REFILE-Changan in talks to export China-made Ford cars-sources

Thu Jan 20, 2011 2:47am EST

(Refiles to add complete comment from Ford spokesman in paragraph 6)

*Ford, Changan in talks to export China-made Ford cars-sources

*China remains major focus for Ford

*Exports to provide additional income as market slows (Adds analysts, background)

By Fang Yan and Ken Wills

BEIJING, Jan 20 (Reuters) - Ford Motor (F.N) is in talks with its Chinese partner, Chongqing Changan Automobile Co 000625.SZ, to export China-made Ford vehicles to emerging markets, two people familiar with the matter told Reuters on Thursday.

Ford, which competes with General Motors (GM.N) among others in the world's largest auto market, aims to expand its joint efforts with its Chinese partner. [ID:nN24159793]

"Ford and Changan are exploring ways to expand their partnership. Export of China-made models is only one of the possible options," one source with direct knowledge of the situation told Reuters.

Another source said the on-going discussions are in line with Ford Chief Executive Alan Mulally's call to broaden and deepen ties with its Chinese partner. The sources declined to be identified since they were not authorised to talk to the media.

A spokesman for Ford, which makes Fiesta, Mondeo, Focus and X-MAX models in a three-way tie-up with Changan and Mazda Motor (7261.T), said the company has no plans to export from China.

"We are building high quality, fuel efficient, fun-to-drive vehicles in China, for China, and have no plans to export vehicles from China," said Trevor Hale, a China-based spokesman with Ford's Asia Pacific and Africa operations, in an emailed statement.

A Changan spokesman declined to comment.

Ford, the only Detroit automaker to have steered clear of a U.S. government bailout and bankruptcy in 2009, is a relatively latecomer in China, where GM and Volkswagen AG (VOWG.DE) have built up a lead.

However, Ford has been accelerating its expansion -- building a green field car plant with Changan and Mazda (7261.T) -- while its 30-percent owned Jiangling Motor 000550.SZ is also adding a $300 million new facility.

In 2010, Ford, which also holds 30 percent of major Chinese light commercial vehicle maker Jiangling Motors Corp, was the fastest growing foreign automaker in the country.

It sold 582,467 vehicles, up 40 percent from the year before, outperforming a 32 percent overall increase in China.

CHINA REMAINS MAIN FOCUS

Joe Hinrichs, president of Ford's Asia and Africa operations, said at the Detroit autoshow that the U.S. automaker intended to introduce 50 new products and power trains in the region in the next four years, its most aggressive move in Asia so far.

"China remains the main focus for foreign automakers. But export deals would serve as an additional income source at a time when the market is slowing down," said Boni Sa, an analyst with IHS Automotive.

The Chinese government issued a massive package of stimulus measures at the height of the global financial crisis in 2009, including tax incentives for small cars. The incentives were scaled back in 2010 and scrapped at the beginning of this year.

Beijing city government's recent move to impose quotas on new car registrations and possibly similar moves by other big cities to tackle traffic gridlock will apply the brakes on the market.

Many industry insiders expect the market to grow 10-15 percent this year, after jumping 33 percent and 53 percent in 2010 and 2009, respectively, but some have projected a decline this year of more than 10 percent. [ID:nTOE70B071]

Other car makers, such as PSA Peugeot Citroen (PEUP.PA), is also seeking to gain entry into emerging countries with brands made at their China ventures.

PSA Peugeot Citroen is preparing a logistics platform in Shanghai and will export selected Peugeot and Citroen cars made at its China plants, said Gregoire Olivier, the French car maker's Asia chief. [ID:nTOE67U06V]

(Editing by Lee Chyen Yee)

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