Ford Motor Company's Sales in China Surged, but Can It Outpace Rivals in 2014?

Can Ford continue to hold off Toyota and Honda as they rebound in China due to the weakened yen?

Feb 12, 2014 at 4:30PM

Ford's HQ. Source: Ford.

When it comes to profits at America's second-largest automaker, Ford (NYSE:F)is a bit of a one-trick pony. It generates the vast majority of its revenue, and even more of its profit, from North America. However, that appears set to change quickly, and management is eyeing a substantial opportunity in China. Ford's operations in the nation have been transforming quickly, but the company has much ground to make up on certain competitors. The good news is that the Blue Oval started the year off on the right foot in January, but can the company hold off the big Japanese automakers, who are on the rebound in China?

By the numbers
Last month, Ford's wholesale units in China nearly reached 95,000. as you can see in the chart below, Ford has consistently grown its sales in this important auto market:

Graph by author. Source: Ford's monthly sales reports.

The surge in sales was led by Ford's passenger car segment which accounted for more than 72,000 vehicles -- a 63% improvement from January 2013. Of that surging segment, Ford's Focus was the clear leader; it reached sales of more than 36,000 units and continues to be the top-selling nameplate in the passenger market in China, according to IHS Automotive.

Another great sign for investors is the strong demand for the newer Mondeo (Fusion) nameplate, which sold nearly 11,000 units in January -- 51% more than the previous January. Thus far, Ford's new vehicle launches in China have seen great responses and strong demand from consumers, which will undoubtedly help the automaker meet its goal of doubling its market share from 3% to 6% in 2015.

With such a strong start to 2014, I fully expect Ford to top more than 1 million vehicles sold in China for the first time. In fact, last year Ford's sales in China surpassed those of its Japanese rivals Toyota (NYSE:TM) and Honda (NYSE:HMC), both of which it had trailed for much of the last decade.

Figures for full-year 2013 deliveries. Source: company-specific sales reports.

While topping Japanese rivals is a big accomplishment, Ford still has plenty of work left if it plans to catch its crosstown rival General Motors (NYSE:GM), which has a sizable lead due to getting into the market much earlier. The good news for Ford is that while GM is also setting record deliveries, it's market share and profitability in the region declined slightly last year.

Graph by author. Source: General Motors' Q4 presentation.

Looking ahead
Ford has changed its entire corporate culture and global operating strategy in the eight years since CEO Alan Mulally took the reins. While Ford is still catching up in China, its operations are transforming quickly and management remains optimistic about the opportunity in the Asia-Pacific region, where it has six major facilities under construction. That region represented about 8% of revenue last year but is expected to contribute as much as 40% by the end of the decade -- a huge win for investors if Ford can execute its new vehicle launches to capture this growth.

Investors would be wise to watch whether Ford can continue to take market share from General Motors. It will also be important to watch how Japanese automakers take advantage of a weakened yen, and how Chinese consumers are coming back around to their vehicles after a yearlong boycott of Japanese products due to a territorial dispute between the two nations. If Ford's new vehicles continue to be a popular option with Chinese consumers, and the company gains market share on GM while expanding its lead over Japanese rivals -- a tough task, no doubt -- 2014 will be a huge step in the right direction for Ford and its investors. 

Don't miss out on the global automotive rebound
U.S. automakers boomed after WWII, but the coming boom in the Chinese auto market will put that surge to shame! As Chinese consumers grow richer, savvy investors can take advantage of this once-in-a-lifetime opportunity with the help from this brand-new Motley Fool report that identifies two automakers to buy for a surging Chinese market. It's completely free -- just click here to gain access.

Daniel Miller owns shares of Ford and General Motors. The Motley Fool recommends Ford and General Motors. The Motley Fool 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.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't 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.

©1995-2014 The Motley Fool. All rights reserved. | Privacy/Legal Information