The news on Ford Motor Company’s (NYSE:F) plan to enter into China market has been trending since they announced that they are partnering with Alibaba to sell a full range of electric vehicles on its platform not only in China but across the globe. However, there are some concerns particularly on how Ford plans to launch over 50 new cars in China market in the next eight years.
Ford had a similar strategy in the past when they introduced more than 94 new vehicles in the market which failed terribly. When one product failed, the company went ahead to launch more products alongside the old model even when people were not buying them. According to market analysts, Ford’s entry into China is behind schedule and the firm is still playing catch-up as it struggles to add dozens of new vehicles to its lineup.
According to Allan Mulally Ford’s former CEO, the company should strive to produce the best vehicle for each major market segment instead of forcing a line of unnecessary new products to the new market. By streamlining its product line and focusing its marketing strategies and resources on producing one product that works for each market segment, Ford would deliver better quality and high-class service features for its customers and greater economies of scale for the company.
Furthermore, Ford should study the competitors in the China market especially the Volkswagen AG which is also planning to launch a range of new car models at the same time as Ford. As Mulally states, the automobile marketplace is increasingly becoming more fragmented and the consumer’s tastes and preferences are also becoming more specific and dynamic.
The key point here is that offering new models to the market requires employees to work more on the assembly lines and in the process reduce the quality of the products and increase the number of defects. In addition, it also reduces the economies of scale for the company as the sales volume of each product is reduced.