Ford in Asia: Go Where The Growth Is

Ford in Asia: Dave Schoch, the president of Ford Motor Company (NYSE:F) Asia and Pacific, gave a presentation at the Citi 2013 US and European Industrials Conference last Tuesday. There, he said, that growth opportunities are presenting as a result of recent developments in Asia. The increase in regional sales volume depicts a bright future for the Detroit based car manufacturer, the representative added.

Much of the global increase in automobile demand, recorded by industry indicators, stem from the Asia, Pacific and Africa regions. Out of the 82 million units sold worldwide in 2012, those regions accounted for 34 million vehicles, or a 41% of total sales. And, China specifically, has been the largest purchaser, accounting for 24% of the total volume. According to Mr. Schoch, by the end of the decade, China will be responsible for 60% of Ford’s growth.

With sales reaching 599,000 units in Asia during the first half of 2013, Ford generated $5.6 billion in revenues. When compared year-over-year, sold units rose by 28% and revenues increased 22%. At the same time, the firm increased its market share from 2.6% to 3.6%.

During the presentation, emphasis was placed upon readiness to deal with this rapidly growing market. Additionally, since Ford had a late entry into the Asian Market when compared to firms such as General Motors Company (NYSE:GM), Bayerische Motoren Werke AG (ETR:BMW) or Volkswagen AG (ADR) (OTCMKTS:VLKAY), it is running from behind. In order to catch up, new factories are being built to increase manufacturing capacity, and construction is underway to secure a large network of dealerships and service stations. Between 2011 and 2015, the amount of assembly plants is to be increased from 14 to 23, and the number of dealerships and service centers doubled. Ford predicts manufacture and distribution of 2.9 million vehicles in this region will be feasible by 2015, fuelling the company’s internal growth.

Ford seems to be well positioned to take advantage of the growth opportunities Asia has to offer in the medium and long term. Since the firm plans to base a large part of its future growth on revenue extracted from the region, investments made today are bound to produce good results for Ford in Asia over the coming years.

Disclosure: Pablo Erbar holds no position in any stocks mentioned

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