Beijing: Ford Motor intends to raise its 30% stake in Jiangling Motors Corp, a major Chinese light commercial vehicle maker, a source said on Friday, as the Detroit automaker speeds expansion in the world’s largest auto market.
“Joe Hinrichs expressed an interest to increase Ford’s stake in Jiangling when meeting with the governor of Jiangxi province earlier this week,” a source with direct knowledge of the matter told Reuters.
Hinrichs is president of Ford’s Asia and Africa operations. He also assumed the role as chairman and chief executive for China in November.
A provincial government official in Jiangxi, home base of Jiangling Motors, confirmed Hinrichs and governor Wu Xinxiong’s meeting on 13 December.
It is unclear whether Ford and Jiangling Motors have reached agreement on the stake hike.
Ford China declined to comment. Jiangling Motor executives could not immediately be reached for comment.
The proposed stake hike in Jiangling, which now makes up nearly a third of Ford’s China sales, will give the US automaker more voting power on Jiangling’s board and help it make further inroads in China’s fast-growing light commercial vehicle segment, industry observers say.
In the first 11-month, Jiangling Motors’ sales jumped 59.5% to 164,088 units, according to company data.
Jiangling Motors currently operates two plants, with combined capacity of 2,10,000 units, making JMC and Ford’s Transit models.
In July, the partners broke ground for a $300 million vehicle plant, capable of producing up to 3,00,000 units annually. The facility is scheduled to start operation at the end of 2012.
Ford, the only Detroit automaker to have steered clear of a US government bailout and bankruptcy in 2009, also runs a three-way car venture with Chongqing Changan Automobile Co and Mazda.
Last month, Ford cut its stake in Mazda to 3.5% from 11%, saying the reduction would allow it to “increase flexibility” as it continues to pursue growth in key emerging markets.
The No.2 US automaker did not elaborate, but financial sources had said it was looking to reduce its Mazda stake to gain more flexibility for its business in the heavily regulated Chinese market.
Earlier, Ford and its car venture partners submitted a proposal to the Chinese government to split the three-way tie into two separate entities, sources had said.
Ford is a relative late-comer to China, where GM and Volkswagen AG have built up a lead.
But it has been accelerating its expansion, building its third China car plant with Chongqing Changan and Mazda and adding 100 dealers, mostly in inland cities that are replacing big coastal areas as the major industry growth driver.
In the first 11-month, Ford and its partners sold 525,100 vehicles in China, up 39% from a year earlier, outperforming a 34.1% gain of the overall China market.