Summary: Will Ford go further in China?
Ford, one of the biggest carmakers in the world, is losing its PV market share in China. According to CPCA's data, Changan Ford sold 9,260 SUVs and 18,435 cars, and JMC, another local JV partner, only sold 436 SUVs in this May. The monthly sales hit a record low last month since March of 2013 in China, not only terrible but surprising. In the meantime, the year-to-date (YTD) PV sales have plunged by 36.2% compared with the same period of 2017. The downward trend has being consolidated from last year, without any sign of improvement.
In 2011, Ford revealed its '1515 strategy' to expand China market, and had obtained outstanding performance and the annual sales volume were increasing from 320,655 units in 2011 to 951,394 units in 2016. The strategy mainly targets to deal with a series of inflexible requirements, such as new car sales, capacity, numbers of dealers etc., showing Ford's firm attitude towards China market. But, from 2016, Ford's inherent vulnerabilities were also exposed to the public. The newly-launched models failed to gain Chinese consumer preferences, and some of them were only facelifts, except Taurus and Escort. In addition, Ford ignored to put on running shoes to catch up with the increasing demands for a customized Chinese car. The long life-cycle of its models and poor innovation in exteriors & Interiors resulted in a stubborn impression from Chinese consumers. High quality complaints on rattles and abortions from transmissions, engine leak, shafts break, etc. have great impacts on the brand image.
Focus, Escort, Mondeo (Global name: Fusion), Edge, and Kuga took up most shares of company's sales in the past three years. Excluding Mondeo and Everest, Ford's models failed in growth in 2017. Some negative quality issues about Focus and Edge mentioned above have direct and obvious impacts on their sales. Volkswagen, Ford's arch-rival, got stuck in the similar quality crisis. However, the good crisis management and highly competitive product portfolio of the German company helped the giant tide over difficulties smoothly. On the contrary, Ford didn't seem to be a good player in this field. Frequent quality problems and poor improvements have scared potential buyers.
In the view of market competitiveness, the weak product power and adverse impacts were not only enlarging the gap between Ford and other global main rivals, like General Motors, Volkswagen, and Toyota, but giving some local OEMs good opportunities to go beyond. In the meantime, Ford only launches 1 or 2 products in specific sub-segments, such as Ecosport in small SUV segment, Kuga in compact SUV segment, Edge in full-size SUV segment, but no new model for mainstream midsize SUV segment. Compared with the strategies like '2 models', '2 brands', or 'more is better' of its competitors, Ford's '1515 strategy' seems as a story. Furthermore, the biggest challenge for the company is how to meet tough regulations on CAFC (Corporate Average Fuel Consumptions). Although Ford has launched Mondeo full hybrid in 2016 and Mondeo plug-in hybrid recently, the company understand that it cannot meet the mandatory requirements on fuel consumptions and NEV quotas under the 'dual-credit system' designed by China government without helps from the new JV with Zotye.
In last December, Ford upgraded their strategy from '1515' to '2025', aiming to improve the situations. It's not hard to find that the giant begins to lay emphasis on China market, and will introduce more SUVs and EVs in China. Although the new strategy looks like a nice dream, it, at least, is a good beginning.
It is noteworthy that Ford will localize the models of Lincoln from 2019. According to its planning, newly-unveiled Aviator and Nautilus (new generation of MKX), and even Corsair (new MKC) will be produced in Changan Ford's Hangzhou plant. Ford also appointed Jingbo Mao, who previously worked as executive vice-president in Beijing Mercedes-Benz Sales Service Co., Ltd., as the CEO of the brand in China. We foresee that the late-coming brand will bring vitality and will be an outstanding growth point.