As its rivals enjoy strong gains in a burgeoning Chinese auto market, Ford Motor Co. is failing because it was late to this game.
Ford’s sales in China, the world’s biggest auto market, plunged nearly 30 percent in the first two months of this year--a decline that came despite an overall rise of vehicle sales in China.
Ford sold 75,990 vehicles in China in January, at a time when the wider Chinese auto market was up 11.6 percent.
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Over the same period, Toyota Motor Corp saw a 24.5 percent rise. General Motors has seen gains, as well, with the auto giant and its joint ventures delivering more than 367,000 vehicles in January for a 14.5-percent jump over the year before.
Cadillac set a new monthly sales record in China, and Chevrolet recorded its highest monthly growth in almost three years.
Ford’s management is blaming low February sales in part on a short working month thanks to the late Chinese New Year holiday. But experts cite a number of other reasons for the record underachievement.
The most glaring problem is that Ford got to China late, only seriously ramping up its operations there in 2012, after its rivals already had a solid footprint in the market. And since then, it’s relationships with its partners—Changan Automobile Group and Jiangling Motors Group (JMC)--have been rocky.
Those relationships, which Ford is now trying to repair, are mired in distrust and have had a negative impact on sales. The most recent distrust largely stems from an effort by Ford to streamline the partners, brands and distribution networks.
From Changan-Ford’s perspective, Ford “often tries to intrude far into our territory; they’re interventionist and are most aggressive among global automakers at trying to have their say on how we run our day-to-day activities”, media cited one Changan official as saying.
The fast-paced nature of the Chinese market has also tripped up Ford, some say. According to Reuters, Ford’s core products are dated, and new models won’t be on the market until the first quarter of 2019. Competition is stiff in this market, and Ford is playing catch-up on three wheels. Related: China's Crude Futures Launch With 10 Billion Yuan Traded In First Hour
The American auto giant is hoping that its China 2025 plan will help it get things in order. The newly announced overhaul includes new products, increased local production and improved relations with its partners.
By 2025, Ford plans to boost its China revenue by 50 percent from 2017 levels, largely by launching new or redesigned products. To do that, it plans to introduce more than 50 new vehicles in China by 2025, including eight all-new SUVs and at least 15 electric vehicles from Ford and Lincoln.
And China has never been more important. U.S. sales are slowing and share prices have been beleaguered at best.
On 1 March, Ford released U.S. sales data showing a 6.9-percent drop in February sales to 194,132 vehicles, with fleet sales down 3.8 percent.
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It was the second month in a row to see a sales drop. January sales showed a 6.6-percent year-on-year decline.
By Jan Bauer for Safehaven.com
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