Ford (NYSE:F) is experiencing an incredible time in China. The automaker registered mind-boggling sales gain of 53% year over year for January. The company’s European sales, like its Detroit peer General Motors (NYSE:GM), may be suffering, but China has given Ford enough reasons to rejoice by somewhat filling in the sales void created by the demand slump in Europe.
Ford has been recording some incredible numbers that it hasn’t seen in the recent past. Until now the company was focused on its American operations that account for a huge chunk of the total revenue. But such warm reception from China in 2013 has aroused Ford’s interest to take the emerging nation more seriously. Will it be easy for Ford to make its presence felt when its Japanese counterparts are looking for a comeback? Will Ford manage to defy its domestic rival General Motors’ strong foothold in China?
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January-February 2014, the regional promotional activities, Source: Company website
At a Glance
In January, Ford made 94,466 vehicle deliveries in the mainland to report an unbelievable 53% sales jump. The sales rise was driven by the company’s passenger car segment that accounted for more than 72,000 units of the total sales volume. Ford Focus has been an unparalleled vehicle in this segment which continues to be the top-seller in the Chinese auto market.
The company’s December sales also saw phenomenal rise of 35%, while November sales gain stood even better at 47%. In fact, the overall sales volume for last year increased 49% to 935,813 units. The Detroit player operates through its joint venture with Jiangling Motors and Chongqing Changan Automobile in China.
The carmaker intends to invest heavily in its China operations to expand and make the maximum benefit from this growing potential market. China, which has a car market estimated to clock almost 32 million units by 2020, is increasingly becoming the hot spot and a dream destination for carmakers. It would be quite a challenge for the auto major given the strong presence of fellow foes GM, Volkswagen (VLKAY), Toyota (NYSE:TM), Honda (NYSE:HMC) and other foreign players.
Ford’s New Focus, Source: Company website
Face Off with the Foes
Ford is not taking it easy as it know that it has some solid adversaries in this Asian market. In the past decade Ford trailed its Japanese rivals in China, but the company’s redesigned models, particularly Focus, did wonders helping the company walk past Toyota and Honda to establish as a stronger contender. The company sold 935,813 vehicles last year, up 49% from 2012 whereas Toyota’s and Honda’s sales volume clocked 917,500 and 756,882 units respectively.
The company has aggressive growth plans to counter the increasing rivalry with GM and Volkswagen in China, and battle the return of Japanese automakers in the mainland.
Parting Note – Increasing Footprint
The second largest U.S. automaker is bent on increasing its market share to 6% by end 2015. It targets to build seven assembly lines and engine plants in the world’s No. 1 auto market. In addition, the company has slated the release of 15 new models in the nation by 2015. Ford’s success and wide acceptance in China is attributable to the company’s strong product lineup. China offers enormous growth potential to the carmakers.
While all auto giants are pulling u their socks to get a greater chunk of the cake, unless an automaker has a solid product portfolio it would be quite a task to hold on to one market share. I believe Ford is all set and prepared to take a big leap to make bigger inroads. What’s your thought?