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Strong sales pace by Ford in China continues

  • Ford (F +0.3%) reports sales in China rose 35% to 549,256 for the first six months of the year.
  • The automaker saw sales in June increase 17% to 87,783 on broad demand across models.
  • Ford sells cars in China through both Ford China and Jiangling Motors.
Comments (8)
  • Tdot
    , contributor
    Comments (4913) | Send Message
     
    Hmm - does 17% for the month, but 35% year to date indicate the start of a leveling-off process?
    7 Jul 2014, 10:00 AM Reply Like
  • cbroncos
    , contributor
    Comments (1261) | Send Message
     
    I doubt we will see a leveling off process in China for quite a few years. The 500 dealerships that they opened recently were in smaller cities where Ford was not in that market. That should keep the growth continuing. Also more cars will be offered soon and that will help as well.

     

    One question - What will 1 million sales in China this year mean for earnings?
    7 Jul 2014, 10:23 AM Reply Like
  • Tdot
    , contributor
    Comments (4913) | Send Message
     
    But if it is not a normal leveling-off on wholesales as the China market stabilizes, then a reduction in growth by half suggests something else is wrong. What else could it be?

     

    If a month's sales fall off the pace for the year, it suggests market exhaustion, supply or demand issues, or some sort of market correction. Is it seasonal? Something structural? Newly imposed limitations on new vehicle registrations?

     

    Based on the mix (mostly smallish cars, crossovers, and vans) and the level of investment required in the Chinese, probably $1-2k per vehicle would be a good guess, before taxes and splitting 50-50 with the partners.

     

    In the 2Q the pre-tax earnings were nearly $300M, suggesting a pace of around $1.5B before taxes.
    7 Jul 2014, 11:50 AM Reply Like
  • cbroncos
    , contributor
    Comments (1261) | Send Message
     
    How many overall sales are there in China? I see estimates of 20-21 million per year. However China has almost 4 times as many people as the US so the market is so much bigger. Therefore growth may continue for many years as more and more Chinese people acquire the money to buy a car.
    7 Jul 2014, 02:52 PM Reply Like
  • Tdot
    , contributor
    Comments (4913) | Send Message
     
    Still doesn't explain why Ford's June sales increase was only half the year-to-date rate. Something's not right, and falling off the pace, suggesting that something is leveling off, even if it is only a short term setback. The numbers don't lie.

     

    January: Up 53%
    February: Up 67%
    March: Up 28%
    April: Up 29%
    May: Up 32%
    June: Up 17%
    7 Jul 2014, 03:24 PM Reply Like
  • PoliceCarSam
    , contributor
    Comments (22) | Send Message
     
    Tdot,
    Don't get too hung up on June numbers. Like they tell us here in the USA, there were only 4 selling Saturdays this year vs. 2013! LOL. One doesn't get distracted by a month of sub-super-stellar sales results. Look at the YTD increases, which are phenomenal. In any established, long-time business you want to look at, if you posted a 17% Year-Over-Year sales increase you would be toasting and drinking yourself silly at this point. Hold on for a great ride. Every great story has a few bumps in the road, and this one is not different, but better than most!
    7 Jul 2014, 08:58 PM Reply Like
  • Tdot
    , contributor
    Comments (4913) | Send Message
     
    If the number of Selling Saturdays had anything to do with it, it would have affected the whole market. Did it?

     

    Well maybe. According to Bloomberg, the China market was up only 14%, so Ford was at least slightly above average. http://bloom.bg/1vVwAQG

     

    Still waiting to see how Ford performed in terms of market share in China in June, compared to the first 5 months.
    8 Jul 2014, 06:11 AM Reply Like
  • crazty4tennis
    , contributor
    Comments (801) | Send Message
     
    Terrific for Ford! It's time this domestic auto maker start making positive headways in a competitive market.
    7 Jul 2014, 12:13 PM Reply Like
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