Title Ford Sales Plummet in China and New Tariff Hit Is Yet

Title: Ford Sales Plummet in China, and New Tariff Hit Is Yet to Come

Link: https://www.wsj.com/articles/ford-sales-plummet-in-china-and-tariff-hit-is-yet-to-come-1531304583

During the first quarter of 2018, Ford sales in China have dropped 26%, while GM had record sales for the first half of the year. Their sales have increased 4%. However, both companies many face a difficult second half due to the imposed tariffs and the U.S government trade dispute with China. These tariffs could include a 10% levy on automobile parts. Despite the imposed tariffs, Ford has no intention of raising the prices of Ford and Lincoln vehicles. Lincoln being the only brand for Ford that increased in sales. To help increase sales, Ford is planning on rolling out new models to draw back customers. Electric vehicles sales on the other hand are sky rocketing. During the first half of the year EV sales have increased 112%. China could be one of the main factors playing a role in increase EV sales. China currently has 9 regions that restrict sales on gas powered cars. To be allowed to drive a gasoline car, motorists must enter themselves in a lottery to get a license plate for these types of vehicles.

Discuss:

1. Why do you think Ford’s overall sales dropped while its’ sales on its’ Lincoln premium brand increased?

2. Do you think car companies like ford and general motors will continue to be successful despite China’s new imposed restrictions on gas powered automobiles?

3. Do you think it is a good move financially that Ford does not plan on raising the prices on imported Lincoln and Ford vehicles?

Solution

Cox Automotive predicted April new auto sales would slide 3.6 percent from a year ago to about 1.37 million vehicles, largely because April had two fewer selling days and one less weekend than the comparison month in 2017.

With most numbers in, Cox Automotive estimated sales fell about 5 percent to just less than 1.35 million vehicles.

Sales were a mixed bag for the major manufacturers. Fiat Chrysler Automobiles, Volkswagen and Subaru were among companies that posted gains. Most automakers saw sales fall slightly.

And aside from Nissan, the rest of the industry fared well and would have been about flat if April had had more selling days, said Charlie Chesbrough, senior economist for Cox Automotive.