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Here's a Glimmer of Hope for Ford Investors

By Daniel Miller – Jul 9, 2020 at 2:22PM

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Sales data overseas could provide insight for possible U.S. recovery.

For investors who have watched COVID-19 put the global automotive industry through pain, whether it's suppliers, manufacturers, dealerships, or many others, there's a glimmer of hope that automakers could recover from China's slump sooner than originally believed. That's great news because not only is China a large chunk of sales for Ford (F 2.36%) and General Motors (GM 0.14%), it could give insight about a similar recovery here in the U.S. markets in a few months.

Ford sold nearly 159,000 vehicles during the second quarter. That result was a 3% gain over the prior year's second quarter and a staggering 78% increase compared to the first quarter of 2020 when the initial impacts of COVID-19 sent sales plunging. Ford's transit commercial vehicles grew 60.9% compared to the prior year, and Lincoln luxury vehicles gained 12%. Ford-brand SUVs also surged with sales topping 30,000 units, which was a robust 82.1% year-over-year gain. Despite GM's China sales declining 5.3% compared to the prior year, the largest Detroit automaker still dwarfs its cross-town rival in total sales volume, which reached over 713,000 units during the second quarter.

Three Ford vehicles in front of Chinese city background.

Image source: Ford Motor Company.

Ford China plans to build on the rebounding sales momentum as social restrictions continue to loosen by accelerating the launch of new products and tweaking local sales strategies. In fact, Ford launched the all-new Explorer in June, and sales topped 2,000 units in the first two weeks of availability. The quick rebound in demand is a great sign for automakers' results in the world's largest automotive market, and investors can hope we see similar rebound in the U.S. industry. Ford's second-quarter sales gain in China was the first quarterly gain in three years, which is great news for Ford, as the company once believed China would turn into a second pillar of profits standing next to its lucrative North American market, but that has faltered over the past few years.

Daniel Miller owns shares of Ford and General Motors. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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