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Ford Reports 43% Drop In Sales For September In China


10/13/2018


Ford Reports 43% Drop In Sales For September In China
The largest car market in the world seems to have slowed down – and foreign car manufacturers are feeling the brunt.
 
There was a 43 per cent drop in sale for Ford in the Chinese market for the month of September compared to the same month a year ago, indicating the situation in the Chinese market. 
 
This is the third straight month where there has been a decline in auto sale in China.
 
Ford, the second-largest U.S. automaker has been impacted by the escalating trade war between United States and China even though is manufactures cars for the Chinese market in China through joint venture with a domestic firm as is mandatory under Chinese rules.
 
Share price of Ford have also not done well and are down by 30 per cent since the beginning of the year. This Friday, the shares touched a 52-week low at $8.57  in the US>
 
But in the Chinese market, Ford has been caught in a myriad of a drop in auto sale in general across the industry. According to Michael Dunne, president of ZoZo Go, an investment advisory firm that follows Chinese autonomous and electrified vehicle companies, this sustained slowdown in the Chinese auto market that is the first for the second largest economy of the world since the Asian financial crisis that was had taken place in the late 1990s.
 
There are number of factors that have resulted in the slowdown. There has been a shortage in demand because of a crackdown by the Chinese authorities on some types of peer-to-peer lending practices in China. This is a feature of the Chinese financial system where those without access to bank loans can borrow money from non banking institutions at rates that are much higher than the usual rates offered by banks.
 
Chinese consumers also have apparently tightened the string to their purse given the over all slowdown in the Chinese economy in recent months.
 
"When times are good, the Chinese are really bullish and bold," Dunne said. "But when times are uncertain they become exceptionally conservative."
 
This characteristic of Chinese consumers is more is a reflection of a peculiar mentality that is more prominent that the usual consumer sentiments and confidence that one can see for example in the United States. "And it is contagious," he added.
 
And lastly there is an impact of the trade war with the US which has added on to the uncertainty which are being felt by many Chinese because of the overall slowdown of the Chinese economy.
 
But Dunne believes that Ford also faces some unique problems in the Chinese market. It has been over a year that no new model or variant has been launched by the company in the Chinese market. And this has led to consumers looking out for newer elsewhere. He however said that the market expects Ford to come up with new products to China in the next few months.
 
(Source:www.cnbc.com)


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