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Ford's (F) 2019 China Sales Plunge 26%, 3rd Year in a Row

Zacks Equity Research

Ford’s F vehicle sales in China fell for the third consecutive year, by 26.1%, amid lacklustur Chinese economy and the long-standing U.S.-Sino trade tiff. The company expects these challenges to prevail this year as well.

Ford currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Ford China Sales Dismal

The leading U.S. automaker has a strong presence in China, which happens to be its second biggest market. Ford delivered 146,473 vehicles in the nation in fourth-quarter 2019, reflecting a decline of 14.7% year over year. For full-year 2019, the company sold a total of 567,854 vehicles.

Ever since its business began suffering hiccups in late 2017, Ford has been making moves to revive sales in this region. Sales in China plunged 37% in 2018, following a 6% fall in 2017.

While 2019 was a "challenging" year for the automaker, its market share in the high-to-premium segment stabilized, and sales in the value segment began to decline in the second half of the year.

No Relief in Sight

Uncertainty related to China’s gloomy economic situation has prompted people to tighten their purse strings, in turn, hitting U.S. auto bigwigs like Ford and General Motors GM. After witnessing double-digit sales decline in China last year, Ford expects to face challenges this year as well amid slowing economy and trade-war tensions.

Nonetheless, Ford is aimed at strengthening its product line-up, with more customer-centric products and customer experiences, in order to counter macro-economic headwinds and improve its profitability.

The automaker plans to launch more than 30 models in China over the next three years, of which more than a third will be electric vehicles. Ford also has plans to produce self-driving cars by 2021

Apart from established carmakers like Toyota, Volkswagen and others, the company has to compete with local players like NIO Inc. NIO, BYD Company Limited and Xpeng. This apart, Tesla’s TSLA expansion in China with the Shanghai Gigafactory will further heat up competition.

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