Ford: Is a Comeback Happening?

Up to September this year, the car market in China seemed to be running out of gas. It seemed that it was no more going to move forward and even the bestsellers like GM (GM), VW and Ford (F) will have to look for a replacement of the boiling hot market that China was up to very recently. But sales figures of last two months suggest that there is much more potential left in the world’s biggest car market. And more importantly, companies such as Ford have figured out what it takes to thrive here once the slow market growth has long been accepted as the new normal.

The positives

The demand for SUVs and crossovers never died down in China and is again gaining strength enough to force all the automakers introduce products targeting these segments.

And the benefits are evident. For instance, GM’s sales growth for November was 14 %. But its SUVs and crossover sales (which is 19% of the total) surged 231% year-over-year led by Buick Envision and Baojun 560 compact crossovers. Similarly, the SUVs of Ford including the Ford Kuga and the Ford Edge are also experiencing strong sales.

Thus, the Chinese car market is coming back on track. There are also government incentives in place for the vehicles which contribute towards reducing pollution. The government has trimmed the 10 % sales tax on vehicles with 1.6-liter engines or lower. This gives the Chinese customers more reasons to return to buy new cars. Thus, the market situation in China is improving and this will help Ford improve.

Forecasted growth

China Passenger Car Association has made the first forecast among the industry bodies regarding vehicle sales in China in 2016. It has forecasted a 10 % growth for passenger cars next year, roughly similar to this year. On the other hand, independent analysts have been predicting between 1% and 8% growth in passenger car sales next year.

The forecast for electric cars is even more positive. According to China Association of Automobile Manufacturers (CAAM) electric-car sales in China is expected to beat US this year making it the biggest electric-car market too. The sales figure is estimated to fall between 220,000 and 250,000 vehicles, which will help Ford increase its sales.

Published on Dec 30, 2015
By Yaggyaseni Mittra

Copyrighted 2016. Content published with author's permission.

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