Ford Motor Company Continues to Drive Sales in China to New Heights

Here's a look at Ford Motor Company's healthy sales increase in China last month, and at why they are expected to climb higher.

May 12, 2014 at 8:15PM

Ford's Focus continues to drive company sales in China. Source: Ford Motor Company.

China is already the world's largest automotive market, and its vehicle sales aren't slowing down anytime soon. Projections have vehicle sales in China topping 30 million at the end of this decade -- that would be nearly the equivalent of the next two largest markets combined. That's why automakers are scrambling over themselves to grow market share and brand loyalty in the country -- every automaker wants a big piece of this growing profit pie. Ford Motor Company (NYSE:F) is working to make up the ground between itself and its crosstown rival General Motors (NYSE:GM) in China, and the folks at the Blue Oval posted another strong month of sales in April.

Gaining ground
Let's get the sales figures out of the way first, before putting the big picture into focus. Last month, Ford China sold 96,829 vehicles, which was a substantial 29% improvement from last year's April. Last month's performance helped push year-to-date sales figures up to 368,150 vehicles, which is a 46% improvement compared to last year.

Source: Ford Motor Company's monthly sales reports.

Ford's strong performance in China last month was driven by sales of the Focus, Kuga (Escape), and Mondeo (Fusion). Sales improved 11% and 16% for the Focus and Kuga, respectively, to more than 34,000 and 11,100 units. Sales of the Mondeo were up an astounding 415% from last April, with sales nearly reaching 10,500 units; Mondeo sales year to date have more than doubled to nearly 40,000 vehicles.

There's no question that Ford's sales in China are expanding rapidly and will continue to do so as management completes its strategy of launching 15 models in the region from 2012 to 2015. Last quarter, Ford's market share reached a company record 4.5% in China and is on schedule to reach its goal of 6% in 2015.

While those are definitely achievements for investors to cheer, Ford still trails rival General Motors by a large margin in the world's largest automotive market. General Motors' market share is roughly 14% in China, and the company remains in a race with Volkswagen to be the best-selling foreign automaker in the country.

Profitability surges
Despite trailing General Motors in market share, Ford's profitability in its Asia Pacific region -- which is heavily dominated by Ford's performance in China -- was a bright spot in the company's first-quarter results. Ford reported a pre-tax profit of $291 million, which was a significant $319 improvement from last year's net loss. Ford's great first quarter in the region was driven by Ford's new vehicles and higher royalties from its joint ventures in China. Management now expects its Asia Pacific region to rope in higher profits for the full year compared to 2013.

"We are gratified that customers continue to respond to the world-class Ford cars and utilities that we are offering in China," said John Lawler, president, Ford China, in a press release. "Together with our dealer partners, we are committed to continuing to serve our customers with the vehicles that best deliver quality, safety, fuel efficiency and smart technology."

If Ford investors want to realize market-beating returns for the remainder of the decade, the Blue Oval will need to increase market share and revenues in China while focusing on bringing more dollars to the bottom line. On that note, the good news is that Ford continues to improve its selling strategy in China, which will set the company up for more success in the years ahead.

No longer are the folks at the Blue Oval developing an American vehicle that sells overseas; rather, Ford is developing vehicles to sell in China with its consumers in mind. Ford's Everest concept, a midsize off-road SUV, is expected to sell well in China and will never touch American soil. Ford also showed off its global Mustang as well as its Escort at the Beijing show, and the company is gearing up to launch its Lincoln luxury line in China. All of these launches bode well for Ford's sales for the remainder of the decade and should push sales, revenues, and profits higher in the years to come.

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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.

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