Ford Motor Co.
) recently reported its highest net income in more than 10
years. We currently estimate
Ford's International operations
contribute 35% to its stock price - similar to its North
American operations that contribute 35.6% if we include both
and trucks together. In 2010, with $7.4 billion of
automotive sales, Ford's Asia Pacific & Africa operations
contributed 6.2% to its total automotive sales of $119 billion
(up 0.9% from its contribution in 2009). We expect that
international operations will become increasingly more valuable
for Ford. Ford competes globally with automakers like BMW
(GR:BMW), GM (
), Daimler (ETR:DAI), Audi (
), Honda (
), Toyota (
) and others.
We have a price estimate of $20.59, which is around 37%
above the current market price.
In this third article of a series, (See Trefis Ford
articles) we will take a closer look at Asia Pacific,
especially the following 12 countries: Australia, China, Japan,
India, Indonesia, Malaysia, New Zealand, Philippines, South
Africa, Taiwan, Thailand and Vietnam, which are the most
important markets for Ford in these regions.
Asia Pacific & Africa Markets
The Asia Pacific & Africa regions include the largest
and fastest growing automotive market in the world. Within the
above-mentioned 12 countries in this region, total automotive
industry sales have been growing by an average rate of 13.3%
every year since 2006, and reached 30.7 million units in 2010.
Between 2009 and 2010, the industry sales in these markets grew
by more than 25%.
China's total automotive industry sales in 2010 stood at
approximately 18.3 million units, up 30% from its 2009 levels.
Total automotive industry sales in 2010 were 3.1 million units
in India - up 35.5% from 2009, 1 million units in
Australia - up 10.5% from 2009, 426,000 units in South
Africa - up 20.3% from 2009, and 328,000 units in Taiwan - up
11.3% from 2009.
Ford's Share of Asia Pacific & Africa
Ford's overall market share in the above mentioned 12
countries of this region is relatively small compared to other
regions and increased by 0.1% in 2010 and reached 2.4%.
India witnessed combined car and truck share for
Ford−brand vehicles almost doubling from its 2009 levels and
reaching 2.6% in 2010. During the same period, Ford's vehicle
market share in Australia decreased by 1.1% to reach 9.2%,
and in South Africa increased by 0.1% to reach 7.7%.
Ford's market share in China stood at 2.5% and in Taiwan stood
at 6.1% in 2010.
Small, Ultra−Affordable Passenger Cars to Drive
Small cars account for 60% of Asia Pacific & Africa
industry sales volume and are anticipated to continue to
benefit from government fiscal policy. Ford Figo's launch in
India has demonstrated Ford's ability to compete effectively in
this market segment. We believe that going forward Ford has
significant opportunities to capture in this segment and
improve its market share.
Lowering of Import Restriction to Intensify
Ford will face increased competition in the passenger car
segment as many countries continue to relax their import
restrictions. Duty reductions have enabled other global car
manufacturers to offer their own low priced models, such as
Toyota Etios, in these markets.
China and India to Continue to Drive Growth in the
China's and India's industry sales volume has almost tripled
between 2005 and 2010. Moreover, the driving age population
with disposable income for vehicle purchases is expected to
grow from about 700 million to more than 1.1 billion in China
by 2020, and from about 165 million to more than 500 million in
India over the same period. We believe that this will
facilitate continued rapid and substantial growth in these
markets over the long-term.
How We Could See Further 10% Upside to Our
We believe that Asia Pacific & Africa region offer
enough opportunities for Ford to increase its market share. We
believe that if Ford's international market share growth is
0.2% more than our current expectations over our forecast
horizon, then this will imply nearly 10% upside from our
current price estimate for Ford implying a potential 45% total
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See our full estimates for Ford.