Ford Building Out In Asia - Shares Remain Neutral

Ford Motor (F) has released plans suggesting an intense focus on its operations in China and India. The company looks forward to adding 250,000 units to its annual production capacity, taking both countries into account.

Ford Motor has announced the launch of production of its small car, Figo, in India in the first quarter of 2010. The decision was backed by a $500 million investment in the company’s existing Maraimalai Nagar, Chennai, plant for expansion. The company has committed to invest more than $950 million in total in the plant. The expansion will make India one of the company’s strategic production hubs, with output potential doubled to 200,000 vehicles annually.

The Chennai plant has already been producing Ford models — including the Ford Ikon, Ford Fiesta, Ford Fusion and Ford Endeavor — for the Indian market only. However, Figo — priced at $10,000 — will be produced for both Indian and international markets.

Ford has also revealed a plan to open its third assembly plant in China with its Chinese partner, Chongqing Changan Automobile. The company already manufactures the Focus, Fiesta and other sedan models in China in a tie-up with Chongqing Changan Automobile and Japan’s Mazda. Its current car manufacturing capacity in China is 447,000 units per year.

Ford will open the new plant based in the southwestern Chinese city of Chongqing. This will push up annual production capacity in the nation by at least 150,000 units.

We continue to recommend the shares of Ford as Neutral with a target price of $8.

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