Why Ford's China Sales Are Crashing

Ford Motor Company (NYSE: F) said that its sales in China fell 18% in January, a difficult start to a year in which Ford hopes to reposition its sagging business in the world's largest new-car market." data-reactid="11">

Ford Motor Company (NYSE: F) said that its sales in China fell 18% in January, a difficult start to a year in which Ford hopes to reposition its sagging business in the world's largest new-car market.

A bronze-colored Ford Focus compact sedan on a Chinese city street.

Not long ago, Ford's Focus was one of China's best-selling cars. Things have changed: Focus sales were down 44% in January. Image source: Ford Motor Company.

While rivals gained, Ford lost ground

Ford's 18% year-over-year decline happened in a month when it should have had an easy comparison: In 2017, the Chinese New Year holiday fell in January. Typically, Chinese businesses close for several days around the holiday; few cars are sold during that period. " data-reactid="25">Ford's 18% year-over-year decline happened in a month when it should have had an easy comparison: In 2017, the Chinese New Year holiday fell in January. Typically, Chinese businesses close for several days around the holiday; few cars are sold during that period.

But this year, the holiday falls on Feb. 16. For most of the global automakers with major operations in China, that meant an easy year-over-year sales gain in January as the overall market rose 11%.

Automaker

January 2018 Sales

Change vs. January 2017

General Motors (NYSE: GM)

367,712 14.5%

Volkswagen (VW brand only)

296,900 9.7%

Nissan 

135,037 13.1%

Toyota (NYSE: TM)

127,500 25%

Honda (NYSE: HMC)

126,174 10.9%
Ford  75,990 (18%)
Overall China light vehicles 2,456,200 11%

Data sources: The automakers, Automotive News

Ford-brand vehicles had an especially tough time in China in January. Sales at Changan Ford (CAF), a joint venture that builds and sells Ford-brand cars and SUVs, fell 29% to 46,888. Sales of imported Ford-brand vehicles fell 36% to 1,300.

Ford's commercial-vehicle joint venture, Jiangling Motors (JMC), fared better with a 13% increase to 22,794 units sold, and the Lincoln luxury brand's sales rose 7% to 5,008, but those gains were too little to make up for the steep decline in sales of Ford-brand vehicles." data-reactid="31">Ford's commercial-vehicle joint venture, Jiangling Motors (JMC), fared better with a 13% increase to 22,794 units sold, and the Lincoln luxury brand's sales rose 7% to 5,008, but those gains were too little to make up for the steep decline in sales of Ford-brand vehicles.

What's going on?" data-reactid="32">What's going on?

Ford's China operation needs work

It has been clear for a while that Ford's product-replacement cycle >hasn't been keeping up with the fast-moving Chinese market. Ford mainstays like the Focus compact sedan and Edge SUV did very well in the first couple of years after they were introduced, but sales have fallen off quickly. The problem: With so many automakers doing business in China, Ford's products have become "old news" faster than expected. " data-reactid="34">It has been clear for a while that Ford's product-replacement cycle >hasn't been keeping up with the fast-moving Chinese market. Ford mainstays like the Focus compact sedan and Edge SUV did very well in the first couple of years after they were introduced, but sales have fallen off quickly. The problem: With so many automakers doing business in China, Ford's products have become "old news" faster than expected.

One factor in Ford's stumble has been a dearth of senior executives with deep China expertise. Ford began addressing that by hiring a Chinese-speaking American executive, >Jason Luo, to run its China operation last August. Luo went to work quickly: He and Ford CEO Jim Hackett announced a >China turnaround plan in December that included a series of sensible changes, including more local production and an expanded range of Ford-brand SUVs for China. " data-reactid="35">One factor in Ford's stumble has been a dearth of senior executives with deep China expertise. Ford began addressing that by hiring a Chinese-speaking American executive, >Jason Luo, to run its China operation last August. Luo went to work quickly: He and Ford CEO Jim Hackett announced a >China turnaround plan in December that included a series of sensible changes, including more local production and an expanded range of Ford-brand SUVs for China.

But Luo abruptly left the company in late January, calling Ford's effort into question. His boss, Ford Asia Pacific chief Peter Fleet, said that Luo's departure wasn't related to his performance at Ford:" data-reactid="36">But Luo abruptly left the company in late January, calling Ford's effort into question. His boss, Ford Asia Pacific chief Peter Fleet, said that Luo's departure wasn't related to his performance at Ford:

Jason offered his resignation for personal reasons that predate his time at Ford. Ford accepted Jason's resignation as the right way for him and the Company to proceed. Jason's decision was not related to the business strategy or performance of Ford China, which remains robust, with a bright future ahead. We continue to act in the best interest of our company, employees, and stakeholders.

For the moment, Fleet is running Ford China while the company decides on Luo's replacement. But it's hard to escape the sense that Ford's operation in China, which looked so successful just a couple of years ago, has fallen into disarray. " data-reactid="39">For the moment, Fleet is running Ford China while the company decides on Luo's replacement. But it's hard to escape the sense that Ford's operation in China, which looked so successful just a couple of years ago, has fallen into disarray.

More From The Motley Fool

John Rosevear owns shares of Ford and General Motors. The Motley Fool owns shares of and recommends Ford. The Motley Fool has a disclosure policy.

Source : https://finance.yahoo.com/news/why-ford-apos-china-sales-170400267.html

Thank you for visit my website
Why Ford's China Sales Are Crashing
Why Ford’s Big China Wager Is Faltering
Why Ford's China Sales Are Crashing
The Morning Ledger: Why Ford’s Bet on China Has Yet to Pay Off