Ford's sales in China collapsed 43% in September amid Trump's trade war and an economic slowdown

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Ford china sinkholeVCG/Getty ImagesA Ford sedan car halts on the verge of a five meters wide and two meters deep hole at Yunlianghe Road on December 12, 2014 in Zhenjiang, Jiangsu Province of China

  • Ford sales in China tanked 43% in September compared to the same month in 2017.
  • The drop is due to a confluence of factors, from Ford's makeover of the company to the Chinese economic slowdown.
  • The growing trade war between the US and China also likely played a role.
  • Ford has been dealing with a series of maladies from President Donald Trump's various tariffs.

Ford's sales in China nosedived in September as a slew of factors, ranging from President Donald Trump's trade war to a slowdown in the Chinese economy, slammed the company.

According to data released by the company Friday, overall sales in China fell 43% in September compared to the same month last year and are down 30% through the first nine months of 2018 compared to the same time period in 2017.

Sales for each of the company's Chinese partnerships fell for the month:
  • Changan Ford Automobile sales were down 55% in September compared to 2017.
  • Jiangling Motor Corporation sales declined 15%.
  • Imported Ford sales fell 16% for the month and are down 15% year-to-date.
  • The only Ford brand to see positive sales growth was Lincoln, with a 1% gain for September and a 4% gain year-to-date.

The numbers, while more extreme, lined up with the general collapse in Chinese auto sales during the month. According to the China Association of Automobile Manufacturers, sales in the country tumbled 11.6% year-over-year in September, the largest drop in seven years.

There are a number of reasons for the collapse in sales for Ford and the Chinese auto market in general:

  • China's economy has slowed in recent months, with the International Monetary Fund marking down GDP growth projections for the country and investment in infrastructure and businesses also slowing.
  • Another problem is the growing trade war between the US and China, which may be partly to blame for the slowdown. In particular, cars from both countries are now subject to tariffs, making it more expensive to import autos from the US to China and vice versa.
  • The increased costs could depress sales, Ford has warned, and the trade uncertainty contributed to the company's profit forecast cut in July.
  • Additionally, while overall growth slowed in 2017, car sales in China were strong for the year.

Add up all of those elements, and you end up with the sales disaster.

The collapse in Chinese sales isn't the only trade-war related problem for Ford. CEO Jim Hackett revealed Trump's decision to impose tariffs on steel and aluminum coming into the US would cost the company $1 billion in 2018 and 2019.

The company also decided to not import a new SUV from China to the US, citing the trade war as the reason for the decision.

The trade war is exacerbating longstanding issues at the automaker, which is already in the midst of a global restructuring. As part of the changeover, the company announced Monday that it will lay off a significant number of its workforce.

Get the latest Ford stock price here.

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