More Success for Ford Motor Company (F) in China

Page 1 of 2

Eye-popping numbers from Ford Motor Company (NYSE:F) in China: The Blue Oval’s sales in the world’s largest auto market in January were up 98% in January.

Better yet, sales at Ford’s passenger-car joint venture – the venture that drives the bulk of Ford’s China profits – were up a whopping 136%.

Sounds impressive, doesn’t it?

It does, but don’t be too impressed just yet. The truth is, those numbers aren’t nearly as impressive as they sound.

But it was still a good month in China for Ford.

Ford Motor Company (NYSE:F)Apples to oranges
Why are those eye-popping gains not as impressive as they look? Because just like almost everyone else in the auto business in China this month, Ford’s PR folks are comparing apples to oranges.

January of 2012 had fewer selling days than January of 2013. Here’s why: Much of China shuts down for several days for the festivities around Chinese New Year. Sometimes, like in 2012, the New Year holiday falls in January. And sometimes, like in 2011 and 2013, it falls in February.

See what I mean? Sales in January 2013 were bound to look great in comparison to year-ago numbers. (And February’s are bound to look dismal. Don’t fret when that happens.)

But that doesn’t mean it was a bad month for Ford. If we compare to January of 2011 – a record month for Ford in China at the time, though that record was eclipsed last month – we see a gain of just over 15%. That’s not 98%, but it’s not bad considering the lackluster state of the overall auto market in China between then and now.

And it could get a lot better soon.

A whole lot of Focuses, with more to come
While Ford already offers several models in China, to some extent the Blue Oval is a one-trick pony in the Middle Kingdom at the moment. About half of the vehicles Ford sells in China in a given month are versions of its Focus compact, which has – in two distinct flavors – rapidly become one of China’s best-sellers.

I say “two flavors” because, although Ford rolls up their sales numbers into one impressive-looking total, the company sells two separate cars called “Focus” in China. The “Classic Focus” is the last-generation European car, offered as a value-priced model, and the “New Focus” is the current global car, positioned as a premium product.

As I said, the two Focus variants together account for about half of Ford’s sales in China, but that could change soon. Ford said last year that it plans to greatly expand its offerings in China with 15 new models by mid-decade. The “New Focus” was the first of those, and another arrived in January: The Kuga SUV, a twin in all but name to the all-new Escape introduced here in the U.S. last year.

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 44 percentage points in 21 months Learn how!

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!