Ford Motor Says More China Trouble on the Road Ahead in 2020
January 12 2020 - 10:56PM
Dow Jones News
By Yoko Kubota
BEIJING-- Ford Motor Co.'s China sales fell for the third year
in a row in 2019, dropping to less than half of what it sold at its
zenith in 2016, and the company said the situation for the broader
market is likely to get worse in 2020.
Ford sold 567,854 vehicles last year in China, down 26.1% from a
year earlier, the company said in a statement Monday. While that
was an improvement from 2018's 36.9% decline, the total number of
vehicles sold was less than half of the 1.27 million figure reached
in its peak year of 2016. In the fourth quarter of 2019, Ford's
sales dropped 14.7%.
The Dearborn, Mich.-based car maker said it expects China's auto
market to keep shrinking in 2020. It said it would improve its
product lineup with "more customer-centric products and customer
experiences to mitigate the external pressure and improve dealers'
profitability," according to Anning Chen, who heads Ford's China
business.
China's market for automobiles grew for decades but over the
past year-and-a-half, it has contracted due to an economic downturn
that has dented consumer demand and tighter emissions standards
that hurt auto makers and dealers. The state-backed China
Association of Automobile Manufacturers is set to release overall
sales data for 2019 later Monday.
The auto slump has been especially tough for American brands.
Ford and General Motors Co. have been among the hardest hit--along
with local companies--while German and Japanese brands have grabbed
more market share.
For 2019, GM said sales dropped 15% from a year earlier, its
most severe annual decline in China, which is its largest overseas
market. American car makers lost 1.5 percentage points of market
share from January through November, according to the China
Association of Automobile Manufacturers.
Ford started struggling in China in 2017, earlier than when the
broader downturn in the Chinese auto market began in July 2018.
The company's main problem is its outdated product lineup, said
Yale Zhang, head of Shanghai-based consulting firm Automotive
Foresight.
"For the past two or three years, they didn't launch new
products quickly enough and the mainstream models hadn't been
updated for years," he said.
For example, Ford hasn't updated its midsize Mondeo sedan--known
as the Fusion in the U.S.--or about two years. Mondeo's China sales
for the first 11 months of 2019 fell 67% from a year earlier,
according to the auto sales database of Sohu, a search engine.
In addition, analysts have said, Ford's vehicles lack some
features that appeal to Chinese buyers, including internet
connectivity and large touch screens. Ford says plans to launch
more than 30 new models in the next three years.
The company's China leadership has experienced significant
turnover in recent years. Last year, Ford overhauled its management
team under Mr. Chen--who was appointed in late 2018 as Ford's
seventh China chief in 10 years--after he turned around Chery
Automobile Co. Mr. Chen has installed more local designers and
marketers with a better sense of Chinese tastes, the company has
said.
Ford has pared losses in China, posting a $565 million loss for
the first nine months of 2019, better than a loss of about $1
billion for the year-earlier period. The company reports
fourth-quarter and full-year 2019 results on Feb. 4.
The car maker has been cutting costs, working to mend ties with
its dealers and rolling out new models, including the Focus Active
crossover sport-utility vehicle and an electric SUV, Ford
executives said in October.
While Ford's pricing power in China has improved, those gains
have been offset by continued sales declines, which were worse than
the company expected in the third quarter, the executives said.
"We're clearly not satisfied with our standing in China and the
team is working exhaustively to return to profitable growth in this
important market," Ford Chief Executive Jim Hackett told analysts
during a conference call in October.
Last month, Ford said it expected its 2019 losses to be roughly
half of the $1.5 billion lost in 2018, with an eye toward
additional improvement in 2020.
Raffaele Huang in Beijing and Mike Colias in Detroit contributed
to this article.
Write to Yoko Kubota at yoko.kubota@wsj.com
(END) Dow Jones Newswires
January 12, 2020 22:41 ET (03:41 GMT)
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