Ford Motor Company Looks to Crush Rivals in Key Future Markets

Ford Motor Company is planting seeds for success over the next two decades. Here's what investors need to know.

Jul 17, 2014 at 3:15PM

Fiestaworldtour
Investors might overlook these emerging markets, but Ford definitely isn't. Source: Ford Motor Company.

During the darkest part of the Great Recession, it had become very evident that Detroit automakers had lost their way. Former Ford Motor Company (NYSE:F) Chief Executive Officer Alan Mulally knew he was facing a massive challenge in reviving the all but dead Dearborn automaker. Mulally's "One Ford" plan was simple: make appealing cars for Americans that will sell globally. As easy as that sounds, it's something Ford hadn't done successfully for years.

It's now very clear Ford has found its way again and is about to export its success abroad where it aims to crush rivals in key emerging markets that will be vital for long-term success.

Future bloodline
Currently, Ford and other major global automakers rely on the United States and China to drive the majority of their top- and bottom-line performances. While that will absolutely remain true for many years to come, especially as China's automotive market continues to boom, no global automaker can afford to overlook emerging markets that will become vital for success down the road.

Ford hasn't overlooked these markets; for a prime example, let's cover the automaker's evolving strategy in an often overlooked market: the Middle East and Africa.

America's second-largest automaker is planning to launch at least 25 new vehicles into its newly defined Middle East and Africa region by 2016. One of those might shock many Ford investors; the all new Mustang will be taking the trip abroad next year as it begins galloping onto the global stage.

The Middle East and Africa will also receive a new Focus next year, which continues to be the world's best-selling nameplate. The Middle East will also get Ford's Fusion this year and it will hit the roads in Africa in the following year.

Ford predicts the total Middle East and Africa car market to grow 40% by the end of the decade to 5.5 million vehicles. To help put that in perspective, with Ford's current 4.6% market share, that would generate 253,000 sales annually. However, it's not unreasonable to think that Ford's market share could double on the backing of new vehicle launches, by the end of the decade.

In addition to Ford's strategy to increase its market share in the Middle East and Africa, the automaker is looking toward India for a huge opportunity, and an opportunity that could develop sooner than investors would think.

Planting seeds
Consider that IHS Automotive, a global market information provider, expects India to become the world's third-largest automotive market as soon as 2016. If that prediction comes to fruition, that would have India jumping ahead of automotive markets in Japan, Germany, and Brazil -- though, it should be noted that IHS Automotive didn't consider Europe as a collective market.

Ecosport

Ford's EcoSport has been a hit in emerging markets. Source: Ford Motor Company

Both Ford and rival GM have much work to do in India. In May, Ford sold more than 12,200 vehicles in India which was a 105% increase compared to last year's May. While that was far ahead of the 4,865 vehicles GM sold in May, it's a drop in the bucket compared to Ford's sales in mature markets.

With that said, Ford has proven it can send sales soaring in new markets, and quickly. For instance, just consider how far the automaker has come in China in just three years.

Furthermore, Ford's strategy in India goes far beyond its sales figures. Ford plans on India becoming its export hub for the Asia Pacific region as it undergoes its biggest industrial expansion there in five decades. Ford's exports out of India grew nearly 60% in June, compared to last year, as demand for its small vehicles continues to increase.

In fact, Ford expects demand for small vehicles to account for more than 60% of the global vehicle market by the end of this decade and more than half of that demand will be generated in the Asia Pacific and Africa regions. Ford's exports out of India will be key to capitalize on the surrounding regions' growth potential, as well as making its global operations more efficient.

Bottom line
Ford's strategy in its Middle East and Africa region will be enough to move the needle for profits during conference calls over the next couple of years, and warrants investor attention as the development takes place. While Ford's sales in India won't be moving the needle anytime soon, its export strategy is planting the seeds for major success over the next decade or two -- something long-term investors should be very happy about.

What technological shift is Ford calling "fantastic"?
A major technological shift is happening in the automotive industry. Most people are skeptical about its impact. Warren Buffett isn't one of them. He recently called it a "real threat" to one of his favorite businesses. An executive at Ford called the technology "fantastic." The beauty for investors is that there is an easy way to invest in this megatrend. Click here to access our exclusive report on this stock.

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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