Moreover, Ford has a strong brand image in China and it is seen as a luxury brand out there. The company will be introducing its iconic Lincoln brand in China in 2014 which should go well with the lifestyle of the affluent Chinese population. Lincoln’s high price tag should boost company’s margins. Further, the company’s revenue should improve as it has the right set of products to match the rising demand of SUV’s in China.
The company’s performance in North America has driven it to safe roads. As expected, the company posted pre-tax profits of $1.87 billion in its fourth quarter. Ford’s revenue in the U.S. might have been slightly up, but a hike in sales of high-margin pickup trucks has boosted its profit. The company’s North American segment is currently the driver that is financing its growth prospects in Asia and making good its losses in Europe.
A dig into the competitors
Ford faces competition from the likes of Toyota Motor Corporation (NYSE:TM) and GM. Currently Toyota is facing some troubles with their acceleration issues, failing brakes, and numerous recalls over the last few years. The company has also been losing market share in China, but all this did not stop the company from selling 9.75 million vehicles last year and becoming the largest automaker across the globe.
Moreover, Toyota’s top position in the auto industry places it in a better position to bargain with the Bank of Japan for obtaining assets in order to keep its expansion drive running.
General Motors, though, have lost the crown of being the largest global automaker but there is a lot to like about it. It is the market leader in China, and has three models in the list of top five cars. Also, the company is planning a lot of new cars to boost its business. Redesigns of the Chevy Silverado, Chevy Impala, GMC Sierra, and a new Chevy Corvette will be in the market soon. The Buick Encore, the Suburban, Tahoe, Yukon, and Escalade are expected to hit roads by the first half of 2014.
Final words
Ford is going strong in the American market and gaining share in China. Although the company is currently not being able to generate any operating profit in China, as it is investing heavily to catch up with its rival, the current investments should reap benefits in two to three years’ time.
Leaving aside Europe, due to gloomy economic conditions, even if the company is able to break-even by 2015-2016 it will add another $1.5 billion to $2 billion to its current pre-tax profits. With the company’s turnaround strategies the target seems achievable.
Overall, Ford is doing well and its performance should improve further in the near future. For the investors I would say, “There is a lot to look beyond the European crisis and be happy about.” I am bullish on Ford and for me it is a good value at its current price.
The article Which Automaker Will Drive Your Portfolio? originally appeared on Fool.com and is written by tarun bachhawat.
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