* Stepping up focus on small cars
* "They are latecomers in Asia" -analyst
* Aims to recapture investment-grade rating
(New throughout, adds analyst comment, closing share price)
By Bernie Woodall and Scott Malone
DETROIT, June 7 Ford Motor Co (F.N) is aiming
to expand its presence in the fast-growing auto markets of
India and China with an eye toward increasing the number of
vehicles it sells per year by 50 percent by the middle of the
Ford also said on Tuesday that it would cut its debt by
15.7 percent to about $14 billion by the end of June, bringing
it to less than half the $33.6 billion it was carrying in 2009.
The company wants to regain an investment-grade debt rating,
which it sees as necessary to resuming paying a dividend, but
it does not expect to reinstate its dividend before next year.
Chief Financial Officer Lewis Booth told investors at a
meeting in New York City that Ford planned to cut its overall
debt to about $10 billion by the middle of the decade.
"We believe we will achieve and maintain an
investment-grade rating through the business cycle," Booth
The No. 2 U.S. automaker, like its rival General Motors Co
(GM.N), is looking to markets other than the United States
because of lingering weakness in the economy. The company said
it would concentrate on small cars, popular in developing
economies, and that it was aiming for sales of small cars to
represent 55 percent of total vehicle sales by 2020.
Small cars currently represent about 48 percent of Ford's
total vehicle sales.
"They are going to have to do a lot of scrambling in Asia,"
said George Magliano, director of auto industry research for
IHS Automotive Insight. "They are latecomers in Asia. GM took
the risk in China and has a bigger stake now."
A 50 percent sales increase by the middle of the decade
would bring Ford's annual vehicle sales to 8 million.
Gary Bradshaw, a portfolio manager at Hodges Capital
Management, which holds Ford shares, described the target of 8
million vehicles as "ambitious, but it's doable."
Breakingviews column on Ford's global goals:
Reuters Insider - Ford's ambitious growth plans:
GM's plans to expand in S. America: [ID:nN06266041]
The Dearborn, Michigan-based automaker aims to triple its
number of dealers in India to 340 by 2016. As it rolls out more
small vehicles, the company aims to have more cars in the
categories that Indian shoppers buy, global sales and marketing
chief Jim Farley said.
It aims to raise this metric, known as "market coverage" to
68 percent in 2015 from the current 16 percent, Farley said. In
China, Ford aims to grow its market coverage to 50 percent in
2015 from 22 percent.
In China, the world's largest auto market, Ford lags behind
GM, Toyota Motor Corp (7203.T), Volkswagen AG (VOWG_p.DE) and
Hyundai Motor Co (005380.KS) and their respective Chinese joint
Ford aims to double its dealer network in China by 2016,
and adding 100 dealers this year.
The company plans to boost its production capacity in China
to 1.1 million vehicles by 2012. That lags GM, which already
produces more than 2.8 million vehicles a year in China and
aims to grow production to 3.7 million by 2015.
The decision to focus on Asia in an obvious one, said
Michelle Krebs, an analyst with Edmunds.com.
"That is where the growth is," Krebs said. "Whether they
will meet their stretch goals, I'm not sure. They've got to get
in there with products and plants because they have to ride
that growth wave."
The company provided no update on its 2011 revenue and
profit targets. Analysts look for full-year earnings of $1.93
per share, excluding items, up about 1 percent, with revenue
rising 13.7 percent to $126.4 billion, according to Thomson
PAYING DOWN DEBT
The company's debt burden is a legacy of Chief Executive
Alan Mulally's move to borrow $23.5 billion in late 2006 to
fund his turnaround plan. That step, ahead of the recession and
financial crisis, is widely credited with helping Ford to avoid
bankruptcy, unlike its competitors GM and Chrysler, which is
now managed by Italy's Fiat. FIA.MI
The three major credit ratings agencies have steadily
raised Ford's rating in the past year. As it stands now, two
agencies, Fitch Ratings and Moody's Investors Service, place
Ford two notches below investment grade. Standard & Poor's has
Ford three notches below investment grade.
Ford shares closed up 4 cents at $13.95 on the New York
Stock Exchange. The stock is down 17 percent so far this year,
less of a decline than the 22.5 percent drop of larger rival
(Reporting by Bernie Woodall and Scott Malone; editing by
Gerald E. McCormick, Andre Grenon and Matthew Lewis)
(firstname.lastname@example.org; + 1 313-416-4073)