Just 11 days after Bill Ford, chairman and chief executive of Ford Motor Co., announced US$1 billion in capital increase in Chang’an Ford, on October 28, Chang’an Ford’s parent company Chang’an Automobile (000625) announced that the third quarter of 2003 is expected to be a quarterly report. Changan Ford may lose money in 2003.
On October 17th, Ford Motor Company Chairman and Chief Executive Officer Bill Ford announced in Beijing: Ford Motor Company and Chongqing Chang'an Group will jointly invest 1 billion to 1.5 billion U.S. dollars in the next few years, and produce Changan Ford's current annual output. The production capacity of 20,000 cars has been increased to 150,000. At the same time, it will cooperate with Changan Ford to build a second car factory and a new engine plant.
However, on the 28th, Changan Automobile reported in the third quarter report of 2003 that 2003 was the first year Changan Ford started production, and it is expected that it will lose money in 2003. In September 2003, Changan Ford Motor Co., Ltd. produced 2,328 vehicles and sold 1,823 cars, achieving a sales income of 231 million yuan and a profit of -905 million yuan.
Changan Ford Motor Co., Ltd., located in Yucheng Town, New District, Chongqing City, was established on April 27, 2001. The company adopted a joint venture with a registered capital of 98 million US dollars. Both Chinese and foreign shareholders have 24% of Changan Group, 26% of Changan Automobile, and Ford. 50% of cars. As the initial stalls were spread too large, the construction of the car production base and the technology development center would take 2 years according to the plan. This made Changan Ford not produce a car for the first two years.
According to Guo Yu, the public relations department of Changan Ford, according to international standards, Chang’an Ford’s construction of a brand new factory in 18 months has been quite difficult. Due to Chongqing’s hilly landscape, Chang’an Ford built it after leveling a hill 23 meters high. plant. In terms of products, Changan Ford strived to prepare new products only after full preparation. For example, when the carnival went offline, its localization rate would exceed 60%. Parts of the carnival were mostly from Chongqing spare parts suppliers. Mondeou, on the other hand, has adopted the CKD assembly, so Mondeou has completed domestic production only after more than three months of the production of the carnival.
According to the audit report issued by PricewaterhouseCoopers Zhongtian Certified Public Accountants, as of December 31, 2002, the profit and loss of Changan Ford was: the main business income was 590,000 yuan, and the net profit was -280 million yuan.
On January 18, 2003, Changan Ford Motor Co., Ltd. launched the first model carnival. It was officially launched in the country in March this year, with an annual sales volume of 20,000 units. Then it launched the second model Mondeo, which was produced in the form of CKD. As of the end of September this year, Changan Ford produced 13,149 cars and sold 10,994 cars. For Changan Ford, this is a very good result.
However, industry experts said that if Changan Ford adopts a “rolling†development model at the beginning of its establishment, gradually expand its production capacity step by step to avoid today’s losses. For example, Beijing Hyundai's Sonata and FAW Car's Mazda 6 have seen their production volume gradually increase at the beginning of their establishment. This rhythm is more in line with China's current rapid development of the auto market.
The current situation is that although Changan Ford sold more than 10,000 vehicles this year, it will obtain profits, but in accordance with the requirements of relevant laws, profits must be used to make up for previous years' losses. Moreover, in the first year of the company's operation and production, due to factors such as start-up fees, worker proficiency, and market expansion, profitability is unlikely.
(Zhang Qing)