Tariff Suspension Won’t Help Ford’s Plunging Sales in China

Sales of Ford Motor Co. (NYSE: F) vehicles in China continue to deteriorate. Year over year, sales volume dropped 55% in November to just 55,434 units. For the year to date, Ford sales are down 34% compared with last year.

According to a report from CNBC Thursday morning, the Chinese government will suspend for three months its additional 25% tariff on imported U.S. vehicles. The suspension begins on January 1 and reduces the tariff on U.S. imports to 15%, its level before the United States and China got into a trade war.

Ford and other U.S. carmakers are unlikely to get much help from the lower tariffs. China’s Association of Automobile Manufacturers reported earlier this week that November sales were down 14% year over year, the fifth consecutive monthly sales decline. And the declines are getting bigger. Sales fell 4% in both July and August and 12% in both September and October.

Tariffs certainly played a role in the declines, but Chinese consumers are just not buying as many cars, foreign or domestic, as before. General Motors Co. (NYSE: GM), which no longer reports monthly sales, indicated that September sales in China, its largest market, dropped nearly 15% and sales for the first three-quarters of the year were down by 2.5%. Volkswagen, also a big player in China, reported this morning that sales fell 7.3% in November, following a 9.8% drop in October.

In late September, Ford reorganized its Asia-Pacific segment and created a new Ford China division under the leadership of Anning Chen, who took over on November 1. In today’s report on sales, Chen commented:

China is absolutely essential to Ford globally. The management team of Ford China is focusing on our China Turnaround Plan. We are building a robust management team and efficient organizational structure to drive the business forward. To win against the competition in China, we must better understand the Chinese customer, respond to market changes quickly, introduce more products that customers like and want, streamline the organization, improve the capability of our team, speed up decision-making, and strengthen our relationships with dealers.

Sales of the Lincoln brand actually rose 3% year over year in November and remain 3% higher for the first 11 months of the year. Year to date, sales of Lincoln brand vehicles totaled 49,586, and November sales totaled 5,216 units.

Ford’s two Chinese joint ventures, Changan Ford Automobile and Jiangling Motor, saw sales plunge 73% and 10%, respectively, in November. For the year to date, their sales were down 46% and 8%, respectively.

Ford vehicles imported from the United States accounted for just 1,151 November sales and a meager 14,741 for the year to date. November sales were down 10% year over year, and year-to-date sales are down 15%.

Ford’s stock traded flat in Friday’s premarket, at $8.50 in a 52-week range of $8.17 to $13.48. The stock’s 12-month consensus price target is $9.89.

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