Fire Sale Props Up Ford's Main China JV in Second Quarter
Yu Liyan
/SOURCE : yicai
Fire Sale Props Up Ford's Main China JV in Second Quarter

(Yicai Global) July 11 -- Changan Ford, the American auto giant's biggest joint venture in China, beat the waning market in the second quarter but looks to be on wrong side of sustainability after most of its sales came from a rare new release and heavily discounted high-emissions vehicles.

Annual sales in May and June were both up 30 percent annually, the Chongqing-based firm told Yicai Global. An impressive figure given that the China's auto market -- the world's largest -- shrunk last year for the first time in over two decades as sales slid 2.8 percent to just over 28 million cars.

Cars spent an average of 28 days on dealer lots over the period, 68 percent less time than the previous six months to mark an 18-month low.

But the driving force behind the performance was sales of the latest Ford Focus -- a rare new release -- whose sales rose 75 percent to 10,000 units in June alone. The last time the firm unveiled a new model was 18 months ago, before dubious decision making and a nationwide fall in demand more than halved annual sales from near a million units in 2016 to just 378,000 in 2018. Sales were down 71.8 percent on the year to 36,800 in the first quarter of 2019.

Another major contributor was heavy discounts on older models, which Ford offered in anticipation of several city governments bringing in stricter emissions standards on July 1 -- a year ahead of the national schedule. The new rules would render the cars unsellable in those cities, which include China's biggest metropolises Beijing and Shanghai.  

The performance boiled down to a shift in marketing strategy, according to Yang Song, president of Changan Ford's National Sales Service division, told Yicai Global. The firm adjusted production to suit demand in order to maintain greater control over the sales process and bring down inventory, he said in an interview.

Editors: Tang Shihua, James Boynton

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Keywords: Changan Ford , Business Performance