Ford Motor Company (F): Do Not Wait to Buy

Page 1 of 2

Ford Motor Company (NYSE:F)If you’ve spent some time trying to find the next undervalued stock with a bright future, chances are you’ve at least scratched the surface of Ford Motor Company (NYSE:F)‘s stock. There’s plenty to be excited about between its sales success with new models, growing economies of scale, and its plan for the future in China. In Motley Fool’s quest to help the world invest better, I think it’s time to put in perspective how big the opportunity in China really is. Not only that, I’ll give some insight on how much this could grow Ford Motor Company (NYSE:F) revenues.

Just how big?
Let’s look at the remaining potential of China’s automotive market using cars to people ratio. In Europe there is one car for every two people while in China the ratio is one car for every 20 people. Looking at the three major markets – Europe, U.S., and China – sales in 2012 reached just over 12 million, 14.5 million, and 19.3 million, respectively. From here on out China’s growth is substantially larger as the car to people ratio narrows. In 2020 sales are estimated to be around 15 million, 20 million, and 31 million, again respectively. So over the next seven years China is essentially creating a market the size of Europe. That’s a welcome notion for investors since the real Europe market is currently imploding.

Ford’s plan
This isn’t new information to automakers who are all racing to get their piece of China’s growing pie. Ford Motor Company (NYSE:F) is spending upwards of $5 billion in the region to meet its goal of doubling its market share from 3% to 6% by mid-decade. Last year Ford set a sales record in China topping 625,000 units sold – up 21% from 2011. Let’s assume Ford simply meets its 6% goal, and to be cautious we’ll say it even takes five years longer than expected. That would bring its 2020 sales in China to 1.86 million units – more than triple today’s levels. Ford plans to execute this with a slew of new models that have garnered much interest from Chinese consumers.

“Record 2012 sales highlight the positive response our customers have for our full portfolio of high-quality, safe, fuel-efficient and smart vehicles,” said John Lawler, chairman and CEO of Ford Motor Company (NYSE:F) China. “Their enthusiasm for Ford cars validates our aggressive plan to introduce 15 new vehicles, double production capacity, and double our China dealership network—all by 2015.” Here’s something I found very interesting.

China doesn’t want Chinese
Ford remains well behind rival General Motors Company (NYSE:GM) and Volkswagen market share in China. Of the 10 top-selling vehicles, four models are Volkswagen’s, three are General Motors Company (NYSE:GM)’s and only one is a Ford Motor Company (NYSE:F) – albeit the Focus is China’s most popular model. Ford has a chance to gain market share a little faster because Chinese consumers remain unimpressed with domestic brands and are avoiding a “Made in China” label. A study by Sanford Bernstein showed Chinese automakers market share declined to 26% in 2012.

Page 1 of 2
Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

The 10 Most Expensive iPhone Apps

The 9 Most Expensive Designer Shoes in the World

The 10 Most Expensive Cigarette Brands

The 10 Most Expensive Law Schools in the US

The 10 Best Wall Street Movies

The 10 Most Expensive Golf Clubs Ever Sold

The 10 Most Expensive Golf Memberships

The 10 Best Disney Characters Ever Created

The 8 Best Foods for Gaining Weight

The 10 Most Expensive Colleges in the World

The 7 Most Memorable Ad Campaigns of All Time

The 7 Most Expensive High Schools in the World

The 10 Electric Vehicles with the Longest Range

The 10 Cities with the Worst Drivers in the World

The 10 Most Expensive Dresses Ever Created

10 Islands to Visit Before You Die

10 Famous Celebrities Who Needed Rehab

The 15 Countries with the Largest Oil Reserves

The 10 Most Overused Excuses in the World

The 5 Best iOS Apps You Can’t Get on Android

5 Companies Damaged By Social Media Blunders

The 10 Most Legendary Blues Songs

The 10 Most Lawless Places in the World

4 Reasons China is a Threat to the US

The 17 Most Sugary Drinks in the World

The 10 Most Ruthless Rulers in History

The 10 Greatest Generals in History

Top 8 Travel Destinations for 2015

The 10 Safest Dog Breeds for Children

The 10 Most Stolen Vehicles in the US

The 7 Most Expensive Celebrity Weddings

The 10 Best LoL Teams in the World

Top 10 Worst Marketing Campaigns Ever Produced

Top 5 Diets that Help You Lose Weight

The 10 Best Ways to Stay Awake

7 Artists That Switched Musical Genres

The 10 Most Expensive Cities to Live in New Jersey

The 10 Best High Schools in New York

The 10 Countries With the Least Gender Inequality

The 6 Biggest Musician-Manager Feuds

The 10 Countries with the Cheapest Gas Prices

The 7 Most Theatrical Bands of All Time

The 8 Worst Band Breakups of All Time

The 10 Most Important South American Leaders

The 7 Most Successful Casting Show Winners

The 10 Most Peaceful Countries in the World

5 Big Reasons Communism Failed

The 15 Most Famous Carl Icahn Quotes

10 Scary Animals that are Actually Harmless

The 8 Most Famous Singer-Actors in Entertainment

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!