Ford, hit by domestic drop in vehicle sales, maps out a recovery

Ford Motor Co is in the throes of a severe reversal in the strategically vital Chinese market, but a senior executive at the US carmaker said he expects a turnaround in early 2019 as new models hit the showrooms - starting in the fourth quarter this year.

Ford's China sales slumped 43 percent year-on-year to 64,383 in September, marking a row of sales falls in the world's biggest market. The continuous decline over the past months resulted in a 30 percent fall year-on-year to 585,171 units in the first three quarters.

Peter Fleet, president of Ford Asia Pacific and chairman and CEO of Ford China, said the plunge in sales was primarily the result of the carmaker's product cycles instead of the ongoing trade tensions between China and the United States.

"We have been quiet for a while in terms of introducing new products into the Chinese market," said Fleet last Tuesday when the carmaker debuted its new SUV, the Territory, developed with its Chinese partner Jiangling Motors Corporation for customers mostly in smaller cities.

"But when seven out of 10 customers who come into our showrooms are new-time buyers, buying an additional car or buying their first car, it is not surprising that in China new products are so fundamentally important," he said.

Fleet said he expects Ford sales to start their recovery during the first quarter of 2019, as models including the Territory as well as the new Focus and the new Escort, produced at its other partner Changan Ford, are launched later this year.

These models are part of Ford's plan announced late last year to launch 50 models, including 15 electrified ones, into the Chinese market by 2025, which Fleet said will underpin the carmaker's long-term recovery in the country.

Fleet said he expects the improved sales and marketing capabilities to help boost its sales as well. Ford is integrating its sales networks by setting up a department responsible for marketing, sales and servicing of all Ford-branded passenger vehicles sold in China.

Headed by newly recruited Chinese executives, the unit is expected to launch marketing campaigns in a way that better appeals to local customers, adding momentum to the promising changes already seen at the debut of the Territory last week.

Fleet said China-US trade tensions have not produced a severe impact on its business in the country, as most of its Ford models are locally manufactured at its two joint ventures and its premium Lincoln arm, which imports all its models, maintained a 4 percent increase year-on-year in its China sales from January to September.

"No, I don't see any impact on the sales of our vehicles as a result of the trade tensions, though I obviously see impacts on my profit margins on those imported vehicles because I have chosen not to pass on all those punitive tariffs onto my customers," he said.

Earlier this year, China raised tariffs on vehicles imported from the US to 40 percent, as opposed to 15 percent on those from other countries, as a retaliatory response to the punitive US tariffs on Chinese products and commodities.

"Fortunately, before the trade tensions escalated, we had already made decisions," Fleet said. In early 2017, Ford announced that it would start localizing production of Lincoln models in China, starting with a small SUV from the end of 2019.

Fleet said the Ford Explorer will be localized as well, although he did not give a schedule. "Those localization plans are under way already and will be progressively introduced," he added.