- Ford’s auto sales in China fell 45 percent in October from the same month last year.
- A government crackdown on certain forms of lending has dried up auto financing for a wide swath of China’s middle class.
- China had for some time allowed peer-to-peer lending schemes, where wealthier people could lend money to the less wealthy.
Ford’s sales in China just keep falling.
The company’s sales in the world’s largest car market fell 45 percent in October, compared with the same month last year.
Ford has recently said it has seen its business in China deteriorate. Ford’s sales in China dropped 43 percent in September over the same month in 2017.
The drop is due partly to a slowdown in sales across the industry and partly to problems unique to Ford.
One major factor hurting sales is a government crackdown on certain forms of lending that made credit available to a wide swath of buyers in China’s middle class, especially in its growing second-tier cities, said Michael Dunne, CEO of ZoZoGo, a firm that advises automakers on doing business in the country.
China had for some time allowed peer-to-peer lending schemes, where wealthier people could lend money to the less wealthy. But the recent crackdown on such practices has shut down several companies facilitating the process and left those remaining lenders skittish, along with many consumers, Dunne said.
Ford’s product line in China is a bit stale, and has failed to keep up with the rapidly changing demand in the country, said IHS Markit analyst Stephanie Brinley, who follows the automotive industry.
“Ford is in a unique situation to the degree that they really did have a product problem,” she said. “That market wants to see fresh product faster, and Ford just wasn’t delivering it. It is not that their products were inherently bad, it is just that they weren’t updating them fast enough for what the market wants. And they are addressing that.”
Ford recently unveiled its Territory SUV, a sport utility vehicle made especially for the Chinese market. The SUV is the first in an upcoming onslaught of new vehicles the automaker is planning for the region. Ford also recently separated its Chinese business unit from its larger Asia-Pacific region and appointed a president specifically for the country, in a bid to accelerate growth.
By Robert Ferris