Ford Motor (F, Financial), the second-largest carmaker in America, is witnessing exciting times in its international market in China. While growth rate is stagnating in the home market, Ford is seeing elsewhere to fuel its growth. And obviously China’s the hot market for automaker with the tremendous scope it offers. And Ford is doing well, considering it’s a late entrant in the Chinese market since it was more focused to expand operations and penetrate more in the U.S. A quick look into some essential growth numbers and a brief overview of the Asian economy will give some better idea about where Ford stands.
Numbers growing steadily
Sales in the mainland is getting better every passing year, and Ford’s hold in the market is growing from strength to strength. Ford sales through the first 10 months of the year shot up 22% in comparison to last year same period. The automaker has a joint venture with Chongqing Changan Automobile for selling passenger cars in the country. Together with the joint venture Ford’s witnessed a surge of 23% in passenger cars through the first 10 months of the year compared with last year. Changan has delivered 660,566 units against 536,421 sold last year through October.
Ford has a collaboration with local player Jiangling Motors Corp. and together the two have sold 216,300 units through October, a rise of 16% from last year when they sold 186,920 units. In 2013 the carmaker sold 935,813 vehicles in all. During the past year, Ford had launched the Explorer and the Ecosport in the Chinese market and received an overwhelming response from customers. This reflected in the sales number, pushing Ford’s overall deliveries up by 49%. For the current year it targets to cross the 1 million mark in the emerging economy. This doesn’t look like a far-fetched objective considering that the company’s had a smooth sail so far during the year.
China’s industrywide sales went up 6.6% against last year, and with healthy demand the growth pace should be maintained.
China’s a big market with big prospect
Realizing the prospects China offers, Ford is doing all that’s required to capitalize on the situation. It’s introduced several models in the past year, and there are plenty in the pipeline. The company proposes to debut as many as 15 models through next year end. Simultaneously, it has plans to augment its production capacity as well to cater to the increasing demand. It aims to pull up its annual production capacity to 1.2 million, which is twice that of its production level in 2012. In fact, Ford is so optimistic about this economy that it estimates to generate around 40% of its total sales volume from here by the end of this decade.
Archrival General Motors (GM, Financial) and Germany based Volkswagen (VLKAY, Financial) have a huge market presence in this economy compared with Ford. This is because the two automakers entered the Chinese market much before Ford, while the latter was glued to its domestic operations. The booming market benefited GM and Volkswagen, and currently each of them hold 15% of the market. To compensate for this, Ford has aggressive plans and is pouring in billion to expand its operations here.
Key takeaway
The Chinese automaker absorbed 22 million vehicles in the past year, much higher compared with the U.S. where sales totaled 15.5 million vehicles. With sales normalizing in the domestic market and prospects looking medium, it’s essential for Ford to build options elsewhere to keep numbers growing. China fits the bill and can offer Ford the kind of growth it’s looking for.
