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Ford, GM See 5% Growth in China


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Both Ford Motor Co. (F - Analyst Report) and General Motors Co. (GM - Analyst Report) have predicted that automobile sales in China will grow about 5% in 2011. GM revealed that total vehicle sales would reach 19 million–19.2 million units for the full year.

Automobile sales in China were adversely affected by the expiration of tax incentives for small cars and subsidies for van buyers in rural areas as well as restrictions on new car registrations in Beijing and other cities. As a result, sales grew 3.3% on a year-over-year basis to 11.98 million units in the first eight months of the year after rising 32% in 2010.

Ford posted a 7% fall in wholesale vehicles to 34,916 units in August due to strict government regulations in the country. However, the automaker’s sales rose 11% to 341,746 units in the first eight months of the year.

Meanwhile, GM’s sales went up 13.4% to 205,885 units led by strong growth in passenger car purchases. For the first eight months of the year, the automaker’s sales in the country rose 5.4% to 1.65 million units.

Ford, a Zacks #3 Rank (Hold) company, posted a profit of $2.64 billion or 65 cents per share in the second quarter of the year, a $67 million or 2.5% decline from $2.70 billion or 68 cents per share in the corresponding quarter of 2010.

However, the company’s profits were higher than the Zacks Consensus Estimate of 60 cents per share. The decline in profit resulted from an anticipated slump in Financial Services results.

On the other hand, GM, a Zacks #3 Rank (Hold) company, recorded a profit of $2.54 billion or $1.54 per share in the second quarter of the year, which almost doubled from $1.33 billion or 85 cents per share in the same quarter of 2010. With this, the automaker has beaten the Zacks Consensus Estimate by 33 cents per share.

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