Manufacturing News

Ford sales rebound as impact of tax hike fades

Ford Motor Co.’s China sales surged 15 percent year on year to approximately 100,000 in June as China’s auto industry recovered from the impact of a tax cut that was phased out.

Peter Fleet, Ford's Asia-Pacific chief, said the first quarter had been difficult after the government raised the sales tax on small-engine cars rose to 7.5 percent on Jan. 1, up from 5 percent last year.

Sales of the Escort and Mondeo sedans – which had been hurt by the tax increase – improved in June, according to Ford.

Ford’s commercial truck partnership, Jiangling Motor Corp., also had a good month. In June, Jiangling sold 24,000 vehicles, up 27 percent.

For the first six months, Ford’s China sales declined 7 percent to 537,522 vehicles. But Fleet said he expects the June rebound to continue into the third quarter.

"I would expect to see for the third quarter strong single digit percentage growth (for) the industry,” Fleet said in an interview. “That's certainly how it looks to us based on the run rate and how the month of July has opened up.”

While Ford-brand sales have be so-so, the Lincoln luxury brand continues to gain market share. In the first six months, Lincoln deliveries jumped 97 percent to 24,541 vehicles, on strong demand for the MKC SUV.

So far this year, Ford’s level of discounting tracked an overall 4 percent price decline for the industry. But Fleet said he does not plan to cut prices to gain market share.

Year-on-year comparisons will "get a bit tricky" in the fourth quarter because sales rose so fast at the end of 2016 as consumers rushed to buy cars before the purchase tax went up, he added.

The sales tax on small-engine cars is set for another adjustment -- an increase that will put it back to its normal level of 10 percent in 2018.

Ford aims to focus its efforts on the crossover and SUV market, the fastest-growing segment in China, with plans to launch a new version of the EcoSport small crossover later this year.

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