Ford Motor (F) has revealed that its sales in China have shot up 79% to 119,338 vehicles in the third quarter of the year. The growth has vaulted an overall sales increase of 78% to 1.33 million vehicles across China .

This was driven by China ’s economic policies to spur auto sales. The Chinese Government halved taxes on purchases of small autos. It is also spending 5 billion yuan ($730 million) on subsidies for purchases of light trucks and minivans in the countryside, where the population density is high.

Considering the first nine months of the year, Ford’s sales grew 32% to 316,639 vehicles. This compared to a 34% rise in sales to 9.66 million vehicles across China , making it the world’s top auto market. The U.S. ranked second in terms of sales volume, with the nine months’ sales totaling 7.8 million vehicles.

The sale of Ford’s mid-range Focus sedan soared 72% to an all-time monthly high of 13,891 units in September. Meanwhile, sale of Ford Fiesta compact car totaled 32,178 units since its launch in March. Ford has tie-ups that delivered excellently in China . Sales in Changan Ford Mazda – a tie-up with Chongqing Changan Auto and Mazda Motor (7261.T) – rose 43% to 227,839 cars in the first nine months of the year.

Jiangling Motors Corp, a commercial vehicle maker partly owned by Ford, sold 82,718 vehicles in the same period including 23,520 Ford Transit models. Several global automakers including Ford are looking forward to maintaining a strong foothold in China to foster revenue growth as demand in other big markets remains sluggish.

The nation has raised possibilities that could make economic growth surpass the Government’s target of 8% for the year.

We continue to recommend the shares of Ford as Neutral with a target price of $8.

Zacks Investment Research
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