By on January 13, 2020

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]

 

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28 Comments on “Ford Still Can’t Figure Out China, GM Similarly Vexed...”


  • avatar
    dont.fit.in.cars

    “Chen, CEO of Ford Greater China, claimed 2019 was another challenging year for the company”

    Is “who moved my cheese” written in Chinese?

  • avatar
    Guy A

    Ford cannot blame solely external factors. Three consecutive declines including a recent 30+% drop in a market “only” dropping 8% speaks to specific Ford issues.

    GM and Ford are not doing well it seems in any market but the US and there they have focussed only on SUVs and trucks, which may not pan out long term.

  • avatar
    volvo

    I would have to see the product mix and get a feel for perceived quality in China.

    If it is anything like the Ford and GM US offerings that would explain weak sales. When every Yuan counts you are more likely to go for Japanese/Korean or local makes. If money doesn’t really matter you will go with Euro luxury brands, Lexus or JLR. As an example in 2018 the largest market for BMW was China followed by the USA and then Germany.

    The black on black Audi A8 is the Beijing equivalent of a fully optioned black on black Suburban seen in the US (personal security included).

  • avatar
    Oldschool

    With many American companies on edge of the Tariff war with China, we are already seeing a mass exodus of manufacturing from the region not only because of the high tariffs, but Chinese labor has become more expensive for these companies supposedly. A lot of production is being moved into Vietnam, Indonesia, Singapore, and other very poor Asian countries. As a matter of fact I recently just purchased a Canon Laser jet printer that is made in Vietnam!! Now these companies are really getting desperate if they are willing to make such a large expensive device in a 3rd world country.

    As this transition is rapidly taking place, the Chinese economy is for sure going to take a hit with the loss of jobs in manufacturing. The U.S. built up China to what it is today from the greed of the American corporations at the expense of U.S. jobs.

    Since everything is made in China now, for example, just imagine how much it actually cost say the, Mr. Coffee brand to make a coffee maker that has a few nice features? And is priced at $100 at Walmart.

    At the most I would say it would cost the company $10-$15 after you add up the labor, materials and shipping cost back to the U.S. The mark up of 900% is incredible, and profits just off that one machine would be ridiculous. It’s insane to think how little wages the Chinese make per hour, yet the U.S. corporations want even cheaper wages that go under $1.00 an hour in some countries just to rake in billions when they can easily still make billions even if they paid these people a fair living wage.

    The American and other foreign corporations have built up China for years, and are now destroying it economically by laying off workers. This same trend has been going on in the U.S. for decades, and now the Chinese worker in manufacturing are now finally feeling our pain.

    So I am not surprised their economy has slowed, it was bound to happen.

    Therefore auto sales suffer. To be honest the Chinese market seems overly saturated with so many different brands including their own, so I am actually surprised that Ford and GM were able to sale as many vehicles as they did in a slowing market with all the fierce competition.

    • 0 avatar
      mcs

      @Oldschool: Vietnam is now producing cars:

      https://cdn.carbuzz.com/gallery-images/840×560/467000/700/467766.jpg

      https://carbuzz.com/news/vinfast-shows-off-first-ever-vietnamese-cars-in-paris

    • 0 avatar
      Greg Hamilton

      @Oldschool,
      Samsung smartphones are also made in Vietnam.

      • 0 avatar
        TMA1

        Yeah, call me when Laos or Cambodia develops a manufacturing economy. I bought a Canon printer years ago, made in Thailand. It was junk, but it was the Japanese designers who programmed it to stop functioning as a scanner when it runs low on yellow ink, not the Thais who put it together.

        And Vietnam is a 2nd world country. The big yellow star on a red field is clue #1.

        • 0 avatar
          volvo

          You know you are on the internet when Vietnam is considered a 3d world country (I agree it is 2nd world and has a robust high tech and clothing manufacturing base)

          And other than the smothering equatorial climate Singapore is a great 1st ++ world country. Measured by Gross National Income per capita it is the second wealthiest country in the world with USA coming in #11. GDP per capita is not as high since not that much manufacturing in Singapore compared to banking and trade.

          • 0 avatar
            dtremit

            Arguably there haven’t been any “2nd world” countries since 1991, but in any case, it’s a term that reflects political alignment with the Soviet Union (or with a philosophy of central planning), not a level of economic development. A 3rd world country doesn’t improve into a 2nd world one.

    • 0 avatar
      spookiness

      News to me that Singapore is considered a “very poor” Asian country.

    • 0 avatar
      thornmark

      Singapore?

      not really

      3rd highest per capita income in the world

  • avatar
    conundrum

    GM sales sagged to 3.09 million in China. Ford only gives percentage drops, not actual numbers, because they are so pathetically small, it’s embarrassing.

    They sold 950,000 in 2016, but only 225,000 last year. Now THAT is a drop. FCA and PSA are in the same dumpster.

    You can theorize about Mr Coffee drip brewers all you want, and the slowing down of the Chinese economy. But it sure hasn’t gone down 75% like Ford sales there have, so is an excuse that entirely misses the point.

  • avatar
    Robbie

    Ford is a maker of pickup trucks. The rest is history.

  • avatar
    Oldschool

    I was wondering why they haven’t reported their sales numbers for China, but it makes sense if they sold less than 300,000 vehicles a year in a country that has over a billion people. That is extremely terrible.

    GM does much better in China because of Buick. So in hindsight, the rest of GM’s brands tend to follow suit with decent sales.

    I really don’t understand how Lincoln is such a minuscule brand in China when vehicles like the Aviator, Continental and the Corsair has superior interior materials, and styling than anything Cadillac makes at the moment. I sat inside a Caddy XT6 recently and it was “ok”. For the price it’s not worth the money. The Lincoln Aviator is so much nicer inside and out. It looks like a more upscale luxury SUV than the XT6, probably one of the nicest interiors I’ve ever sat in, and this goes for the new Lexus LS which is amazing.

    So Lincoln should be blowing up in China, because at the moment Lincoln vehicle’s definitely look and feel much nicer than any current Cadillac. Lincoln goes above and beyond, while Cadillac looks and feels “good enough”.

    • 0 avatar
      TMA1

      Maybe the paint quality on the Chinese Lincolns is as bad as it is in America. Lincoln has no reputation in China. Whereas the Germans have been building brand equity (and vehicles) there for decades. The Chinese are vary brand-conscious; those who have money would rather by German, even if it’s a stripper model, then some American car no one’s ever heard of.

      I’ve seen more Lincolns in Seoul than I have in Beijing or Shanghai. And Koreans are far less interested in foreign cars than the Chinese.

  • avatar
    Michael S6

    The Chinese customer is a fast learner and quickly realized that the vehicles from Japan, Korea, and Germany are of higher quality and reliability than GM and Ford. The only segment where the big three rule is the full size pick up trucks and unfortunately no one else in the world need or can afford these gas guzzling trucks. Hence the Big three liquidated their European operation and now are getting their butts kicked in China and pretty much anywhere else around the world.

  • avatar
    Greg Hamilton

    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?

  • avatar
    redgolf

    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! ;-)

    • 0 avatar
      RHD

      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.

      • 0 avatar
        Oldschool

        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.

    • 0 avatar
      ToolGuy

      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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