Ford Motor Company (F, Financial) recently announced its China sales for the month of August. The Blue Oval sold 97,863 vehicles, down 1% as compared with August 2016. Ford sold 720,000 in the first eight months of the year which represent a decline of 6% year over year. Lincoln dominated the months with sales more than doubling those of last year’s August. Lincoln sales amounted to 5,240 vehicles, up 105% year over year.
In contrast, its crosstown rival, General Motors (GM, Financial), is well in line with the industry’s performance and registered healthy sales for August. Here’s a look at Ford’s monthly performance in the Asian economy.
How Ford fared in China
Changan Ford Automobile registered an 8% sales decline by selling 69,002 vehicles in August as compared with August 2016. This was due to the poor performance of the models sold under CAF such as Focus and Taurus. By contrast, Jiangling Motor Company sold a total of 22,035 vehicles, up 10% year over year. CAF’s cumulative sales for the first eight months of the year stood at 487,039 units (down 16%) while that of JMC stood at 185,288 units (up 16%). Mark Ovenden, Ford’s vice president of marketing, sales and service in the Asia Pacific region, remained optimistic as he said:
“[Ford] significant gains in sales of JMC and imported Ford-branded vehicles, which grew 10% and 25%, respectively,” He further added: “We look forward to launching the new EcoSport in mid-September to further strengthen our product portfolio in China.”
Other models like Ford Mondeo and EcoSport fared well in China in August with sales coming in around 9,200 units (up 18% year over year) and 4,400 units (up 43%). Sales of the Lincoln models such as MKZ, MKC and MKX improved 108%, 62% and 46%. The company’s imported vehicle sales climbed 43% and Mustang’s sales grew an astounding 80% year over year.
What’s hurting sales?
The sales of the Blue Oval’s mainstream models have been softening. The company has had a difficult year so far with sales down 6% compared with the same period in 2016. This is primarily attributable to the CAF portfolio which is down 16% year to date. Ford’s family passenger cars including the high selling Focus, Mondeo, EcoSport, and Escape haven’t generated good sales numbers for the company so far this year.
Last word
Overall auto sales in China surged 4.1% in August year over year led mainly by robust demand for SUVs. However, China sales growth has been quite weak this year as compared with 2016 as customers bulked up their purchases due to a reduction in the Chinese tax rate. The first half of 2017 suffered from the impact of increase in purchase tax, leading to feeble demand.
Ford’s performance in China was not strong and when compared with the performance of General Motors, the former has to put in efforts and extend its portfolio to boost sales volumes in China. Ford’s overall sales in China may have flagged this year, but investors could expect a turnaround soon. Commercial vehicles and Lincoln is doing quite well for the automaker. In addition, introduction of fresh vehicles should help the automaker bolster its sales volume and get back on the growth track.
Disclosure: I do not hold any position in the stocks mentioned in this article.
