Nov 29, 2018 (China Knowledge) - Ford Motors is looking to accelerate its plans to build its luxury Lincoln models in China as the company seeks to avoid tariffs put in place from the Sino-U.S. trade war. According to its current timeline, the company will only commence production of the Lincoln models in late 2019.
Every little bit counts for Ford as the company currently lacks local production infrastructure that most of its competitors are packing. Prices of its Lincoln models have soared recently due to the 40% import tariff China has put in place on U.S.-made vehicles. Despite the company's efforts to absorb some of the costs, sales of its cars have declined.
The automaker had initially planned to capitalize on strong demand growth from China to revitalize its Lincoln brand, which has been lagging behind competitors. It was expecting China to become one of its top markets after a 66% growth in sales last year. However, sales this year have fallen significantly, with the company facing a 6% contraction last month. Sales for its Lincoln line for the first 10 months of this year have only risen by 3%.
The company is also reconsidering its plans to export its Chinese-built models back to the U.S. with the new tariffs in place. Instead, Ford plans to build the same models concurrently in both countries to avoid tariffs. Back in August, Ford had cancelled its plans to export its Focus Active model back to U.S. after the Trump administration put another USD 200 billion worth of tariffs on Chinese goods.
Ford's CEO Jim Hackett estimated that the metal tariffs put in place by Trump will likely cost the company USD 1 billion in annual profits, disrupting many of the company's plans. The company expects that the tariffs will stay for some time and is accounting the cost of tariffs into its future business plans.
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