Ford Follows GM's Lead as It Uncovers the Secret To Success in China: Prestige, Baby!

ford follows gms lead as it uncovers the secret to success in china em prestige

Ford Motor Company is finally figuring out the secret to General Motors’ most recent overseas sales success. Chinese shoppers are willing to pay more for a new car than consumers in other countries, but only if it piles on the luxury and, most importantly, prestige.

However, there’s still a long way to go before the Lincoln brand catches up to a surging Cadillac. That automaker only wishes it could find such sales gains in the United States.

According to stats published by The Motley Fool, General Motors sales in China rose 5.7 percent to 345,733 vehicles in October, a record-setting number for that month, and year-to-date sales are up 8.6 percent from the same period in 2015. While Buick has consistently been a major part of that equation, Cadillac is steadily creeping up in its appeal to affluent youngsters.

In fact, GM says Cadillac buyers in China are routinely half the age of those in the U.S. — averaging 35 years of age to their 59.5-year-old American counterparts. And that young blood isn’t afraid to exercise its purchasing power, either. Cadillac sales doubled compared to the previous October, giving the luxury brand its fourth consecutive month where China increased volume by over 50 percent.

For Cadillac, the XT5, XTS, and ATS long-wheelbase variant were up more than 70 percent year over year.

In 2015, Cadillac sold 80,000 cars in China compared to about 175,000 in the United States. This year, the goal for China is 100,000, and it looks like GM could hit that mark.

Meanwhile, Ford’s Asia Pacific unit earned $131 million in the third quarter, up from a modest $22 million a year prior. That had everything to do with China’s Changan Ford Automobile Co., which helped bring an additional 26 percent in equity over 2015. However this only came after some pricing adjustments after suffering an unwelcome second-quarter loss. Ford was caught with its pants down over the aggressive pricing offered by domestic Chinese rivals, and it lacks a big earner like Buick with its desirable image and heritage.

However, the Blue Oval has been considering whether to produce cars inside the country as Lincoln sales nearly tripled in China in the third quarter. While that sounds impressive, it only equates to 8,546 Lincoln vehicles. Cadillac sold 12,502 in October alone, but Ford might close the gap by building cars in-country, avoiding the heavy taxes placed on imported vehicles, and lowering prices.

Ford has learned the hard way that, while Chinese shoppers may be willing to pay more for a superior product, they are still hungry for a good value.

What they aren’t hungry for is General Motors’ cheap commercial vans. While SAIC-GM-Wuling offers inexpensive entries into to that segment, Ford’s Transit has fared much better in China despite its higher pricing. Wuling is also a low-budget brand, something Chinese consumers are quickly growing out of.

Buick, a premium brand, sells at almost the same volume as Wuling in China. Last month it was shy of the bargain brand’s 108,760 units by a mere 3,690 vehicles.

GM’s income from its Chinese venture is comparable with last year’s. Sales are up, but, like Ford, the automaker faces pressure from extremely affordable domestic Chinese automakers. That has shrunk profit margins and made General Motors’ premium brands all the more appetizing to both the seller and the buyer.

[Image: General Motors]

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  • Jeff S Jeff S on Nov 09, 2016

    That is one reason why our vehicles are more global in nature than as in the past where cars and vans were more specific to America (pickups are still more US). The US is no longer the largest market with China and Asia becoming the largest market.

  • Brn Brn on Nov 09, 2016

    Motley Fool is still a thing?

  • Snickel Fritz I just bought a '97 JX 4WD 4AT, and though it's not quite roadworthy yet I am already in awe of it's simplicity and apparent ruggedness. What I am equally in awe of, is the scarcity of not only parts but correct information regarding anything on this platform. I'm going to do my best to get this little donkey back on it's feet, but I wouldn't suggest this as a project vehicle for anyone who doesn't already have several... and a big impressive shop with a full suite of fabrication/machining/welding equipment, and friends with complimentary skillsets, and extra money, and... you get the idea. If you don't, I urge you to read up on the options for replacing anything on these rigs. I didn't read enough before buying, and I have zero of the above suggested prerequisites... so I'm an idiot, don't listen to me. Go buy all of 'em!
  • Bryan Raab Davis I actually did use the P of D trope, but it was only gentle chiding, for I love old British cars of every sort.
  • ScarecrowRepair The 1907 Panic had several causes of increased demand for money:[list][*]The semi-annual shift of money between farms and cities (to buy for planting and selling harvests)[/*][*]Britain and Germany borrowing for their naval arms race[/*][*]San Francisco reconstruction borrowing after the 1906 earthquake and fire[/*][/list]Two things made it worse:[list][*]Idiotic bans on branch banking, which prevented urban, rural, and other state branches from shifting funds to match demands. This same problem made the Great Depression far worse. Canada, which allowed branch banking, had no bank failures; the US had 9000 failures.[/*][*]Idiotic reserve requirements left over from the Civil War which prevented banks from loaning money; they eventually started honoring IOUs illegally and started the recovery.[/*][/list]Been a while since I read up on it, so I may have some of the details wrong. But it was an amazing clusterfart which could have been avoided or at least tamed sooner if states and the feds hadn't been so ham handed.
  • FreedMike Maybe this explains all the “Idiots wrecking exotic cars” YouTube videos.
  • FreedMike Good article! And I salute the author for not using the classic “Lucas - prince of darkness” trope, well earned as it may be. We all know the rap on BL cars, but on the flip side, they’re apparently pretty easy to work on (at least that’s the impression I’ve picked up). On the other hand, check the panel fits on the driver’s and passenger’s doors. Clearly, BL wasn’t much concerned with things like structural integrity when it chopped the roof off a car designed as a coupe.