Ford Motor Co. (F, Financial) witnessed a 3% year-over-year sales decline to 87,733 vehicles in China, marking the U.S. automaker’s third sales decline this year.
The company’s year-to-date sales plunged 11% to 436,961 vehicles as compared with the same period last year. Despite all this, Peter Fleet, vice president of marketing, sales and service in Asia, remains optimistic, saying sales are on track and will grow in the second quarter of the year.
Like Ford, General Motors (GM, Financial) experienced a May sales decline of 0.3% in China, and Toyota Motor Corp.’s (TM, Financial) sales growth has also slowed.
Ford sales drop in May
Ford’s passenger car joint venture, Changan Ford Automobile (CAF), saw a 12% drop in May sales to 59,276 vehicles. The EcoSport was among the CAF lineup that disappointed, recording a 47% year-to-date sales drop. Sales of the Kuga and Ford Focus sedan also experienced a double-digit loss during the period on a year-over-year basis.
China's domestic automakers are using predatory pricing strategies in an attempt to put pressure on global automakers. As a result, Ford, GM and others have no choice but to cut prices and compromise on their bottom line to prevent losing market share.
Lincoln and JMC thrived in China
On the bright side, Lincoln showed its resilience in May, recording a mammoth 73% improvement to 4,112 units as compared with May 2016. Lincoln brand’s sales were powered by huge gains from MKC (up 76%) and MKZ (up 159%). Moreover, Lincoln’s sales for the period stood at 20,376 units, which is twice what it sold in the year-ago period.
Ford's Jiangling Motors Corp. (JMC) manufactures commercial vans and multipurpose vehicles. The company's May sales surged 15% to 22,706 vehicles. The sales gain was led by huge gains from Ford Tourneo (up 158%) and Yusheng S330 (956 units sold).
Looking ahead
Investors remain confident the company will bounce back after managing an average start in China this year. As the small car market is suffering, Ford will look to boost sales of its larger, high-margin vehicles like the Ranger, which will be ready for sale in 2018, and the F-150 Raptor. Moreover, Lincoln is having a dream run, which gives investors hope of revival in the Asian market.
As Ford approaches the second half of the year, it is looking to turn things around. Sales of some of the company’s key models, like the Focus, EcoSport SUV and Kuga, have continuously remained soft. A new and refreshed version of Ford EcoSport is slated to hit the roads this year in mainland China. It will be interesting to see if the company can grow its sales and gain traction in the Chinese market.Â
Disclosure: I do not hold any position in the stocks mentioned in this article.
