Please ensure Javascript is enabled for purposes of website accessibility

2 Important Markets Ford Motor Company Investors Overlook

By Daniel Miller – Feb 12, 2014 at 6:31PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

It's easy for Ford investors to keep track of the successes and failures in the company's largest markets, but overlooking the performance these two smaller yet vital markets could be a mistake.

It's easy for investors of a global automaker like Ford (F 0.36%) to overlook smaller and still-emerging markets -- but that could be a mistake. It's difficult for smaller regions to compete with headlines about China, where Ford delivered a 53% surge in sales last month to nearly 95,000 vehicles. That said, the big story in China is how late Ford was to the market, and that's why investors would be wise to keep an eye on emerging markets and Ford's progress in getting into the action faster. Here are two markets typically overlooked by Ford investors and reasons why they matter.

Ford's Figo looks to play a big role in India sales. Source: Ford

India
Many investors overlook India's automotive market. Many may not know that it declined last year for the first time in 11 years. Most investors also don't realize that India's automotive market is the sixth-largest in the world and has a lot of potential remaining -- India is one part of Ford's Asia-Pacific region, which is expected to represent 40% of company revenues by the end of the decade, compared to 8% currently.

Last month, in India, Ford managed to sell 10,634 vehicles with its domestic wholesales and exports combined -- a 49% increase from January 2013. A big story for investors to really watch is Ford's export figures, which increased from 1,053 last January to just under 4,000 last month. The folks at the Blue Oval are strategically using India as an export hub for many regions in the Eastern Hemisphere, which could turn into a huge success story over the next decade.

In addition to its export plan, Ford has worked to build a sizable following inside the country and is aiming to attack India's most competitive segment: compact cars. That segment is expected to double in size to 2 million by 2018, and Ford's five-door Figo hatchback should help the company grow its market share and sales in India, sooner rather than later.

Success in U.K.
It's easy for investors to want to dodge the results coming out of Europe, it's quite the dismal situation and a continuous drag on profits. But when looking at specific markets, Ford's success in the U.K. is quite a different story and is often overlooked.

Last month Ford started the year off strong, beating overall market growth and increasing sales of its cars and commercial vehicles, compared to January 2013. The automaker's car sales in the U.K. were up 11% to 21,792 vehicles, and it extended its market share lead to 4.5 percentage points of share ahead of its nearest rival -- Ford's share of the market checked in at 14.1% in January.

Further, Ford took home the top two slots for best-selling vehicles last month with the Fiesta and Focus combining for more than 9,000 registrations -- double its nearest non-Ford competitor. Looking at Europe as a whole, the Fiesta sold nearly 300,000 vehicles last year which captured the top-selling small car for the second consecutive year.

While the U.K. is but one piece of the region, Ford's success with its smaller vehicles and gains in market share should give investors hope that as the company launches 25 new vehicles in Europe, over the next five years, it will help fuel a faster turnaround in one of the company's most difficult regions.

Final thoughts
While these markets are pieces of a larger region, both give insights into the bigger picture for Ford. One story Ford investors don't want repeated is the company's late start in emerging markets. Keeping an eye on India's growth, as well as Ford's export strategy, will play a huge role in the company's success overseas. In addition to progress in India, the U.K. remains a bright spot in a dismal European story. Ford has managed to keep demand for its smaller cars strong, and 43% of the company's sales last year in Europe were all-new or significantly refreshed models -- spelling a brighter future for average transaction prices and profits as the company plans to unleash a ton of new models in the coming years.

Daniel Miller owns shares of Ford. The Motley Fool recommends Ford. The Motley Fool owns shares of Ford. 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.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Ford Stock Quote
Ford
F
$14.08 (0.36%) $0.05

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
360%
 
S&P 500 Returns
118%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 11/26/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.