AutoBeta(AutoBeta.net)07/27 Report--

Ford Motor Company reported a net profit of just $100m (690 million yuan) in the second quarter of 2019, down from $1.1 billion (7.56 billion yuan) in the same period last year. Ford's global revenue for the quarter was $38.9 billion (267.48 billion yuan), unchanged from the same period last year, with total revenue of $79.2 billion (544.59 billion yuan) in the first half of 2019, down 2 percent from a year earlier.

It is understood that Ford's car sales are falling except in Europe, and Ford spent $1.2 billion (8.25 billion yuan) on restructuring its plant, directly leading to a decline in Ford's profit margin. Of this total, there was a loss of 155 million US dollars (1.06 billion yuan).

Ford said the collapse in net income in the second quarter was mainly affected by the restructuring of its operations in Europe and South America.

With a recent reform plan costing $11 billion (75.62 billion yuan), Ford is restructuring its production plants and has begun revamping its plants in Europe and the Americas. Ford also closed one of its two engine plants in the UK and closed its production plant in Russia in June. Ford also had to cut jobs while closing the plant. This is the main reason for the decline in profits.

In response to the losses in the Chinese market, Ford said that it is now improving in the Chinese market, and the Chinese team is taking measures to stabilize sales and actively reduce inventory.

However, in terms of sales volume, Ford has not come out of the trough in the Chinese market. Data show that in the second quarter of this year, Ford's total sales in the Chinese market were 154000, down 21.7% from a year earlier; in the first half of this year, Ford's cumulative sales in the Chinese market were 290000, down 22% from a year earlier.

Ford is one of the earliest multinational car companies to enter China. In 1997, Ford and GM entered China together. At present, there are two joint ventures, Changan Ford and Jiangling Ford.

Ford's sales have slowed since 2018. Ford sold 752000 vehicles in China in 2018, down 36.9 per cent from a year earlier, while Changan Ford sold only 417000 vehicles, down nearly 50 per cent. This also directly led to Ford's loss of $1.5 billion in the Chinese market, ending years of profits.

Some analysts believe that Ford's rapid decline in the Chinese market is mainly due to Ford's global strategic mistakes, not paying enough attention to the Chinese market, the product line has not been updated for a long time, the product is seriously aging, and it has been defeated in the competition with other brands. Second, due to "Sino-US" trade reasons, sales continue to be affected.

In addition to the decline in sales, its joint venture, Changan Ford, was heavily fined for monopolization. On June 5 this year, the State Administration of Market Supervision made a decision to punish Changan Ford Motor Co., Ltd. for implementing the vertical monopoly agreement and fined Changan Ford 162.8 million yuan, which also dealt a heavy blow to Ford.

However, Ford said it was still confident about the results in the second half of the year. To welcome the coming electrification and automation, Ford invested in Argo AI, a self-driving company, and established a partnership with Volkswagen to jointly develop new electric vehicles. In 2019, Ford will adjust its cash flow, adjust its auto business, and propose policies in North America and Europe to strive for higher earnings before interest and tax in the fourth quarter than in the third quarter.

At present, the Chinese market has become the largest automobile market in the world, and Ford is more and more dependent on the Chinese market. In April this year, Ford put forward the slogan "more Ford, more China" and launched the "330" plan, that is, to launch more than 30 new models in the Chinese market within three years.

Although Ford has launched a series of planned measures, it is still a bit weak to reverse the decline or even return to the top in China. As for the effect of the 330 plan, we will wait and see!

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