Ford Still Can't Figure Out China, GM Similarly Vexed

by Matt Posky

Published: January 13th, 2020

ford still can t figure out china gm similarly vexed

Ford has struggled to improve market share in China for years now, as decades of economic growth made the region’s overwhelmingly large population too tempting for global manufacturers to pass up. But it hasn’t been an easy road for foreign automakers. Many entered the region saddled with a lack of brand awareness and were required to enter into joint ventures with Chinese firms to gain access (Ford has three). U.S. products have since faced additional scrutiny as American-Sino relations soured; at the same time, the whole of the market appears to be heading in the wrong direction.

While this hurt plenty of automakers that aren’t Ford, the Blue Oval has really taken it on the chin. The company reported a 26.1 percent sales decline for 2019, marking its third straight year of negative growth in China. At first blush, that may not appear relevant to what’s happening in the West. But Ford hasn’t seen its market share in the People’s Republic rise above 5 percent since 2008 (it’s about half that now), despite putting plenty of resources behind the project.

Plenty of this is out of Ford’s hands. It didn’t start the trade war, nor did it expect China’s auto market to start rolling backwards down a hill. Still, it is going to have to cope with the situation, which is unlikely to improve for at least another year. CAMM (China Association of Automobile Manufacturers) is already predicting a 2 percent decline in auto sales for 2020. While smaller than the 8 percent loss endured last year, it’s just a guess. Things may again turn out to be worse than expected.

A reported by Reuters, Anning Chen, CEO of Ford Greater China, claimed 2019 was another challenging year for the company, adding that it saw its market share in the high-to-premium segment stabilize while declines in the mainstream segment narrowed in the second half of the year.

“The pressure from the external environment and downward trend of the industry volume will continue in 2020, and we will put more efforts into strengthening our product lineup with more customer-centric products and customer experiences to mitigate the external pressure and improve dealers’ profitability,” he said.

Over the next three years, Ford wants to introduce at least 30 new models in the Chinese market — a third of them hybrid or fully electric. Unfortunately, the ludicrously high demand for EVs everyone predicted hasn’t manifested. Chinese EV sales through July were tabulated at 696,000 for 2019 by CRU Group. While that represents a year-over-year increase of 41 percent, the industry anticipated more.

There are a few silver linings, however. Lower than expected EV sales have helped keep battery costs from exploding through the ceiling and the electric take rate could improve as the rest of the year’s data comes in. Ford also had some minor victories of its own. “[Ford] managed to stop the bleeding and increase average selling price,” said Bill Russo, head of Shanghai consultancy Automobility Ltd. “Good sign, but they need to do more to localize their business model to address the growth in non-hardware related mobility and digital services if they are to recapture growth.”

Ford is hardly the only foreign manufacturer subjected to unfavorable conditions in China. General Motors, which managed to snag a much larger share of the Asian market, reported Chinese sales falling by 15 percent to 3.09 million deliveries last year — and that’s coming on the heels of a 10 percent drop in 2018. It’s expecting more trouble in 2020, despite having axed its European endeavors to focus more on Asia.

Some outsiders, like Volkswagen Group, did manage to grow their business. The company reported 2019 deliveries improving by 1.7 percent to 3,163,200 vehicles. That would seem to prove that the situation isn’t hopeless, even with the Chinese economy going through an awkward phase. VW attributed the win to a product offensive aimed at covering more segments. Since Ford is also about to pull the trigger on a bunch of Asia-specific models, perhaps it can change its trajectory in the region.

[Image: Ford China]

#Asia #AutoSales #China #ChineseMarkett #ChongqingChanganAutomobileCo #Ford #FordMotorCo #IndustryNews #JianglingMotors #ProductPlaning #SalesData #ZotyeAutomobileCo

Matt Posky

A staunch consumer advocate tracking industry trends and regulation. Before joining TTAC, Matt spent a decade working for marketing and research firms based in NYC. Clients included several of the world’s largest automakers, global tire brands, and aftermarket part suppliers. Dissatisfied with the corporate world and resentful of having to wear suits everyday, he pivoted to writing about cars. Since then, that man has become an ardent supporter of the right-to-repair movement, been interviewed on the auto industry by national radio broadcasts, driven more rental cars than anyone ever should, participated in amateur rallying events, and received the requisite minimum training as sanctioned by the SCCA. Handy with a wrench, Matt grew up surrounded by Detroit auto workers and managed to get a pizza delivery job before he was legally eligible. He later found himself driving box trucks through Manhattan, guaranteeing future sympathy for actual truckers. He continues to conduct research pertaining to the automotive sector as an independent contractor and has since moved back to his native Michigan, closer to where the cars are born. A contrarian, Matt claims to prefer understeer — stating that front and all-wheel drive vehicles cater best to his driving style.

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6 of 28 comments

Bob on Jan 13, 2020

Apparently Ford's CEO should ask Elon Musk how to market a car in China. Musk's company not only is the only one not partially owned by the Chinese government but he also managed to get a $1.4 billion loan from them to build his cars there. What did George Carlin say about being in a club?

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Redgolf on Jan 13, 2020

Oldschool - Who in the heck buys a Mister Coffee coffee maker for $100 ? Especially at Walmart! My last 2 Mister coffee's were between $30-$40 at Walmart ( I use filtered water so the coffee taste better than tap) The schmuck who goes to Starbucks daily/weekly should invest in one of these brewers, most coffee makers operate on the same low cost principle, cold water in, hot water out, drip over coffee, down the spout! ;-)

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- RHD on Jan 13, 2020
  
  Sub-dollar-an-hour labor is available in Mexico. The Vietnamese are being paid much less than that. People don't seem to count, it's all about the profit, baby. Screw the air, screw the environment, screw the workers. (And screw the customers, too, while you're at it!) Gotta pay an additional penny to the shareholders, and a few million more to the executive board.
  
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- Oldschool on Jan 14, 2020
  
  @RHD Right! Lol, I’ve seen coffee makers that are $100, not that I would ever buy one for that much as that’s just simply a waste of money unless it had an espresso maker attached to it and other features. Keurig coffee machines come to mind as they are priced pretty high for what they are. (which is a more convenient single serve coffee maker). People will pay for that convenience and lack of clean up. But for Keurig, the cost to actually build one, is probably next to nothing for the company as it is with the majority of corporations that produce everything offshore. Ford like GM are short term profit thinking companies. Big truck sales won’t last forever, and for both companies to rely on them to survive is very short sighted. The lack of effort among GM and Ford to go above and beyond it’s competition is really discouraging. When a 2020 Genesis G90 is a much better luxury car ( also sat in one) than either the Lincoln Continental and the Cadillac CT6, that is something very worrisome. Both GM and Ford need to wake the Eff up if they want to continue to be relevant in the future and I’m not talking about EV’s here, as every automaker will have some sort of EV’s on the market soon. But I’m talking about luxury vehicles that use the highest quality materials without compromise, styling and tech that is unique and special and goes beyond what’s available today. The Genesis brand has finally become a legitimate luxury marquee just how like Hyundai and Kia are better in certain cases than a Toyota or Honda when it comes to quality.They have easily surpassed GM and Ford, if any of you ever get a chance to sit inside a Hyundai Palisade or a Kia Telluride, you’ll see what I mean. Those SUV’s should be outselling everything in its competition by a long shot , it looks and feels that good inside for its price. A small detail that the Palisade has and most people will overlook it, but it’s one nice detail that should be acknowledged. You know the plastic plate that is located in front of the trunk or lift gate latch on most cars and SUV’s? Sometimes they’re ribbed or simply smooth, well on the Telluride and Palisade, there’s an aluminum or stainless plate that covers over the plastic. Now I don’t know any other brand that does this. Even the Genesis G90 has the same plate which adds a sense of quality and attention to detail. Instead of the plastic plate getting all scratched and scuffed up and looking crappy over so much use, the metal trim takes the beating and can probably be replaced with a new one once the old one has taking so much abuse. It’s this little things that the company thinks about that GM and Ford never will. This is what sets these companies apart, and why foreign competition will always be better than the domestic brands unfortunately. The years of cost cutting, keeping shareholder values high, and focusing too much on the bottom line instead of customer retention, will doom GM and Ford not too long into the future.
  
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- ToolGuy on Jan 14, 2020
  
  Imagine how affordable coffee makers could be if each brand had its own network of dedicated dealers, and you had to go to that dealer to get that brand. /S Now imagine that coffee makers were distributed that way in 2020, and someone wanted to *change* it. Imagine the howls of protest you'd hear.
  
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- Redgolf on Jan 14, 2020
  
  @ToolGuy I thought Walmart and Amazon were the dedicated dealers! ;-)
  
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