April 19, 2024

Ford Strategy Will Call for Stepping Up Expansion, Especially in Asia

Ford’s chief executive, Alan R. Mulally, is expected on Tuesday to unveil an aggressive strategy to increase the company’s worldwide sales to 8 million vehicles a year from 5.3 million by middecade. That would put the Detroit automaker at the top echelon of world production. Last year, Toyota, the leader, sold about 8.42 million vehicles.

But Ford will be playing catch-up in Asia, where competitors like Toyota, General Motors and Volkswagen have larger shares and better brand recognition.

“Ford is trying to make up for lost time in Asia,” said Michael Robinet, director of global forecasting at the research firm IHS Automotive. “They have to do a lot of heavy lifting in the next decade to become a major player.”

Mr. Mulally plans to share Ford’s growth goals with investors and analysts at a meeting in New York, representing another step in the revitalization of the nation’s second-biggest auto company.

“We’re clearly transitioning into a growth mode after going through a horrific recession and industry collapse,” Mr. Mulally said in an interview on Monday. “We are now positioned to serve customers where the market is growing.”

After revamping its core North American business and posting eight straight profitable quarters, Ford is pushing hard to build up operations in Asia. The company has already exceeded expectations for its turnaround in its home market, and now has the financial strength and product lineup to try to repeat that success in what has been its weakest region.

The company expects to expand sales of its Asia-Pacific-Africa division to one-third of its global sales by 2020, from 15 percent of its overall volume currently.

Its steepest challenge appears to be in China, where other automakers have more established brands and deeper ties to consumers. G.M., for example, is the market leader in China with a 14 percent share, while Ford has less than 4 percent, according to IHS Automotive.

But Ford has drastically transformed its product portfolio since Mr. Mulally took over as chief executive five years ago, from an overreliance on trucks and S.U.V.’s to smaller cars. Mr. Mulally said that by 2020, small cars would make up about 55 percent of all Ford sales.

New cars like the Fiesta subcompact and Focus sedan are made on global platforms and sold in various markets around the world. That is a huge change from how Ford operated in the past, when it made different cars and trucks for specific regions of the world. Now the company can sell the same models in China, for example, that it offers in the United States. The change has cut costs and allowed Ford to shorten the time it takes to develop new products and refresh older ones.

Mr. Mulally said that transformation was the main reason that the company could now concentrate on gaining new customers in fast-growing markets like China and India.

“Up until now we haven’t had the products,” he said. “And now we have a company that’s operating profitably in all the regions of the world.”

Ford’s two hometown competitors, G.M. and Chrysler, both required considerable financial assistance from the United States government to survive and restructure in bankruptcy court.

Ford, by contrast, was able to weather the recession without federal aid. The company mortgaged most of its assets in 2006 to borrow $23 billion, then sold off noncore brands like Volvo and Jaguar and reorganized operations to produce a new lineup of smaller, more fuel-efficient models.

The strategy paid off. Last year, Ford earned a $6.6 billion profit and increased its United States market share for the second consecutive year — the first time it had done that since 1993.

The company continued its surge in the first quarter of this year when it posted a $2.6 billion profit that beat analysts’ projections. Meanwhile, Ford has paid back $17 billion of its debt, while maintaining cash reserves of $21 billion.

Ford has already started its product blitz overseas. By middecade, it will increase the number of models it offers in India to eight vehicles, from three, and in China to 15, from five. It is also building several new plants in Asia and adding dealers.

In the past, Ford’s Asia strategy relied heavily on its Japanese partner, Mazda. But it has substantially reduced its stake in Mazda, and is building up its own regional staff of executives and other people.

“Asia is clearly the next frontier for Ford,” said Mr. Robinet of IHS Automotive. “It’s definitely possible for them to grow significantly because they’re working from such a low base.”

Mr. Mulally said he was undaunted by Ford’s underdog position. He said that Chinese consumers were well aware of Ford’s products from the Internet, and appreciated its growing reputation for quality and fuel-efficiency around the world.

“The entire industry in China is growing, so it’s not like you’re taking share away from another competitor,” he said. “You have all these new customers that are now entering the marketplace and looking for world-class products.”

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