Ford (F, Financial), in collaboration with its Chinese joint ventures, sold a record 100,561 vehicles in China, representing 15% year-over-year sales growth and ending the first half of the year on a positive note.
The Chinese tax incentive had adverse effects on the company as around 70% of the Blue Oval’s lineup comprised cars with 1.6l or lower engines. This led to a 7% sales fall in the first quarter. Second-quarter numbers were astonishing, up 7% from the same period last year.
Ford’s Asia-Pacific chief, Peter Fleet, optimistically says:
"I would expect to see for the third-quarter strong single digit percentage growth (for) the industry. That's certainly how it looks to us based on the run rate and how the month of July has opened up."
The Dearborn, Michigan-based automaker said that Escort, Focus, Mondeo and Taurus were the main growth drivers for June. The company’s year-to-date sales came in at more than 540,000 vehicles in the largest Asian economy.
How Ford fared in China
Escort was the No. 1 seller in China in June followed by Focus on volume basis; 25,000 Escort vehicles were sold, nearly double that of Focus. Lincoln MKC and Navigator too experienced sales growth in June.
Changan Ford Automobile witnessed staggering sales during the month, up 9% to more than 70,000 vehicles. It was the best-ever June for Changan.Jiangling Motor Automobile said that its sales spiked 27% to more than 24,000 units.
The Blue Oval sold 121 imported F-150 Raptors in June and 488 units during the January-June period. The company also sold 2,070 Mustangs in the first two quarters of the year. Lincoln sales surged a mammoth 84% on a year-over-year basis to roughly 4,200 units. This was Lincoln’s best-ever June figure.
What’s ahead?
The SUV segment is the one that is not only thriving in the Chinese market but is also the fastest-growing sector. Thus the American-based automaker is looking forward to introducing a new version of the EcoSport, a small SUV, later this year.
The company also plans to start production of the all-new and revitalized Lincoln SUV in this Asian economy by the end of 2019. Moreover, the production of Ford sedans would move to China in the second half of 2019 instead of being imported from the U.S. The automaker also plans to take the wraps off its first hybrid vehicles in 2018. Ford projects that three-fourths of its cars wil have electric options by 2025.
Last word
Ford looks forward to performing well in the rest of the year given the impressive second-quarter performance. The purchase tax on small engine cars will jump to 10% in 2018. Thus the company can expect some boost in the demand in the fourth quarter of the year. A year-over-year comparison would "get a bit tricky," particularly the last quarter as evident from the sales in fourth-quarter 2016 that saw astounding growth as customers took advantage of lower purchase taxes.
The automaker looks to strengthen its position in the world’s fastest-growing automotive market. China accounted for more than 24.3 million sales last year, well ahead of the U.S. market where car sales totaled a record 17.55 million vehicles.
For now, let’s stay tuned for July figures.
Disclosure: I do not hold any position in the stocks mentioned in this article.
