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Ford Motor Company (F): Can It Beat General Motors Company (GM) in China?

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There’s no doubt that Ford Motor Company (NYSE:F) has had a lot of success in China lately.

The latest Ford Focus, introduced in China last spring, has been a huge hit – big enough to make the Focus the world’s best-selling car in 2012, according to analysts at R.L. Polk.

But the Focus was just the first of a wave of new Fords set to come to China over the next few years. The Kuga SUV, a twin to the Escape sold here, arrived in February – and sales have already been strong.

Ford Motor Company (NYSE:F)

How strong? This strong: Ford’s sales in China are up 54% so far this year. In just a few short years, Ford Motor Company (NYSE:F) has gone from near-invisibility to outselling Toyota Motor Corporation (ADR) (NYSE:TM) in China.

But can Ford’s Chinese operation catch up to longtime nemesis General Motors Company (NYSE:GM), which has had a huge head start?

GM is already one of China’s giants
It’s a daunting proposition. In terms of total vehicle sales, General Motors Company (NYSE:GM) is the China market leader, with archrival Volkswagen close behind. GM had a commanding 15.6% share of the Chinese market last year, outselling Ford by more than six to one. VW was second with 14.5%.

But many of those sales aren’t “passenger vehicles”, they’re small commercial vans. General Motors Company (NYSE:GM) has a stake in a joint venture that makes inexpensive little commercial vans sold under the Wuling brand name. It’s a minority position, and it doesn’t make a ton of money for the General, but it comes with something GM values very highly – the right to count all of Wuling’s sales as GM’s.

But if you factor out the Wulings, it’s VW that looks like the top dog. According to LMC Automotive figures cited by Reuters, VW had 19.5% of China’s passenger vehicle market last year, to GM’s 10%.

But no matter how you slice it, catching up to General Motors Company (NYSE:GM) will be a daunting task for Ford. The Blue Oval had a 3% market share in China in 2012, about the size of Subaru’s presence here in the U.S. And while Ford Motor Company (NYSE:F) has already gained ground – the company had a 3.6% share in the first quarter of 2013 – it clearly has a long way to go to catch up to GM.

Ford Motor Company (NYSE:F) is investing big for major growth
That said, Ford has geared up to expand in a big way – but not in pursuit of GM, necessarily. Instead, the Blue Oval is in pursuit of profit growth. Ford has been investing big in new factories, new engineering centers, and infrastructure in China and other parts of Asia.

Despite that big investment – almost $5 billion – Ford’s Asian operation, the bulk of which is China, has been close to breaking even in recent quarters. That’s a point that Ford CEO Alan Mulally often highlights: If we’re breaking even while spending all that money now, he often says, think about how we’ll be doing once those factories are completed.

It’s also worth thinking about the fact that Ford’s sales are likely to grow considerably. Ford Motor Company (NYSE:F) Asia chief Dave Schoch said on Monday that Ford expects to have 6% of China’s auto market by 2016. That will come as Ford continues its huge new product push, dubbed “15-by-’15”, for the number of new models the company expects to introduce in China by 2015.

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