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Ford Got Hammered in China in 2019. Is a Turnaround Possible?

By John Rosevear - Jan 14, 2020 at 4:05PM

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Has Ford finally hit bottom?

Ford Motor (F 3.68%) said that its sales in China fell 14.7% in the fourth quarter, to 146,473, as the company scrambled to overhaul its product lineup amid a protracted sales slump.

For the year, Ford's sales in China were down 26.1% from a rough 2018 result. 

The raw numbers

Ford no longer releases model-by-model sales numbers for China. But the company did share a few key figures for the fourth quarter and full year. 

  • Sales of Ford-brand vehicles, including imports, totaled 83,336 vehicles in the fourth quarter, down 18.8% year over year but up 7.6% from the third quarter of 2019.
  • For the full year, Ford-brand sales were down 34.4% from 2018
  • Lincoln sold 12,937 vehicles in the fourth quarter, down 17.6% from the fourth quarter of 2018 but up 11.4% from the third quarter of 2019. 
  • For the full year, Lincoln sales were down 15.7% from 2018.
  • Sales of the JMC-brand trucks produced by Ford's joint venture with Chinese truck maker Jiangling Motors fell 6.2% in the fourth quarter from a year ago, to 50,200. That's an increase of 19.5% from the third quarter of 2019.
  • For the full year, JMC-brand sales were down 9.3%.

Key points from Ford's fourth-quarter China report

  • Ford launched an all-new version of the compact Focus in China late last year. Sales of the Focus were up 7% in the fourth quarter from a year ago.
  • The Ford Territory, a lower-cost China-only model introduced earlier this year, has been a modest success: It's now the brand's best-selling SUV in China, with 42,669 sold in 2019.
  • Sales of the Ford Transit commercial-van family rose 10.6% in the fourth quarter from the year-ago period. 
  • Ford began China deliveries of the all-new Lincoln Aviator SUV in December. Early demand has been strong. 
  • Sales of Lincoln-brand SUVs as a group were down in 2019, but the big Navigator continued to do well: Sales rose 32% for the year. 
  • Ford's sales in Taiwan rose 50% in the fourth quarter and were up 25.2% for the year, driven by strong demand for the new Focus. Taiwan is a small market but a fairly affluent one, long dominated by Japanese and German brands: Ford's 2019 market share (about 4.7%) represented a strong performance. 
A silver Ford Territory, a sleek compact crossover SUV.

The small, low-cost Ford Territory is now the Blue Oval's best-selling SUV in China. Image source: Ford Motor Company.

What Ford's management had to say

Anning Chen, CEO of Ford Greater China (which includes China, Hong Kong, and Taiwan) said that Ford's 2019 sales decline in China was felt disproportionally in value segments. He said that Ford's market share in "high-to-premium" segments has now stabilized, thanks to good results for newer products. That trend should continue into 2020 as Ford launches the new Ford Escape and Lincoln Corsair SUVs in China, but Chen warned that he expects the market to continue to be a difficult one for Ford. 

"The pressure from the external environment and downward trend of the industry volume will continue in 2020," Chen said. "We will put more efforts into strengthening our product lineup with more customer-centric products and customer experiences to mitigate the external pressure and improve dealers' profitability."

When will Ford turn it around in China?

Here's some larger context for Chen's remarks: Ford's wholesale shipments in China have dropped sharply since 2017, and so far there doesn't seem to be a path back. 

A bar chart showing that Ford's wholesale shipments to dealers in China rose steadily from 2008 through 2016, dipped slightly in 2017, and then fell sharply in 2018 and 2019.

Data source: Ford Motor Company. Chart by author. Chart shows wholesale shipments from Ford and its joint ventures with Chinese automakers. 2019 figures were estimated from Ford's wholesales through the first three quarters plus retail sales from Q4; Ford will report full-year wholesale totals on Feb. 4. 

It's not that the company hasn't been trying. Ford recognized that its China operation was in trouble in late 2017, when it announced a turnaround plan that included a long list of new products, more local manufacturing, and an overhaul of the company's dealer network. 

That work has been ongoing, and there have been some signs that it's having an effect. Ford's loss in China through the first three quarters of 2019 narrowed considerably from the same period in 2018, and new models like the Territory, the latest Focus, and (most recently) the Aviator have sold fairly well. Costs are down, dealer inventories have been reduced to reasonable levels, and more new products are on the way.

But all that said, auto investors should be realistic: As of right now, it still looks as if Ford faces a long and difficult road to recovery in China. 

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