Ford Motor Company (F) Is Going Full Speed

General Motors Company (NYSE:GM) is much bigger than Ford in China, and even if it’s not growing as fast, the company is doing quite well in the country. General Motors Company (NYSE:GM) and its joint ventures sold an August record of 245,799 vehicles in China, an 11.2% increase versus the same month last year. For the first eight months of 2013, sales by GM and its joint ventures in China rose 10.7% to 2,034,771.

Japanese competitors, on the other hand, have been facing declining sales in China over the last months due to anti-Japanese sentiment among Chinese consumers because of territorial disputes between the two countries. It´s hard to tell how long these kinds of factors may last, but while they do, Ford is gaining market share versus Honda and Toyota in such a key market.

Ford has big ambitions in China. The company plans to spend $5 billion in new plants over the next five years, and bring 15 new vehicles to the country by 2015. Management believes that China and India combined could account for 40% of the company´s sales by 2020 versus 15% of sales today.

Bottom line
Ford has made a remarkable comeback since the financial crisis, not only when it comes to the quality and efficiency of its vehicles, buy also on the financial front. Unlike its domestic rivals, the company managed to go through the financial crisis without government help, debt levels have been notoriously reduced, profit margins are on the rise and Ford is now free to distribute capital to shareholders.

The company doubled its dividends to $0.10 per share this year, and the stock is currently paying a 2.5% dividend yield. Ford is trading at a forward P/E ratio below 10 — hardly an expensive valuation, especially for a company which has made such an amazing turnaround over the last years, and which continues delivering new sales records.

Strong truck sales in the U.S., market share gains in smaller vehicles and growth opportunities overseas mean that Ford is well positioned to continue delivering solid returns for investors in the middle and long term.

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The article Ford Is Going Full Speed originally appeared on Fool.com is written by Andrés Cardenal.

Andrés Cardenal owns shares of Ford. The Motley Fool recommends Ford and General Motors. The Motley Fool owns shares of Ford.

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