Ford Sets Another Record in the Promised Land of Growth

Ford's 2014 Focus ST. Photo credit: Ford Motor Company.

These days the automotive industry is reaching saturation in the U.S. and Europe, but China continues to be the promised land for future growth. Ford (NYSE: F  ) was a late entry into China and trails crosstown rival General Motors (NYSE: GM  ) by a long shot. The good news is that Ford continues to set company records in the region and plans to catch up to the market leaders. Let's take a look at how lucrative this market could be and what speed bumps could stop Ford from catching its rivals.

Lucrative growth
Consider that last year automakers sold 19.3 million vehicles in China, almost 5 million more than here in the U.S., and some of the more optimistic projections say that number could swell to 30 million annually by the end of the decade. That's some serious growth; it would be nearly the same amount that all automakers sold in Europe last year.

Company record
For the fourth month in a row Ford set a sales record in China, hitting 71,000 wholesale units in August for a 46% increase over last year. Year-to-date sales topped 551,000, which is up a significant 50% from the same time period last year.

Ford's 2014 Focus ST. Photo Credit: Ford Motor Company.

Ford's breadwinner in the region, the Focus, again drove sales during August. The popular ride sold nearly 31,000 wholesale units, good for a 21% increase. Even better is its year-to-date sales, up 62% to nearly 250,000 wholesale units sold.

Sales with Ford's joint ventures in China are also showing impressive growth. Its passenger car joint venture, China Changan Ford Automobile, has seen a 70% increase in year-to-date sales to 394,000, versus last year.

This is all a part of Ford's goal to double its market share in China to 6% by 2015. It's well on its way to reach the goal, but are there any speed bumps that could slow the Blue Oval down?

Environmental challenges
The biggest problem with such potential growth in vehicles in China is air pollution, and that could increase government regulations that would slow vehicle sales. Consider that pollution readings in Beijing peaked at a reading of 755 on the air quality index; anything above 400 is considered hazardous for all, according to USA Today.

However, that negative could become a positive with foreign automakers, which are used to the more stringent regulations in the western world. That could keep Chinese automakers in the background for a majority of the sales growth during this decade.

Bottom line
Everything is in place for Ford to accomplish its goal of 6% market share by 2015, and if things go well don't be surprised to see that goal reached early. In addition to Ford launching 15 new models in the region by mid-decade, sales of Japanese automakers have plunged in China over the last nine months and have been very slow to recover. Ford has pounced on this opportunity, and as it continues to release popular vehicles in hot segments, we'll continue to see Ford set monthly records in the region. 

There's good reason to believe that the most successful investors over the next few decades will be those with exposure to China's massive and growing population of domestic consumers. And there are few things that these consumers are likely to purchase with more enthusiasm than cars and trucks. In this brand-new free report, our analysts get out in front of this trend by identifying two automakers that are poised to surge along with China's middle class. If you want to be among the smart investors who get rich from this growing trend, then you'd be well advised to instantly download our free report on the topic by clicking here now.

Read/Post Comments (1) | Recommend This Article (4)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On September 06, 2013, at 1:34 PM, AmericanFirst wrote:

    Ford is doing great, but the headwinds are of concern, institutional players that are instrumental in driving stock prices, which many were also bailed out are sympathetic to GM and the government which has advantaged GM immensely over Ford with relieving them of $B's in future interest expense and layering that with $B's in future tax benefits.

Add your comment.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2625859, ~/Articles/ArticleHandler.aspx, 9/26/2016 1:49:03 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 2 days ago Sponsored by:
DOW 18,261.45 -131.01 -0.71%
S&P 500 2,164.69 -12.49 -0.57%
NASD 5,305.75 -33.78 -0.63%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

9/23/2016 4:01 PM
F $12.17 Down -0.01 -0.08%
Ford CAPS Rating: ****
GM $32.12 Down -0.27 -0.83%
General Motors CAPS Rating: ***