The largest market for automobiles is China. A growing middle class with a disposable income is ready to make use of China’s expansive highway networks and purchase their own vehicles. Ford is currently trying to break through in to the Chinese market for automobile but only accounts for 2% of the marketshare. Interestingly enough, it’s main competitor in China is GM who outsold Ford by 200000 vehicles in May of 2012. Ford’s opportunity to increase revenues and spread its’ brand can be paralleled to the entrance of Honda in to the American Car Market in the late 1970s and early 1980s. Honda was able to market fuel efficient compact cars targeted at American consumers who had just experienced the first major oil price shock of their lifetime. In the case of Ford, they may be able to capitalize on the tastes and preferences of the Chinese consumer who is looking for a well-known international brand that is also aesthetically pleasing. Chinese car buyers are eager to purchase vehicles and in the past have forgone purchasing Ford vehicles because of a lack of volume. In order to change this trend, Ford is opening 2 new showrooms a week for three years in China and just invested $5 billion dollars to increase their production capacity to 1.2 million vehicles by 2015. They recently built a $760 million plant that will manufacture these vehicles in Eastern China.
The growing market for automobiles also has changed the way in which Chinese buyers approach the car buying process. In the past, most buyers would pay in all cash because cars were really only accessible for the wealthy. However, as Ford and other foreign car companies produce cars that are more bare-boned and geared towards first time middle class car buyers payment methods have changed as well. We see a shift from cash payments to installment payment with a dealership acting as an intermediary. This is something similar to what we see in the automobile industry in the United States. Ford has altered the auto industry in China by introducing the American system of financing automobiles, while Chinese consumers tastes and preferences have forced Ford to increase its’ production capacity and sales strategy to remain globally competitive.