Ford Motor’s (F, Financial) sales in the world’s largest car market dropped 2.5% in May as the company sold 88,248 units.
Last year the automaker sold 90,553 units in China. This is the carmaker’s second straight month of falling sales. The company’s retail sales were decent but not good enough to compensate for the poor sales in the commercial vehicle market.
However, Ford’s sales have been decent year to date as it sold 479,542 vehicles during the period, representing a 5% sales rise as compared with the same period last year. Another positive sign for the company despite the sales slump is solid performance by the all-new Taurus sedan in China. Ford sold almost 2,500 units of the sedan in the previous month.
Here’s a comprehensive look at the company’s monthly and year-to-date sales in China.
China sales slump
Ford operates through two joint ventures in China, namely Changan Ford Automobile and Jiangling Motors (SZSE:000550, Financial). Changan is primarily known for selling Ford passenger vehicles while Jiangling manufactures commercial vehicles, mainly the company’s Transit vans. Changan sold 67,055 units during the last month, up 11%, while Jiangling witnessed a 4% sales decline to 19,692 vehicles in May.
Year-to-date sales for Changan amounted to 370,268 vehicles. Jiangling, on the other hand, delivered 102,163 units, representing a 9% sales slump as compared to the same period last year. The company’s environmentally friendly vehicle, Ford Ecosport, witnessed a mammoth 31% sales hike, thereby crossing the 300,000 mark for the first time.
Commercial vehicles sales were down
The company kicked off the month on a joyful note. However, sales were down for the last two months, mostly on account of the slump in the sales of commercial vehicles. Commercial vehicles forms an integral part of Ford’s offerings and business operations in China.
The decline in commercial vehicle sales has hampered sales at Jiangling. However, Changan somewhat helped the company compensate for the weakness in commercial vehicles sales, thanks to the robust performance of the company’s crossover SUV.
Looking ahead
Ford’s key to success in the Chinese market is establishing a strong SUV lineup, a segment that is increasingly growing popular with the country’s population. For the first time ever, total sales of Ford Edge, Explorer, Everest, Kuga and Ecosport exceeded 250,000 units in the last year.
Moreover, Ford will soon launch hybrid versions in China, the plug-in hybrid version of the midsize sedan that is expected to boost the company’s sales. As for now, there is intense pressure on the commercial vehicle market. There’s no doubt that this is going to be a challenge for the Blue Oval for some time in China.
Apart from this, the company is also building strategy to capitalize on the rising demand for luxury vehicles in China. Apparently, Ford is working to widen its luxury offerings under the Lincoln brand. The Detroit automaker is intending to manufacture the luxury car locally and is said to be in talks with Changan Automobile. The company was in conversation with Changan Automobile regarding manufacturing the brand’s vehicles in Chongqing. Mark Fields, the company’s CEO, said that China can soon replace U.S. as Lincoln’s largest market by the end of 2020.
China is the world’s hottest car market. It has emerged as a highly lucrative market for automakers across the globe. If Ford builds the Lincoln locally, it would save as much as 25% of import tax, giving it an edge over Mercedes-Benz, Audi (NSU, Financial) and BMW (BMW, Financial). It would be interesting to see how this plan shapes up and how Ford’s sales in China would trend over the next few months.
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