Ford Reports Strong 1st-Quarter Sales in China

Ford's strong sales support its profits

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Apr 25, 2016
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Ford Motor’s (F, Financial) China sales for the month of March spiked 5% to 114,788 units year over year despite the struggling Chinese economy, leading to a 14% first-quarter sales gain.

Despite China’s difficult economy, Ford managed to make its mark in the first quarter of the year. The improvement is attributable to the robust demand for SUVs on the mainland.

The company sold 314,500 vehicles in the first quarter of the year. Ford operates through two joint ventures in China – Changan Ford Automobile and Jiangling Motor. Changan Ford witnessed sales gains of 23% to 244,411 vehicles while Jiangling Motor saw sales decline 11%, selling 60,306 vehicles through the first three months of the year.

Going strong on the mainland

Ford’s sales in March and January were strong enough to compensate for the weak February numbers where deliveries took a hit of 9% owing to the Chinese New Year.

John Lawler, chairman and CEO of Ford China, is happy with the sort of response and appreciation the company’s products are getting from Chinese customers. Moreover, the January to March period saw deliveries climb to 5.64 million units in the country. Passenger vehicle sales in China saw growth of 6.8% in the first quarter. Lawler said in a statement: “We remain committed to offering a great portfolio of vehicles and providing world class service to our valued customers.”

Ford SUVs are selling extremely well in China. Combined sales of Ecosport, Edge, Explorer and Everest surged an astounding 38% in the January-March period against the same period last year. Besides the SUVs and the company’s joint ventures’ solid performances, Ford Mustang did fabulously well and posted a mammoth 75% sales gain in the first quarter of the year.

Furthermore, Lincoln sold 5,484 vehicles during the period, indicating a threefold sales hike from the same period the previous year. Considering the present customer preferences and trends, the company is planning to open more Lincoln dealerships in China. It presently has 37 dealers in China. The goal of selling 300,000 Lincolns in China by the end of this decade would depend on how extensively its dealerships are located and how well it manages to tap the demand for luxury cars in the budding Asian economy.

Ford has the right portfolio at the right time

Chinese customers’ inclination is shifting from traditional sedans to SUVs and crossovers, and Ford seems to be doing well on this front with its wide portfolio.

Ford managed to put up a good show in China, even in the face of tough market conditions, thanks to its product portfolio. Apart from this, the Chinese government’s decision to cut tax on vehicles is bringing positive changes in sales figures. Tax incentives will last all through the year, boosting sales further. Strong China sales in the first quarter should boost the company’s quarterly profits and increase returns to company investors.

Ford’s long-term growth is aligned to emerging economies such as China, which remains the hottest car market in the world. The Detroit automaker remains highly committed and focused on providing great products and exceptional services to its customers.