The second largest U.S. automaker Ford is set to make the most of the world’s largest car market China. Although a late entrant in the mainland, success looks boundless for the Westerner. The other two foreign auto giants that enjoy dominance in the sizzling market are General Motors (NYSE:GM) and Volkswagen (VLKAY). Cars are selling like hot cakes in China, like never before. And automakers are fighting for increased market share.
By the Number
Ford deserves a mention given the stunning year it’s reported so far. The Detroit carmaker along with its Chinese joint venture delivered 103,815 vehicles in March, a rise of 28% year over year. The automakers had a scintillating start to the year as it saw a 53% hike in sales in January, followed by a staggering 67% jump in February.
The momentum is there to continue – thanks to the Ford Focus, a car widely loved by the Chinese population. The first quarter China sales numbers for the automaker stood at an impressive 271,321 in volume, or 45% higher than a year-ago comparable period.
- Warning! GuruFocus has detected 4 Warning Signs with F. Click here to check it out.
- F 15-Year Financial Data
- The intrinsic value of F
- Peter Lynch Chart of F
The Blue Oval’s Undeterred Focus
Ford has probably never thought that despite such a late start in the Chinese market, it would receive such warm reception from petrol heads. Big names such as Volkswagen, General Motors, Toyota (NYSE:TM) and Nissan (NSANY) have been ruling the market from a much longer time. And China’s loved their cars too.
When you enter a market under the above mentioned scenario, there are several hiccups and doubts regarding your acceptance and success. But Ford proved all that wrong. It got things right with the launch of the Ford Focus. The demand for this car has been phenomenal, so much so that it was branded as the best-selling model in the economy last year.
The Blue Oval is also preparing to offer the Escort, which was discontinued in the European market when production ceased in 2002. There was huge speculation as to whether the American carmaker would revive the model ever again. And there we expect to see it at the Beijing Auto Show on April 20, as claimed by the company officials. The carmaker would mass produce the Escort in collaboration with its joint venture with Changan and sell it in the country, and export it to Russia, and Latin America. Ford would sell the Escort in other emerging markets as well, but has no plans to offer the model in North America or Europe.
Changing Pattern with Changing Times
Gone are the days when Westerners used to fear that Chinese automakers would barge in their territory the way Japanese counterparts did, and eat into their market share using their economical technology. China’s embracing foreign cars at an incredible rate. Chinese automakers have had huge dreams of exporting their cars to North America and Europe and making solid margins from this business. This has been a reason of worry for American and German auto majors. Actually it’s reversed now. The market size of General Motors and Volkswagen in China says it all. And now it’s Ford, which is tasting enormous success in the mainland.
Ford’s having a gala time in China. But it’s just the beginning of the carmaker’s journey. It has massive growth plans for the world’s top car market and is heavily investing in doubling its production capacity here. True, it’s way behind Volkswagen and General Motors, but at this pace Ford looks all charged up to get in the race with the biggies in the Mainland.