Collapse in China Sales Threatens Ford CEO's Turnaround

Cars and Drivers

Published: July 12, 2018 6:35 am

Last Updated: January 11, 2020 9:09 pm

Ford Motor Co. (NYSE: F) CEO James Hackett has set a broad, ambitious and risky turnaround plan for the flagging carmaker. Almost all his strategy could be challenged by a collapse in sales in China, the world’s largest car market by far. Without the ability to steady sales there, Ford’s plans in the United States and for its autonomous and electric car businesses could be swamped by the lack of success at its core gas-powered auto business.

Ford reported that sales in China dropped a breathtaking 38% in June to 62,057. First-half sales fell 25% to 400,423. While Ford enumerated joint venture and electric car plans in China, these are no comfort against what remains a soft set of strategies to better the problem company. Local management comments are unlikely to improve the perception of the number two U.S. car firm’s prospects. Peter Fleet, president, Ford Asia Pacific and board chair and CEO, Ford China, said as Ford announced its China results:

We always knew it would be a challenging year for us given our position in the product cycle; however, we are intensely focused on our ‘In China, For China’ strategy. As we reposition our business in the market, we are working closely with our partners to strengthen our core business, improve our operational fitness and capitalize on emerging market opportunities.

Ford never let on that a “challenging year” would mean a quarter of its sales would disappear.

Hackett also has to deal with a U.S. market that has swung toward demand for sport utility vehicles, crossovers and pickups. Although it has in its F-Series pickups the top-selling vehicle in America, its car business has been so badly hurt that it will stop selling most of its U.S. car models.

Hackett has set a strategy to cut Ford global costs and to become a leader in electric and autonomous vehicles. Just as his credibility about China is under attack, so are these broader initiatives. Ford cannot be considered at the forefront of either the electric or autonomous car sectors. These are led by a group of tech companies and electric car operations, and squeezed by similar initiatives by every major manufacturer in the world.

China is Hackett’s most immediate problem, and there are no signs he has an answer.