Top Biz News

Ford to boost China parts purchases

By Gong Zhengzheng (China Daily)
Updated: 2006-10-27 10:31

Most global automakers are increasing the sourcing of parts in China, taking advantage of the nation's lower costs.

Volkswagen said in February that it would purchase auto parts worth US$1 billion from China this year, a tenfold increase from 2005.

DaimlerChrysler said in June that it would increase its sourcing of China-made parts to US$840 million in 2008 from US$100 million planned for this year.

Encouraged by growing overseas demand, Chinese auto parts manufacturers are striving to boost their exports.

According to a five-year government plan, China's exports of parts are expected to reach US$35 billion to US$40 billion a year by 2010, up from last year's US$10.9 billion.

However, industry analysts said domestic manufacturers should invest more in research and development and improve quality, instead of waging price wars in overseas markets.

Ford, a latecomer to the Chinese market, has invested more than US$1 billion in the nation since 2003.

Combined sales of Ford and its wholly-owned brands - Volvo, Lincoln, Land Rover and Jaguar - in China more than doubled to 114,685 in the first three quarters of this year.

But this volume is much smaller than market leaders General Motors (GM) and Volkswagen.

GM and Volkswagen sold 645,680 and 524,558 vehicles in China from January to September.

Meanwhile, total sales of China-made vehicles jumped by a quarter to 5.17 million units. Sales for the whole year are forecast to reach 7 million units, which will enable China to surpass Japan as the world's No 2 vehicle market.