(Yicai Global) June 21 -- Ford Motor Co. [NYSE:F] said on June 20 that it plans to shift its production of the Ford Focus from the US to China. Ford produces Focus sedans for local customers in China.
Car sales in the States have fallen sharply, and manufacturers are struggling to cut production costs, said Joe Hinrichs, Ford's president of global operations. Shifting production of the Focus from the United States to China could save Ford USD1 billion, including USD500 million that would otherwise be spent on setting up a plant in Mexico, Hinrichs said.
Ford said it would not cut jobs in the US because of the move. The automaker may have been worried about a reaction from President Donald Trump, who has criticized Ford for making cars outside the US.
The plant in the suburbs of Detroit that currently produces the Focus will be transformed in the second half of 2018 to produce Ford Ranger pickups, Bronco SUVs and other models, Ford said.
Consumers have become accustomed to using mobile phones and other made-in-China goods and care more about the quality of a car than where it was built, Ford studies shows. Ford will begin exporting Focus sedans from China to the US from 2019, said Hinrichs.
Wages are lower in China than in Mexico, but this advantage is partly offset by the cost of transporting vehicles from China to the States, Hinrichs said. Overall, the cost of producing vehicles for the US is lower in Mexico, but Ford has idle production capacity in China that can be utilized by transferring production there, he said.
Ford is not the first car company to export cars from China to the US. Volvo Group began doing so in 2015. General Motors Co. [NYSE:GM] started exporting small-displacement Buick Envision SUVs from China to the States last year and has also imported Cadillac CT6 plug-in hybrids from China.