Ford Blows Past Toyota and Honda in China

Sales boomed in 2013, but Ford's push to expand isn't done.

Jan 6, 2014 at 5:59PM

By most measures, Ford (NYSE:F) had a pretty good year in 2013. 

U.S. sales were up 11%, enough to give Ford an added half-point of market share -- more than any of its rivals. Strong demand for Ford's F-Series pickups helped make that gain happen, and helped keep Ford's profits strong, too.

Images

Ford's Focus was again among China's best-sellers in 2013. Photo credit: Ford Motor Co.

Ford also made progress outside of North America. Ford gained some ground in Europe's tough retail market, and its losses in that region narrowed.

But China is where Ford really shined last year. 

Big year for Ford in this huge market
Ford said on Monday that its sales in China were up a whopping 49% in 2013. That gain gets even more impressive when you consider that 2012 was also a great year for Ford in China.

Ford China sold 935,813 vehicles last year, the company said in a statement. That was more than Toyota (NYSE:TM) and Honda (NYSE:HMC), though it's still a long way from the more than 3 million sold by the twin titans of China's auto market, General Motors (NYSE:GM) and Volkswagen (NASDAQOTH:VLKAY)

As was the case in 2012, Ford's charge in China was led by the compact Focus. Ford posted more than 400,000 wholesale deliveries of the Focus in China last year, enough to make it one of China's best-selling cars. (Or, really, two of China's best-selling cars: Ford sells two different cars called "Focus" in China, but counts the sales as a single "nameplate.")

Ford

The Mondeo is China's version of the Ford Fusion. It was launched at the end of summer, and racked up more than 35,000 sales in 2013. Photo credit: Ford Motor Co.

Ford also stepped up its imported offerings. Ford had previously imported the Edge SUV to China from the U.S. Last year, it added the Explorer and the high-performance Fiesta ST and Focus ST to its offerings imported from North America. But the Focus wasn't the only success story for Ford in China, as the company added several other models to its lineup in 2013. The Kuga (China's version of the Escape), the Mondeo (China's version of the Fusion), the refreshed Fiesta, and the EcoSport (a subcompact SUV based on the Fiesta's platform) all arrived at Chinese Ford dealers during the year. All have done well, particularly the Kuga, which sold almost 96,000 examples in 2013.

That's all good stuff. But what does this mean in terms of Ford's ongoing plan for China?

Ahead of schedule on an aggressive plan
Ford said back in 2011 that its goal was to add 15 new models to its Chinese lineup and get to a 6% share of the market by 2015. The New Focus was the first of those, launched in April 2012. Seven more -- the vehicles listed above -- were added in 2013. More will come over the next couple of years, including the next-generation Edge and the all-new 2015 Mustang.

Meanwhile, Ford's market share in China might be surging past the company's own aggressive targets. Ford had just 2.5% of the Chinese market at the beginning of 2012, but it's well more than 4% now -- ahead of plan. 

Meanwhile, the company's aggressive expansion plan continues. New dealers are being added at a high rate, several factories are under construction, and more new models are on the way. 

The upshot: Ford's biggest expansion in decades should boost the stock in time
Ford hasn't posted big profit numbers from Asia yet, because it's still investing aggressively in expansion. Those investments have mostly offset the money it has been made in Asia over the last couple of years. 

That expansion effort will cost Ford almost $5 billion by the time it's done, but it should leave Ford in a good position to book big profits from the region for years to come. In fact, by 2016 or so, Ford could be making well more than $1 billion a year from China and the other Asian markets. (Some analysts think it could be $2 billion a year.)

That's a key part of why I think Ford stock remains a buy for the long-term investor: Even if the company simply holds its ground in North America, the expansion effort in China will add significant profits to the Ford's bottom line over the next few years.

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Fool contributor John Rosevear owns shares of Ford and General Motors. You can connect with him on Twitter at @jrosevear. The Motley Fool recommends General Motors. It recommends and owns shares of Ford. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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