Ford Motor (F, Financial) has been increasing its focus in the developing market of China, which is currently the hottest automotive destination. The company is investing in building plants and facilities, and is also introducing new models to grab a share of the booming Chinese market. Recently automakers reported October sales in this market. Ford’s arch rival General Motors (GM, Financial) delivered 291,371 vehicles in China during the month. Let’s take a look at how the Blue Oval stacked up against its domestic rival in this oversea market.
Breaking down the number
Ford manufactures cars in the mainland in collaboration with Chongqing Changan Automobile and Jiangling Motors Corp. The carmaker sold 93,179 vehicles in this economy in the last month, which is a decline of 0.8% compared with a year ago sales figure of 93,969 units. While the sales plunge might look a bit disappointing, Ford’s year-to-date delivery figure in the emerging market has been amazing. The carmaker has sold 906,613 units through October, a rise of 22.2% over last year when the company had sold 741,818 vehicles in the same period.
Imported vehicles such as the Ford Edge, Ford Explorer, Ford Focus and Ford Fiesta did really well in the market. These cars witnessed sales gain of 61% year to date, and 27% compared with a year ago period. Ford Mondeo’s sales stats were in fact unbelievably high. The car’s sales rose by a stunning 94.2% to 100,482 units through October this year. However, the American automaker’s passenger car joint venture with Chang Automobile saw sales drop 1.5% over last year to 69,111 units. Ford’s joint venture with Jiangling Motors also experienced sales plunge of 1.3% to 21,446 vehicles in October.
In comparison General Motors sold 291,371 vehicles in China, surpassing Ford by a huge margin. The company has sold 2.8 million vehicles in China through October, which is an increase of 11% over last year same period. In fact there is no comparison between the two of them in terms of their scale of operation in this Asian economy. The top U.S. automaker entered the Chinese market way ahead of Ford. This gave it a head start, and now it is reaping the benefits of the growing auto sales here. Ford, being a late entrant in the economy, has a long way to go before it matches General Motors or Volkswagen’s (VLKAY, Financial) presence in China.
Though Ford has a much smaller presence in the mainland, it should be noted that it’s growing at a faster pace. Its year-to-date sales surge hovers around 22% which is double the growth rate of General Motors.
Capitalizing on the opportunity
Sensing the enormous opportunity and robust demand, Ford has heavy investment plans. The automaker’s invested $600 million to open a third assembly unit in Chongqing sometime back. By doing this, Ford’s passenger vehicle capacity has been augmented by 360,000 units. Other than this, Ford proposes to open an assembly facility in Hangzhou around next year.
China’s car market is growing at a robust pace. It has already gone past the U.S., and the best part is that, despite being the biggest auto market across the globe, it still has a huge appetite for buying cars. By the end of this decade, the economy is expected to absorb over 30 million cars annually compared with the U.S. and Europe that are estimated to buy around 17 million and 15 million cars in a year.
Ford is extremely keen on expanding its operations in China and has been pouring billions of dollars to pick up pace and enjoy a greater piece of the total market share. Also as the number of wealthy individuals are rising in this market, Ford plans to launch its luxury vehicle Lincoln to capitalize on such demand, and gain additional margin on the sale of such premium vehicles.
Parting thoughts
October might have been a dull month for the automaker, but Ford is all out to make the most of this lucrative market. With proper expansion plans and spot-on strategies, Ford appears to be striking the right chords in the Chinese market.
