Ford Motor (F, Financial), in collaboration with its joint ventures in China, delivered around 150,000 vehicles in December 2016, an improvement of 23% from 2015. The rise is attributable to the solid demand for the company’s widened portfolio of SUVs, including Ford Edge, Explorer, Taurus and Ford Mustang.
As far as the entire year is concerned, Ford’s sales soared to its highest-ever level of 1.27 million vehicles, up 14% over 2015. This includes vehicles delivered by its joint ventures, the company’s imported vehicles to China and its luxury brand Lincoln.
A look at the numbers
Ford operates through two Chinese joint ventures, Jiangling Motors Corp. and Changan Ford Automobile. In addition, the company also imports some vehicles and sells in the mainland. Changan Ford, which is Ford's passenger car joint venture, registered record annual and December sales volumes. Changan sold more than 957,000 vehicles during the year, which is an increase of 14% compared with 2015. In December, Changan sold more than 115,000 vehicles, 19% higher than what it sold in the year-ago comparable month.
Ford's SUV lineup was another key factor boosting sales in China. Demand for Edge and Explorer saw phenomenal growth of 123% and 36% in 2016. The Ford Taurus also recorded its highest-ever monthly sales for December while its annual sales volume crossed the 32,000 mark. The company’s performance vehicles are also being noticed and attracting buyers in China. Ford Mustang sales grew 45%, while Focus RS and Focus ST sales were up 12% for 2016. As for the small sedan segment, the new Ford Focus and Escort continue to sell well with sales volumes up 8% and 53%.
Ford's other joint venture, Jiangling Motor, manufactures transit vans, pickups and a Ranger-based SUV in China. Jiangling sold 265,056 vehicles in the past year. This is an increase of 7% over 2015. December sales for the joint venture came in at 32,193 vehicles, an improvement of 28% from a year earlier.
Lincoln has also been a key performer for Ford as it sold 32,558 vehicles. While the number in absolute terms might appear tiny compared with other vehicles, it tripled the volume of 2015 sales. Lincoln’s popularity was driven by the strong reception of Lincoln SUVs. The number of dealerships increased to 65 in 2016. Of these dealerships, five are among the top 10 Lincoln dealerships across the globe.
The success formula
Ford's sales chief for the Asia Pacific region, Peter Fleet, said in a statement, "We have built some great sales momentum in China, particularly in the second half of 2016, on the strength of our expanded vehicle lineup." He added, "Record numbers of customers are choosing our three-row Edge crossover, elegant Taurus sedan, Explorer premium SUV and Lincoln luxury vehicles."
Ford also benefited largely from the SUVs market, particularly crossover SUVs, and big premium sedans, which are currently showing strength in the Chinese market.
In addition, the company has been prompt in handling the domestic competition in China. The pricing pressure, particularly in the small SUV segment, had a bearing on Ford’s sales volume in the first half of 2016. The company’s market share also dropped, but its management immediately took corrective measures to regain its position and grow stronger. Ford made pricing adjustments and backed it by cost-cutting measures to ensure its bottom line does not get hit. Ford’s journey in China may have started late, but the American player is gearing up to emerge as a significant automaker in the world’s hottest car market.
Disclosure: I do not hold any position in the stock discussed in this article.
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