"We must use a business model centered on the needs of Chinese consumers to participate in future market competition."
"China is no longer just the largest car sales market, but a place for us to cultivate and learn from experience."
On the eve of the opening of the 2021 Shanghai Auto Show, Jim Farley, President and CEO of Ford Motor Company, who did not come to Shanghai, arrived at the office at six in the morning and accepted online interviews from several mainstream Chinese media including Auto Commune. The content gave a frank answer. Among them, the most impressive thing is this sentence.
At the Shanghai Auto Show, Ford brought out its own "pure electric" dish Mustang Mach-E. This is the true landing of Ford China in the pure electric field after the "Ford China 2.0" strategy was released in April 2019.
Can Mustang Mach-E sell well? The reporter had communicated with media teachers in the industry before and was not too optimistic. why? Ford had a "late episode". Moreover, Ford's perception of the Chinese market is a bit "stunned". Before, all of its focus was on the domestic market in the United States. Mach-E is not the first to be listed on the Chinese market.
However, changes have quietly occurred since Jim Farley took over as Ford's global CEO. In fact, the importance of the Chinese market has never been higher. From this time Ford’s China Electric Vehicle Division transferred an "triathlon" player, Mark Kaufman, that he is preparing to "harden the stronghold and fight hard battles" in China, and I can fully appreciate that. Kind of change.
After the Shanghai Auto Show, let’s review Jim Farley’s interview. Ford’s future style of play, its perception and layout of the Chinese market, and its strategies to deal with competition have become increasingly clear.
Two "pillar" markets
As the current head of the "Ford people" for three generations, Jim Farley naturally knows Ford.
Therefore, in the face of "big changes in the automotive industry" that have not been seen in a century, Jim Farley's first key task after becoming Ford's CEO is to initiate the implementation of the company's comprehensive business transformation plan. Moreover, this is not "Jim Farley’s personal plan." It is a "combination with General Manager Anning (Group Vice President of Ford Motor Company, President and CEO of Ford Motor (China) Co., Ltd. Chen Anning) and all Ford’s senior leadership. Consensus reached on future plans."
Jim Farley said that this comprehensive transformation plan is divided into three important goals that are simultaneously promoted: revitalizing the automotive business, realizing corporate modernization, and self-disruption.
Speaking of reviving the auto business, then, whether it is China or North America, Ford's auto business must be revitalized, "This is our foundation and the basis for us to expand competition in emerging business areas." According to the reporter's understanding, this Much better than Han Kaite's period. Although Han Kate did a lot of important work during his tenure, he still paid too much attention to Wall Street and ignored the nature of car manufacturers.
Jim Farley has already felt "the biggest challenge from China" at the US headquarters. As Ford’s global CEO, Jim Farley said that he must ensure that North America and Europe can learn from China’s experience, turn China’s experience and advantages into Ford’s global competitive advantage, and export China’s successful experience to the global market. This is both huge The challenge is also a huge opportunity.
"Ford's future core product portfolio must come from China and North America." Moreover, this is the "New Ford". In the future, only in North America and China will Ford maintain a complete product range, which will also be the two major "pillar" markets for Ford's future global operations. Since the Chinese market has risen to an independent unit, Ford has clearly stated the importance of the Chinese market through Jim Farley for the first time.
In the process of transformation, Ford China has played an important role in the three goals of revitalizing the automotive business, realizing corporate modernization, and self-subversion. As a century-old car company, Ford finally realized that there are very big differences in the understanding of customer needs and customer experience management in the Chinese and Western markets. "We must use a business model centered on Chinese consumer needs to participate in the future market. competition."
Jim Farley said that Ford needs to launch a series of brand-new products that are more in line with the needs of the Chinese market so that Ford's business in China can keep up with the market situation. He understands that the acceptance of digital technology and products in daily life by Chinese consumers is ahead of the rest of the world. "We see that whether it is the application of artificial intelligence technology, digital services, etc., China is already at the forefront of the development of these digital technologies, and the depth and breadth of applications will also lead the world."
He hopes that Chinese consumers can take a look at Ford’s brand with admiration, “We must focus on the needs of Chinese consumers, take advantage of Ford’s global products and technologies, and combine the advantages of the team and resources in the Chinese market to develop unique products for China. Soon everyone will see our products."
Jim Farley said, "This is why we have a new leadership team under the head of Anning. It is not only to turn losses into profits, but more importantly, to create a new'DNA' for Ford, a company with Chinese genes. DNA', because this team is well versed in the Chinese market and Chinese consumers, and can truly launch our products and services'consumer-centric'.” Of course, Ford has to work hard not only to launch new products, but more importantly. It is to show sincerity to the needs of Chinese consumers and develop more competitive products.
The answer to the second round
We have seen that a Ford car with a new "DNA" and a Chinese gene "DNA" needs too much "to put down the burden and start the machine." Therefore, in addition to reviving the car business, Jim Farley also said that Ford's three The goal of "realizing enterprise modernization" is not only to make pure electric vehicles, but also to introduce other high-tech means such as artificial intelligence to further modernize the relationship with customers.
This includes improving the traditional customer relationship between manufacturers, "In the past, I sold you the car, sold you the parts, and then it was over, and I will see you in a few years. Such a relationship must be innovated by modern means. Carry out comprehensive innovation around changes in consumer demand for products, services and experiences."
In terms of supply chain management on the supply side, Jim Farley cited an example of an American baseball game (nine inning system) to illustrate the current situation of Ford's battery supply. He thinks it has just entered the first or second inning. In the first game, batteries can be purchased from Ningde Times, LG, Panasonic, SK and other companies, but now it has entered the second game. From a strategic point of view, the security of supply has become very important.
"The listing of Mustang Mach-E has answered this question very well." Ford has always believed that players who entered the game earlier cannot afford the entire supply chain cost, and the unexpected listing price of Mach-E Benefit from the decrease in the cost of the entire supply chain. Zhu Jiang, the COO of Ford's China Electric Vehicle Division, emphasized at the press conference, "Undoubtedly, Mach-E will be on the market a little later, but the entire supply chain price has come down. We can reduce costs. In fact, the ultimate benefit is the market and users."
In an exclusive interview, Jim Farley gave a very official explanation to the current question of "Ford chooses BYD battery as a partner", "Who will we have more extensive cooperation with in the future? The answer is still unclear. Once new New technologies, such as the use of lithium iron phosphate batteries, may not require a particularly long battery life, but they are very cost-effective."
So, why is BYD? It is very simple. Ford chooses which partners to cooperate with, and will carefully "understand the chemical characteristics and professional capabilities of their products. In our own company, we have a dedicated team responsible for the development of batteries to grasp how these technologies themselves work." How are these products made and how to improve their quality? How to improve their cost structure and enter the next stage."
The words came to an end. On April 27, foreign media reported that Ford decided to establish a power battery research and development center called "Ford Ion Park" in southeastern Michigan. Moreover, a special team composed of 150 experts in the field of power battery research and development and production will be deployed in the "Ford Ion Park" to be responsible for the research and development of power batteries for Ford's new energy models. In addition, Ford will spend 185 million U.S. dollars (approximately 1.2 billion yuan) to establish a cooperative laboratory dedicated to the development, testing and manufacturing of power batteries.
In addition, entering the second round, Ford’s $22 billion electric vehicle strategy did not include the investment in batteries. “We will definitely have more investment. In the future, how should we pay attention to the investment in batteries? Which standards of these companies are concerned about? Including battery companies in China."
Based on these explorations, Jim Farley, Chen Anning and the management team are forming their own views on many areas. Forward-looking research, including solid-state batteries, has begun (development), chemical technology has been improving, and technology has been developing and changing. Farley believes that for Ford to enter the third game, he must have a better strategy. Ford is still in the second game, but, "The second game is also an exciting change for us."
Not only is the supply chain undergoing modernization changes, on April 28, Ford China announced a new adjustment to the management model of its business operations in China, and it will establish a Ford brand passenger car and commercial vehicle division. In the future, the automotive business will focus on the four core areas of Ford brand passenger cars, commercial vehicles, Lincoln brand and electric vehicle business.
This internal structure and channel adjustment, one of them, the Mach-E channel model, was clearly explained by Zhu Jiang at the press conference on the 13th. Specifically, Ford's electric vehicle business unit will build a sales and service network that directly faces users in a "direct operation model". By 2021, urban experience stores and service outlets will cover 20 cities.
This is what Jim Farley mentioned in an interview, "In China, we are the first foreign OEM manufacturer to separate electric vehicles from fuel vehicles and establish a direct sales + direct sales hybrid sales model, directly facing consumers. This is very subversive to our traditional dealer network model."
Of course, Ford’s future business is not just selling cars. Jim Farley said, “We must also look for new business growth opportunities in every area where people travel, and pay attention to customer satisfaction and comfort during every kilometer of use. To break through the traditional business model that relied on automobile production and sales in the past, this is a very big change for Ford, which has a century-old history."
Facing the ups and downs of the Chinese market and facing new competitors like NIO and Tesla, Ford, under the leadership of Jim Farley, also began the most important self-subversion. Ford is also becoming more humble, abandoning the shackles of tradition, seeing himself as a "challenger" and "subverting in a way that he competes with himself."
Among them, the most important mentality change is that Ford’s new positioning is a "challenger", no longer indulging in the positioning of a traditional company with a history of 118 years, and not only to challenge the electrification of products, but also to digitize, Challenges in intelligence and customer experience.
This is also reflected in the first Chinese sentence of Mark Kaufman, General Manager of Ford’s China Electric Vehicle Division, on the "show" on the day Mach-E was released. strength. Moreover, at the beginning of the conference, Zhu Jiang, the COO of Ford’s China Electric Vehicle Division, put his own Diss to the end, “Today’s conference is to tell a story, first smash one's own place, and then get the place back.” It is completely "not broken." How can I be born again?"
The reporter said that after so many years, we finally have the opportunity to see Centennial Ford show a "relentlessness". Ford has a kind of fierceness, decisiveness in doing things and making decisions, and being able to survive a century of industry changes without failing. This characteristic in its bones is very strong. We saw it in Jim Farley, the "old Ford man" and the Ford China team.
From Jim Farley’s point of view, Mustang Mach-E is Ford’s "self-subversive" product, "Only Ford can do Mustang Mach-E, and no other company can do it. It has Detroit’s The style, attitude and aura of Detroit are something that only Ford can do."
Jim Farley also said that in order to achieve the three goals of revitalizing the automobile business, realizing corporate modernization, and self-disruption in China, the market scale of electric vehicle products must first be rapidly expanded. There are two obstacles to overcome this challenge, one is to have excellent products, and the other is to have innovative digital customer experience, "to achieve a differentiated customer experience. Mustang Mach-E is our first answer."
Secondly, it is necessary to realize the differentiated advantages of the Lincoln brand in the luxury market. In the past few years, Lincoln’s performance in the Chinese market, the successful landing of "three domestically produced cars in three years" has become a bright spot. It can be said that “Lincoln China leads Lincoln’s global development in many aspects.” For example, in China’s “Lincoln The Tao is much more advanced than the "Lincoln Way" in the United States. The sales of Lincoln vehicles sold in China in January of this year were already higher than sales in the United States.
But Lincoln must ensure that it will continue to grow in the future and form its own "differentiated competitive advantage". There are more things to do, such as the upgrade of the "Lincoln Way". Jim Farley believes, "In the future, we must accelerate the electrification of Lincoln, coupled with the digital Lincoln customer experience, to create a brand-new digital "Lincoln Way". Only in this way can we enhance the global competitiveness of the Lincoln brand. ."
Jim Farley also said that Ford re-examined the Chinese market and changed many traditional practices. For example, it is no longer the same as before, just introducing the Fox developed in Europe, and then localizing it to produce and market it, and it can still be successful. "More than half of our Changan Ford's sales in the first quarter were SUVs and mid-to-large sedans. This is a product transformation based on the trend of high-end and family-oriented Chinese consumers."
For the performance of the Ford China team, Jim Farley gave a high evaluation. He said that since the Chinese market has suffered losses in the past few years, Chen Anning's very important mission since taking office is to revive Ford's business. The "Ford China 2.0" plan put forward by the Chinese team led by Chen Anning two years ago reorganized its business in China, laying a business foundation for focusing on electrification, intelligence, and upgrading the consumer experience. Moreover, since the implementation of the "Ford China 2.0" plan, Ford's comprehensive strengths such as the brand, product system, and marketing system have been improved and enhanced.
"We have learned a lot in the past few years. It is not only reflected in the performance of turning losses into profits, but also let us understand how to better compete in China." Jim Farley famously said in Ford, "You don't break yourself. , Others will." He said that he believes that the Chinese leadership team will do their best to fully compete like a "challenger" in the Chinese market.
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