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Automakers haven't had the best year thus far. The Japanese earthquake and tsunami particularly affected auto parts suppliers in that region. These effects were somewhat subdued in the West, as production volumes of U.S. car makers pushed forward, but they were still notable. Worse yet for automakers, massive unrest in the Middle East and Africa sent oil prices gushing through the roof.
Despite these troubles, U.S. automaker Ford (NYSE: F ) posted its highest first-quarter profits in nearly 13 years, as demand for its fuel-efficient hybrids increased. Ford looks poised for greater forward momentum, thanks to a great first quarter and favorable leading indicators.
A brief look at the numbers
Ford enjoyed great results in the opening quarter of 2011. It saw an increase in both its top and bottom line, owing mainly to an increase in demand for its fuel-efficient cars. Net income rose by close to 22% to $2.6 billion, the highest such number in Ford's first quarter since 1998. Ford's revenue also increased by nearly 18% to $33.1 billion, beating analysts' estimates.
Higher prices also helped Ford boost its profits. Even though its rival General Motors (NYSE: GM ) managed to sell a greater volume of cars in the first quarter, Ford profited more by selling fewer cars at higher prices. GM made profits of $1.7 billion from its operations alone, even though its total profit was close to $3.2 billion.
With a great first quarter in the bag, let's see how Ford plans to motor through the rest of the year.
The auto industry
The global auto industry has shown positive signs of growth in the face of the recent economic slump. Analysts estimate that this market may increase by nearly 33% in the next four or five years, rising from around 72 million units in 2010. Ford is already well placed in the global automobile market, and aims to capitalize on this predicted growth.
The emerging markets have become a key area of focus for automakers across the globe, who have upped their efforts to increase their presence and market share in these regions. The emerging BRIC nations alone could purchase more than 12 million vehicles by 2015.
Ford expects nearly 70% of its growth in the next decade to come from the Asia-Pacific and Africa region. Industry sales there, including China, India, Thailand, Australia, and South Africa, increased to 30.7 million units in 2010, up from 24.5 million year over year.
Fellow Fool Sarosh Nicholas has previously emphasized the importance of the emerging Chinese market to automakers, and covered Ford's plans for expansion there. Ford had a market share of 2.4 % in the Asia Pacific and Africa region last year. To grow thaty piece of the pie, the company plans to double dealerships in China in the next five years.
For now, GM has the highest market share in the BRIC nations, but that may not last forever. Japan's two biggest automakers, Toyota (NYSE: TM ) and Honda (NYSE: HMC ) , already have a substantial presence there. Even though the Japanese disasters hit them hard, they're still eagerly pursing expansion in emerging markets.
The Foolish bottom line
Despite the challenges of rising oil prices, global economic growth is expected to land around 3.5% this year. That rising tide should also lift the auto industry. Although supply constraints may cause a few production shortages, I still think Ford is well-equipped to combat this potential problem. With a strong international presence already, and ambitious plans for emerging markets such as China and India, Ford looks well -laced to boost both its top and bottom-lines and carry its first-quarter success through the end of the year.