Ford's Rising Sales in China Top U.S. - Analyst Blog

Ford Motor Co. (F) has revealed that its sales in China grew 35% during November, surpassing its 24.3% sales growth in the U.S. The automaker sold 56,829 vehicles during the month in China compared with 147,338 vehicles in the U.S. Meanwhile, Ford's sales soared 39% to 525,100 vehicles in the first 11 months of the year.

Ford's sales in China were boosted by its midsized car lineups, including Fiesta and Focus. Sales of Focus went up 34% to17,139 units in November while sales of Fiesta surged 60% during the first 11 months of the year.

Changan Ford Mazda Automobile, Ford's passenger vehicle joint venture in China, posted a 31% gain in sales during the first 11 months of 2010. On the other hand, sales at Jiangling Motors Corporation – the automaker's commercial vehicle venture in the country – shot up 59% during the same period.

The Chinese auto industry being the apple of Beijing's eye is being further boosted by government incentives that coax car owners to shift to more environment-friendly and fuel-efficient cars and minivans. While the domestic automakers (especially small car manufacturers) received most of the incentives, foreign automakers including Ford and General Motors (GM), benefited from them as well.

Ford's hometown rival, GM, posted an 11% gain in sales to 196,990 vehicles, driven by strong demand for its Buick and Chevrolet lineups. In the first 11 months of the year, the automaker's sales appreciated 32.7% on a year-over-year basis.

According to the China Passenger Car Association, passenger car sales soared 36% to 11.1 million vehicles during the first 10 months of the year. In contrast, Ford's sales in China surged 39% to 468,754 vehicles during the same period.

J.D. Power and Associates has predicted sales in China to grow by 33% to 18 million vehicles for 2010 from less than 13.5 million vehicles in 2009 and 10.5% in 2011.

Ford has been pursuing a major expansion plan in the emerging countries, including Argentina, Brazil, China, India and Thailand. Through the expansion plan, the automaker aims to tap the growing market potential in the countries, especially those in Asia. Since last year, Ford has invested $510 million in China and $500 million in India as part of its expansion plan.

In the first 10 months of the year, Ford's sales in the Asian-Pacific and African regions shot up 39% to 731,724 vehicles. Ford anticipates 70% of its sales growth to come from Asia Pacific and Africa region in the next 10 years, mostly from China and India. Industry sales in the region are expected to grow from 16 million units in 2009 to 35 million units by 2018. 

Ford, a Zacks #3 Rank (Hold) stock,showed an $1.04 billion rise in profit to $1.91 billion or 48 cents per share (before special items) in the third quarter of the year from $871 million or 26 cents per share (before special items) in the same quarter a year-ago. The profits surpassed the Zacks Consensus Estimate by 10 cents per share during the quarter.

The improvement in profit was fueled by the strength in Ford's new products, strong performance at Ford Credit on a consistent basis as well as a recovery in the North American automotive market.

Total revenue slipped 4.3% to $29 billion, including revenues generated from Volvo cars in 2009. This compared with the Zacks Consensus Estimate of $28.16 billion. However, excluding revenues from Volvo, sales improved $1.7 billion or 5.6% from the third quarter of 2009.