Ford’s newest car carries a ‘Made in India’ label – CNBC

Posted: Thursday, November 17, 2016

A source close to the carmaker, who wished to remain anonymous to avoid being pulled into the current trade debate, said Ford isn’t intentionally waving a red flag. It identified a yawning new product segment and wanted to get into it as soon as possible, the source explained, adding that many of the market’s other small SUVs are also coming from abroad in order to hold down costs and build a profitable business case.

“This decision was made a long time ago,” the source explained, adding that, “It has everything to do with Ford’s manufacturing footprint, not the trade battle with Trump.”

Joe Phillippi, head of Auto Trends Consulting, said he hopes the trade dispute will die down, though he fears the EcoSport announcement could raise it back to headline levels. “The automotive business is truly global. So, to make this whole thing work, you have to have a relatively free flow of components and vehicles across borders,” stressed Philippi. “It’s how you keep the costs down.”

The EcoSport announcement actually could widen the automotive side of the trade debate, as Ford could now become the first carmaker to begin selling Indian-made vehicles in the U.S. when the first of the utes arrives in 2018. Several other Indian companies have laid out similar plans, but have yet to push into the States.

The China question

The 800-pound gorilla of the trade debate, however, is China. That country already runs up a massive trade deficit with the U.S. and it notably has numerous trade restrictions in place to discourage automotive imports. That has led virtually every major global automaker to set up operations in China—and, by law, to do so in partnership with a domestic Chinese auto manufacturer.

Until recently, the rapid pace of growth in China’s car market sucked up just about everything the industry could produce, but with the numbers slipping into single digits, that’s encouraging both domestic Chinese and foreign-owned carmakers to start looking at export opportunities.

Volvo, the Swedish-based but Chinese-owned carmaker, recently became the first to bring a car into the U.S. from a factory in Chengdu, capital of Szechuan province. The stretched S60 Inspiration sedan will soon be followed by a longer version of the new Volvo flagship, the S90, it announced last week.

Meanwhile, Volvo’s parent Geely also made it clear it will push into the U.S. with an all-new mid-range, Chinese-made brand, Lynk & Co. “The goal is somewhere around 2019,” a source close to the carmaker attending this week Los Angeles Auto Show told NBC News.

General Motors quietly launched its own Chinese import this fall, the new Buick Envision, like the Ford EcoSport, the smallest SUV in that brand’s line-up. Several company officials have privately said that GM decided to forego the usual, splashy new model media preview for Envision to avoid getting caught up in the trade debate. But GM would like to follow up with other Chinese-made models in the not-too-distant future. As that country’s second-largest automaker, it has lots of capacity to tap.

Ford would also like to get off the radar in the trade debate, viewing sourcing decisions as a part of a global business strategy, not a matter of politics. But with the launch of EcoSport it could find itself back in the spotlight and draw more attention to the auto industry overall.

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