Should Ford go cheap in China?

The automaker is getting killed in Europe, and it can't rely on US sales alone. It needs to catch up in China.

By Kim Peterson Aug 3, 2012 5:59PM
Image: China (© Digital Vision Ltd./SuperStock)Ford (F) has always taken the high road in China, offering pricier models and refusing to compete at the low end. That was a mistake.

Ford didn't get into China at all until 2002, nearly 10 years behind General Motors (GM) and decades behind Volkswagen (VLKAY), Bloomberg reports. And it just hasn't been able to make waves there since then.

Ford only has about 2.4% of China's light-vehicle market. Now, its problems there are being scrutinized closely as Ford has crashed and burned in Europe. Ford is expected to lose more than $1 billion in Europe this year. It absolutely needs to pick up the pace in China, because Ford can't be so dependent on the U.S. for its success. Ford got a reminder of that in July, when its sales in the U.S. came in below analyst expectations.

"In China, we decided -- and you can debate the intelligence of that decision -- not to offer a full range of products," Joe Hinrichs, Ford's top guy in Asia, told Bloomberg last week. "That's something we're changing."

Ford needs to change its pricing too. It sells the Fiesta subcompact in China, but the car costs 40% more than a similar car, the Chevrolet Sail, made by GM. It must lower prices to compete. Ford wants Asia to make up a third of its global sales by 2020.

This year, Volkswagen made five of China's 10 most popular passenger cars. GM had three and Ford and Hyundai each had one.

Check out the following video to see exactly how bad things are in Europe for automakers.


Tags: Fgm
5Comments
Aug 4, 2012 9:49PM
avatar

Ford hits a brick wall after every peak period. The Taurus front end looked like a catfish. If they fixed the look, it would have cornered the market. Instead-- phased out for the Fusion. The Fusion has been great but what started near $20,000 now starts at $30,000. They had a great thing going with the SVT re-do of the Focus and the Kona version. Once again, the higher end models now start at $30,000. It needs to occur to marketing that THEY are the only ones making that kind of money now. Chrysler is aiming for the working class dollars and winning them. As usual, GM is building what they want to and playing financial games with prices and credit.

 

The best ALL THREE could be doing today is flushing the marketing staff OUT and replacing them with people who live in the real world.

Aug 4, 2012 5:35PM
avatar

3 spam dating hits and 3 pretty much worthless remarks.....

 

Yes, Ford needs to make better inroads in China.....The Company needs to pick up profits where they can so as to help American manufacturing here at home.

Maybe some you don't want them to succeed, but like many of auto companies here, that need to keep going, because it means overall, millions of JOBS....In the U.S. too.

If you want Ford and GM to leave here and go totally to China,India and Brazil they probably could...?

 

And then what bread and soup line are you going be standing in, yelling about all manufacturing leaving America.....Some of you had better get some common sense, before we are destroyed...

Aug 4, 2012 7:09AM
avatar
They lower the price in China, they better lower the price in America. "The rent is too dam high" and the price of cars here in america is "Too Dam High".
Aug 4, 2012 5:29PM
avatar
Ford needs to dramatically cut their prices across the line. They also need to retarget their customers. Untill the late 90's their cars were working class cheap and sensible and their sales showed. Mustangs were cheap, barebone, thrilling cars. Trucks were trucks. The sedan was parked in every driveway in a working class neighborhood. To find a truck now with an 8' bed and a v8 is impossible and pricey. A decent mustang will set you back almost 30k and thats well out of range for the under thirties who use to line up at the dealers to buy them. Ugh. Forget about it.
Aug 4, 2012 10:31AM
avatar
All I can say is that the Cruze delivers. It is smooth running has onstar and cell phone and plenty of good music, my favorite radio stations, no complaints. 
Report
Please help us to maintain a healthy and vibrant community by reporting any illegal or inappropriate behavior. If you believe a message violates theCode of Conductplease use this form to notify the moderators. They will investigate your report and take appropriate action. If necessary, they report all illegal activity to the proper authorities.
Categories
100 character limit
Are you sure you want to delete this comment?

DATA PROVIDERS

Copyright © 2014 Microsoft. All rights reserved.

Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.

STOCK SCOUTER

StockScouter rates stocks from 1 to 10, with 10 being the best, using a system of advanced mathematics to determine a stock's expected risk and return. Ratings are displayed on a bell curve, meaning there will be fewer ratings of 1 and 10 and far more of 4 through 7.

116
116 rated 1
265
265 rated 2
429
429 rated 3
612
612 rated 4
499
499 rated 5
525
525 rated 6
701
701 rated 7
533
533 rated 8
337
337 rated 9
131
131 rated 10
12345678910

Top Picks

SYMBOLNAMERATING
UPLULTRA PETROLEUM Corp10
COPCONOCOPHILLIPS9
TAT&T Inc9
DVNDEVON ENERGY CORPORATION9
EOGEOG RESOURCES Inc9
More

VIDEO ON MSN MONEY

ABOUT

Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.

Contributors include professional investors and journalists affiliated with MSN Money.

Follow us on Twitter @topstocksmsn.