Ford Motor’s (F.N)
China slump intensified, with vehicle sales tumbling 38 percent in June and the
automaker recording its worst-ever first half, as buyers shunned its aging
models that are awaiting overhauls and flocked to rivals.
The U.S. automaker announced on Friday it sold 62,057
vehicles in China in June, taking its sales for the first half of the year to
400,443, down 25 percent compared with the year-ago period. According to
consultancy LMC Automotive, it was Ford’s biggest first-half percentage decline
since starting operations in China in 2001.
Ford, which undertook a big expansion in China earlier this
decade, is paying the price for a lack of new models in its lineup. Last year,
its sales fell 6 percent even as overall vehicle sales in China rose 3 percent.
“We always knew it would be a challenging year for us given
our position in the product cycle,” Peter Fleet, head of Ford’s Asia-Pacific
operations, which include China, said in a statement.
Fleet has previously said Ford’s sales will not likely
regain momentum in China, the world’s biggest auto market, until next year when
the first of new vehicle models arrive in showrooms in large enough numbers.
LMC Automotive senior market analyst Alan Kang said one
reason Ford is struggling in China is “fiercer competition” in the car market
there, where luxury brands are suffering amid the rise of local Chinese brands.
“Weak global brands are squeezed like the meat in a
sandwich, so this is why we can see not only Ford,” but Hyundai Motor Co (005380.KS),
KIA Motors Corp (000270.KS),
and Peugeot SA (PEUP.PA)
have “all suffered” in the last two years, Kang said.
The dim sales numbers come as the United States and China
slapped tit-for-tat duties on $34 billion worth of the other’s imports on
Friday, with Beijing accusing Washington of triggering the “largest-scale trade
war” ever in a sharp escalation of their months-long conflict.
With automobiles subject to additional duties by China,
Ford has much to lose. Last year, it shipped about 80,000 vehicles to China
from North America, more than half of them its upper-end Lincolns – including
the Lincoln Continental sedan and the Lincoln MKX crossover SUV.
Ford said a day before it will not hike prices of imported
Ford and Lincoln models in China, thus absorbing the additional cost of tariffs
on U.S.-made vehicles.
Ford’s troubles in China, which include the absence of a
country head following the abrupt departure of the previous chief in January
after only five months at the helm, contrast with General Motors Co’s (GM.N)
steady performance there. Ford’s Fleet has been overseeing the company’s China
operations, as it searches for a new country chief.
GM sold 4.04 million vehicles in China last year, up 4.4
percent from a year earlier. Ford, in comparison, sold 1.19 million cars last
year, down 6 percent. Japan’s Toyota Motor Corp (7203.T)
and Honda Motor Co (7267.T)
also outsold Ford last year in China.
In an effort to reverse the slump, Ford has said it is
overhauling its product lineup for China. Redesigned Focus compact and Escort
subcompact cars are due to hit showrooms in China later this year, along with
the new Lincoln MKC and Nautilus sport utility vehicles.
In June, sales of Ford’s premium Lincoln brand rose 12
percent to 4,350 vehicles, with sales volume for the first half totaling 24,314
vehicles, up 4 percent from a year earlier.
Still other brands remained under pressure. Particularly
poor performing was the Ford brand, whose sales collapsed.
here for the original article from Reuters.