These days the automotive industry is reaching saturation in the U.S. and Europe, but China continues to be the promised land for future growth. Ford (NYSE:F) was a late entry into China and trails crosstown rival General Motors (NYSE:GM) by a long shot. The good news is that Ford continues to set company records in the region and plans to catch up to the market leaders. Let's take a look at how lucrative this market could be and what speed bumps could stop Ford from catching its rivals.
Consider that last year automakers sold 19.3 million vehicles in China, almost 5 million more than here in the U.S., and some of the more optimistic projections say that number could swell to 30 million annually by the end of the decade. That's some serious growth; it would be nearly the same amount that all automakers sold in Europe last year.
For the fourth month in a row Ford set a sales record in China, hitting 71,000 wholesale units in August for a 46% increase over last year. Year-to-date sales topped 551,000, which is up a significant 50% from the same time period last year.
Ford's breadwinner in the region, the Focus, again drove sales during August. The popular ride sold nearly 31,000 wholesale units, good for a 21% increase. Even better is its year-to-date sales, up 62% to nearly 250,000 wholesale units sold.
Sales with Ford's joint ventures in China are also showing impressive growth. Its passenger car joint venture, China Changan Ford Automobile, has seen a 70% increase in year-to-date sales to 394,000, versus last year.
This is all a part of Ford's goal to double its market share in China to 6% by 2015. It's well on its way to reach the goal, but are there any speed bumps that could slow the Blue Oval down?
The biggest problem with such potential growth in vehicles in China is air pollution, and that could increase government regulations that would slow vehicle sales. Consider that pollution readings in Beijing peaked at a reading of 755 on the air quality index; anything above 400 is considered hazardous for all, according to USA Today.
However, that negative could become a positive with foreign automakers, which are used to the more stringent regulations in the western world. That could keep Chinese automakers in the background for a majority of the sales growth during this decade.
Everything is in place for Ford to accomplish its goal of 6% market share by 2015, and if things go well don't be surprised to see that goal reached early. In addition to Ford launching 15 new models in the region by mid-decade, sales of Japanese automakers have plunged in China over the last nine months and have been very slow to recover. Ford has pounced on this opportunity, and as it continues to release popular vehicles in hot segments, we'll continue to see Ford set monthly records in the region.