This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

How Far Can Ford Go in China?

SHANGHAI ( TheStreet) -- Ford (F - Get Report) got into China late and seemed to stake out wrong regions of the sprawling country, locating far from the surging coastal economies of Beijing and Shanghai.

But now the automaker is benefitting from rapid growth in lower central China, where Ford has a joint venture with Chongqing Changan Automobile. The business is based in Chongqing, a large city that borders Sichuan province. Together, Chongqing and Sichuan have about 110 million people, more than any Chinese province.

Ford said last week that it expects to increase its fourth-quarter market share in China to 5%, double its level at the end of 2011. The company has said it expects to have a 6% share by 2015.

"There's been a lot of investment from the central government into the inland regions, in terms of infrastructure investment and power generation," said Tim Dunne, director of global automotive operations for J.D. Power and Associates. "That helps Ford's growth. Ford is well-positioned, close to where the new buyers are coming from."

Dunne said Ford's expectation for 5% growth is realistic, but he cautioned that looking ahead Ford may not be able to grow so quickly. At 2.5%, he said, Ford "was lagging behind where they should have been.

"But now, as a global brand, they are close to where they should be and, as in any endeavor, the further you go, the more difficult the incremental increases become," he said.

Ford is benefitting this year from fallbacks by Japanese automakers, perhaps as a result of recent flare-ups in a territorial dispute between China and Japan. During the first eight months of 2013, according to J.D. Power, Nissan (NSANY) China passenger vehicle sales fell 17%, Toyota (TM) sales fell 8% and Honda (HMC) sales fell 3%, according to J.D. Power figures. During the same period, Ford passenger vehicle sales rose 73%.

It would be unwise to assume the Japanese will not recover as nationalist hostility diminishes, Dunne said. "Chinese buyers are shrewd," he said. "They will look carefully at what is the best investment for them personally."
1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
F $13.99 0.00%
AAPL $110.38 0.00%
FB $92.07 0.00%
GOOG $626.91 0.00%
TSLA $247.57 0.00%


Chart of I:DJI
DOW 16,472.37 +200.36 1.23%
S&P 500 1,951.36 +27.54 1.43%
NASDAQ 4,707.7750 +80.6910 1.74%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs