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Ford CEO Alan Mulally poses at the Ford display at the North American International Auto Show in Detroit

Carlos Osorio/AP

A single statistic from Ford Motor Co. demonstrates how quickly the Chinese auto market is growing: The company is opening two dealerships a week in the country.

Managing growth in the world's fastest-growing markets, which are in the Asia-Pacific region, is the key challenge Ford faces, chief executive officer Alan Mulally told a small group of reporters at the North American International Auto Show in Detroit.

"We have great global vehicles now," Mr. Mulally said. "So our job is really to scale up the manufacturing and bring all these vehicles in as quickly as we can."

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Ford's sales jumped 40 per cent in China last year, amid a 33-per-cent surge for all auto makers in what is now the world's largest auto market.

Although growth rates are expected to slow this year, auto makers have poured billions of dollars of worth of investments into China amid anticipation of a growing market as annual incomes increase.

A key part of the strategy Mr. Mulally put in place when he joined Ford in 2006 from Boeing Co., was to reinvigorate the company's small-car lineup to better position Ford in the United States amid rising gas prices, and to more closely match demand in the rest of the world, where 60 per cent of drivers buy subcompact or compact vehicles.

So the Ford Fiesta subcompact and the Ford Focus compact were redesigned. Different versions of the cars are tailored for different markets around the world, although the basic underbody of a Focus is the same in Europe as it is in the United States and elsewhere.

In India, for instance, where the market grew by 31 per cent last year, Ford has stripped the cars down to their basics.

About 70 per cent of the cars in India retail for less than $8,500 (U.S.). In China, by comparison, the figure is $14,500.

"Clearly those markets are price sensitive," Derrick Kuzak, global vice-president of product development told reporters.

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So Ford tailors the interiors and other features of the cars to different markets. In North America, drivers are accustomed to instrument panels with a soft feel to them. In India, they don't need to be soft touch.

"By aligning our attributes and our content to the Indian market, we can reduce costs by $1,000 to $2,000, depending on the size of the vehicle, the number of vehicle systems we are impacting," Mr. Kuzak told investors and analysts on Tuesday at a conference in Detroit.

Ford will expand its lineup in India to eight vehicles by 2015 from three today, and four of the five new vehicles will be priced at less than $8,500, he said.

Mr. Mulally said Ford no longer thinks of itself as a U.S. auto maker or one of the Big Three Detroit companies.

"Ford is a global auto maker and we're competing with the best companies in the world," he said. "There's a Big Six or Seven that are competing worldwide."

Asked to identify competitors he regards highly, Mr. Mulally mentioned his long-standing admiration for Toyota Motor Corp. and the Toyota production system, and also pointed to Volkswagen AG and South Korea-based Hyundai Motor Corp.

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About the Author
Auto and Steel Industry Reporter

Greg Keenan has covered the automotive and steel industries for The Globe and Mail since 1995. He also writes about broader manufacturing trends. He is a graduate of the University of Toronto and of the University of Western Ontario School of Journalism. More

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