When China Means Little

Monday was a good day for American automakers. Well, at least one of them. Ford (NYSE: F  ) reported that car sales in China were up 46% in 2005, to 82,225 vehicles. That's an impressive number, and it becomes even more so when you consider that all of Ford's related imprints -- Lincoln, Land Rover, Jaguar, and Volvo -- also did well. MarketWatch says that including them with Ford's brand-name total would push Chinese sales above 220,000 cars.

The improvement can be traced back to increased investment in the region. For example, a joint venture between Ford and locally owned Changan Automotive accounted for more than 61,000 of Ford-branded vehicles sold in China during 2005, according to The Wall Street Journal.

The Journal reports that Ford wants to keep the momentum going and plans to invest $1 billion more to do so. The moola will go to expanding local production capacity to 360,000 vehicles by the first half of 2007; that's good for an 18-fold increase from just four years earlier.

None of this seems too surprising, of course. China has also provided welcome relief to ailing peer General Motors (NYSE: GM  ) . Indeed, MarketWatch reports that GM's China sales were up 35% in 2005 and that it has become the largest foreign seller in the region. Hooray! Sold American!

Well, not so fast, bucko. China's influence on Ford's and GM's sales is downright minuscule today, and that isn't likely to change overnight. Witness Ford's dismal third-quarter results, for example. The entire Asia-Pacific region accounted for $2.1 billion in sales, or just 5.1% of the company's worldwide total.

No doubt, China is an important, emerging market for the American automakers. But it's going to take years, if not decades, to fully take advantage of that. In the meantime, labor strife continues, costs remain out of control, and fuel-efficiency innovation is nowhere to be found. So, congratulations, Ford. Way to go, GM. Take five minutes to celebrate. And then get back to work. Because absolutely nothing that matters has changed for the better.

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Fool contributor Tim Beyers still thinks the Ford Mustang is the coolest car ever built. Too bad he doesn't own one. He doesn't own shares in any of the companies mentioned in this story, either. You can find out what is in his portfolio by checking Tim's Fool profile. The Motley Fool has an ironclad disclosure policy.


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