safe to assume that arrangement won't happen.  Right now I'm not clear on how Lincoln is going to thrive in China, but I think the road just got much longer and more expensive.  

 

Why?

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18 minutes ago, rmc523 said:

Why?

Tariffs 

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5 minutes ago, fuzzymoomoo said:

Tariffs 

Whoops.  I misread that - I didn't notice the "in the US" part - I thought he was talking about a Chinese-bound model.

So I guess that would've been an Encore-esque model?

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I don’t believe the tariffs will be around long term, and more options will open up. 

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17 hours ago, jpd80 said:

Perhaps, Ford's Chinese partners can come up with more cost effective products for South America too...

It seems the "new Ford" Territory (JMC Yusheng S330 ) is indeed going to replace the Focus in Argentina's Pacheco plant, for the South American market. However, VW will be producing Tarek/Tharu in Pacheco, where Ford will produce the Ranger and VW Amarok... maybe we can see an MQB-based Ford CUV (sounds better in terms of platform)

 

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5 hours ago, tbone said:

I don’t believe the tariffs will be around long term, and more options will open up. 

Wouldn't it be ironic if automakers like Ford contort their plans to suit today's tariffs knowing that inside two years, everything could change back to what was originally planned.....it must be maddening to be in charge of product planning at Ford and try to predict the future with any certainty.

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46 minutes ago, jpd80 said:

Wouldn't it be ironic if automakers like Ford contort their plans to suit today's tariffs knowing that inside two years, everything could change back to what was originally planned.....it must be maddening to be in charge of product planning at Ford and try to predict the future with any certainty.

You mean we go back to the gov't paying ford to build cars that nobody wants???...how did this work out for chebby? ....

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11 minutes ago, snooter said:

You mean we go back to the gov't paying ford to build cars that nobody wants???...how did this work out for chebby? ....

What money is the government paying Ford?

If you're referring to DOE loan, that money was used across 14 plants and is being paid back, so no it's not like GM.

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58 minutes ago, jpd80 said:

What money is the government paying Ford?

If you're referring to DOE loan, that money was used across 14 plants and is being paid back, so no it's not like GM.

AFAIK that loan was paid off a few years ago. Paying that off was one of the key reasons they were able to retool MAP for Ranger.

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5 hours ago, fuzzymoomoo said:

AFAIK that loan was paid off a few years ago. Paying that off was one of the key reasons they were able to retool MAP for Ranger.

September 2016, Ford still had $3.5 Billion owing on the DOE loan but  Switching MAP to Focus C-Max only cost $550 million, the rest of the lending was spread across something like 14 plants, so either way, i think Ford is in the clear with the government.

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On 11/30/2018 at 6:01 PM, jpd80 said:

Wouldn't it be ironic if automakers like Ford contort their plans to suit today's tariffs knowing that inside two years, everything could change back to what was originally planned.....it must be maddening to be in charge of product planning at Ford and try to predict the future with any certainty.

Already happening:

Though he didn't say what they're cutting it to, Trump sent this out this morning:

https://www.autoblog.com/2018/12/03/trump-china-xi-auto-tariff/

WASHINGTON/SHANGHAI — U.S. President Donald Trump said China had agreed to cut import tariffs on American-made cars, buoying shares in BMW and Daimler AG who manufacture in the United States for export to the world's biggest auto market.

Shares of Chinese car dealers also perked up on hopes that such a move could revitalize the domestic auto market that is poised for its first annual sales contraction in decades amid cooling economic growth and a debilitating U.S.-China trade war.

Trump, fresh from agreeing to a 90-day cease-fire in his trade war with China at the meeting of the G20 nations, said on Twitter "China has agreed to reduce and remove tariffs on cars coming into China from the U.S. Currently the tariff is 40%."

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Ford already had to cancel the Focus Active due to rising trade barriers and Lincoln has admitted it won't be able to achieve its 300,000 global sales goals by 2020.  I'm sure that severely limits Lincoln's ROI since it was dependent on achieving that volume through 2020.  I think Lincoln still expects to achieve those numbers eventually once they move all of their Chinese volume to local production.  No doubt Lincoln needs to change its business strategy, not only because of increasing trade barriers but because of the change in technologies and consumer preferences.  It's an incredibly difficult time to be an automaker even before the economy takes a dive.  It's either an opportunity to thrive or we are are going to see dramatic fallout in the coming years.  Either way, change is exciting,  the auto companies are way too old.

 

 

Edited by Assimilator

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3 minutes ago, Assimilator said:

Ford already had to cancel the Focus Active due to rising trade barriers 

 

 

The Focus Active didn't do well in focus groups either-which I'm sure made them completely step on the brakes with it after the (non)tarriff situation.

Maybe the next refresh they do of the Focus will make it more appealing to US customers, like adding AWD would be a huge help. 

 

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Personally I'm glad the Focus is gone, it has always been a headache for Ford.  

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On 11/30/2018 at 11:10 AM, tbone said:

I don’t believe the tariffs will be around long term, and more options will open up. 

 

1 hour ago, rmc523 said:

Already happening:

Though he didn't say what they're cutting it to, Trump sent this out this morning:

https://www.autoblog.com/2018/12/03/trump-china-xi-auto-tariff/

 

 

It looks like my prognostication is correct. We will have to see what the final details look like but this is what I was expecting. 

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19 hours ago, Assimilator said:

Ford already had to cancel the Focus Active due to rising trade barriers and Lincoln has admitted it won't be able to achieve its 300,000 global sales goals by 2020.  I'm sure that severely limits Lincoln's ROI since it was dependent on achieving that volume through 2020.  I think Lincoln still expects to achieve those numbers eventually once they move all of their Chinese volume to local production.  No doubt Lincoln needs to change its business strategy, not only because of increasing trade barriers but because of the change in technologies and consumer preferences.  It's an incredibly difficult time to be an automaker even before the economy takes a dive.  It's either an opportunity to thrive or we are are going to see dramatic fallout in the coming years.  Either way, change is exciting,  the auto companies are way too old.

 

 

Well, the new Aviator has an plug-in electric hybrid for its highest trim and Lincoln has said that all of its products going forward will electrified in some way. They are still hinting about there being an all-electric in the not-too-distant future, but aren't yet showing any leg. But you raise a key point. When the next recession finally comes -- and it will come whether in a year, two years, or three -- we may see a global sorting out of car makers even greater than what we saw after the 2008 financial crisis hit.

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On 12/4/2018 at 8:10 AM, Gurgeh said:

When the next recession finally comes -- and it will come whether in a year, two years, or three -- we may see a global sorting out of car makers even greater than what we saw after the 2008 financial crisis hit.

I dunno about that-I don't expect the next recession to come close to what happened 10 years ago. 

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The next big sort will happen in China. Not all the car companies there will survive, and not all the foreign companies will make it there either.

If the auto industry was really open to foreign competition in China, all the foreign companies will buy out their JV and quite a few Chinese companies will probably be crippled without the JVs.

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