A mixed bag of economic conditions around the world has meant a mixed bag of sales results for Ford
While the U.S. auto market has been trending up as of late, its longtime sluggishness has led Ford CEO Alan Mulally to place the company's hopes for big sales growth on an expansion of its operations in key emerging markets.
But while its Russian operation has done well, its results in China have been more mixed. And the most recent results were positively disappointing.
Success in St. Petersburg
Ford has a nice little success story quietly building in Russia. Sales of key models have been gathering steam: The Focus, which Ford builds locally in a plant near St. Petersburg, was named Russian Car of the Year in its segment and other models, like the Mondeo sedan (a European model similar in size to the Fusion) have also started to sell well. Ford's total sales in Russia in the first quarter of 2012 were up 30% over year-ago results, led by the Focus, with Ford also reporting a surge in interest in its Transit commercial van.
Still, at a grand total of just more than 27,000 vehicles in three months, Ford's sales in Russia are barely a drop in its global bucket. That doesn't mean that Ford's investment in the country isn't a big deal -- Russia's car market is still tiny, but won't stay tiny forever. Ford's strong position in the country's auto market and growing brand recognition is likely to pay off handsomely as the nation's demand for new cars grows.
Right now, the Russian market pales in comparison with China's, where rival General Motors
But Ford's China efforts have so far seen mixed results.
Investing big despite a rough quarter in China
GM and VW spent the last decade-plus building their brands in China, but for most of that time Ford was largely focused (so to speak) elsewhere. Mulally has worked hard to make up for lost time in the past few years, investing big in a major joint venture and building an elaborate production complex in Chongqing.
But while the company has promised 15 new vehicles for China by 2015, current sales have been hit-or-miss. After solid results last year, Ford China's sales were down 14% in the first quarter versus the year-ago period.
That runs counter to trend, but it's not a one-month blip. It's true that the Chinese auto market has been sluggish recently, but most of the global automakers with a significant Chinese presence were able to post solid gains in the first quarter. Ford's decline shows that the Blue Oval still has a ways to go in the still-evolving Chinese auto market.
But it's not for lack of investment. Ford recently announced a $600 million expansion of its facilities in Chongqing, and expects to be able to make 950,000 vehicles a year in China by 2015. That's less than half of what GM sold last year, but it's still a significant boost: Ford will need to roughly double its current sales pace to make that investment worthwhile.
Ford officials say the company's aggressive expansion plans are on schedule, and -- at least in public -- haven't seemed too concerned about the sales decline in China. Indeed, it may be premature to worry: Ford's current lineup has proved to be solidly competitive in other markets, and it's a good bet that it'll do just as well in China over time.
But given the company's -- and Ford investors' -- high hopes for growth in China, it'll bear careful watching.
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Fool contributor John Rosevear owns shares of Ford and General Motors. Follow him on Twitter at @jrosevear. Motley Fool newsletter services have recommended buying shares of Ford and General Motors and have recommended creating a synthetic long position in Ford. Try any of our Foolish newsletter services free for 30 days. 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.