Ford’s (F) vehicle sales in Greater China grew 25.4% year-over-year to 164,352 in the third quarter and were up 3.6% quarter-over-quarter. This marked the second consecutive quarter of Y/Y growth. The company’s China sales had increased 3% Y/Y in 2Q following about three years of slump.
Moreover, the Y/Y growth in Ford’s 3Q vehicle sales in China marked the largest growth for the company since the fourth quarter of 2016. The company attributed this growth to new product launches and its localization strategy. Last week, rival General Motors (GM) reported a 12% Y/Y rise in its 3Q China vehicle sales.
Ford makes its cars in China through its joint ventures Changan Ford, JMC, and Ford Lio-Ho with Chongqing Changan Automobile Co Ltd, Jiangling Motors Corp Ltd and Lio Ho Group, respectively.
Sales of Ford brand vehicles in China increased 12.5% to 87,131 units in 3Q driven by a 72.2% rise in Ford SUVs, over 30% jump in Ford Transit sales and a 60.7% surge in sales of Ford Lio-Ho. Also, the sales of the company’s Lincoln luxury vehicles grew 64.8% to 19,143 units, reflecting the demand for Lincoln Corsair. JMC Vehicles sales increased 38.3% to 58,000 on robust demand for light trucks, commercial vans and pickups.
Cheering the growth, Anning Chen, President and CEO of Ford China, said “Ford is strengthening its sales momentum in China by building on growing consumer preference for our iconic brand and favorable product mix of luxury and near-premium utility vehicles.”
“Our localization strategy to produce in China world-class Ford and Lincoln vehicles, including the newly launched Ford Explorer, Lincoln Corsair and Lincoln Aviator, has further enhanced our competitiveness in delivering the best products and services that Chinese consumers are looking for.”
On Oct. 14, Goldman Sachs analyst Mark Delaney increased the price target for Ford to $8 from $7 while maintaining a Hold rating. The analyst feels that companies with higher auto exposure could have strong earnings reports based on recent industry data and company commentary.
Delaney boosted his US auto sales forecast for 2020 to 14.3 million from 13.4 million and predicts sales of 15.5 million units in 2021, up from the previous outlook of 15 million. (See F stock analysis on TipRanks)
The Street is cautiously optimistic on Ford. A Moderate Buy consensus for the stock is based on 4 Buys, 7 Holds and 1 Sell. With shares down 17.5% year-to-date, the average analyst price target of $8.03 reflects an upside potential of 4.7% in the months ahead.