Dallas, Texas 10/22/2013 (Financialstrend) – Ford Motor Company (NYSE:F) has announced an ambitious $100 billion expansion plan in 2014, which will see the car maker spend money on R&D, new production facilities and enter into new markets in order to grow its business and emerge as the top car maker in the globe. It envisions growing its production to top 8 million units of vehicles by 2015 through this surge. It intends to ramp up its sales capacity accordingly. In order to sustain and ramp up quickly it is also contemplating adding to adding 550 more suppliers to its existing 750 supplier roaster.
Ford’s decision to pump in more cap ex is in line with the trends being observed in the auto market over the past few quarters. Analysts are seeing a slow but albeit steady uptake in demand in the U.s and Europe markets. The sale figures for the auto industry took a beating during the 2007/08 financial turmoil and since then had been struggling in the doldrums until the recent upturn.
Industry watchers are predicting that the automobile industry is on the cusp of a big demand surge driven by improving economic sentiments and improvement in the job market. In U.S. they also foresee a cyclical increase of buyers from the rental industry entering the market to replace their ageing fleets (average 10 year old vehicles) with newer models. Both Ford and GM had reported close to 5% increase in their September sales in U.K.
A recent auto supplier’s survey covering players in U.S had churned out interesting findings. They suppliers feel that in the event of production reaching full capacity, then the suppliers will struggle to fulfil the demand for parts due to chronic reduction in their capacity over the past few years. Ford with its big ticket plans of increasing its supplier base is proactively trying to account for the impending demand for components.