On October 23, Ford Motor Company released its third-quarter earnings report, including adjusted free cash flow of $207 million, and profit before interest and taxes (EBIT) of $1.8 billion, up 8% versus the previous year. For the year to date adjusted cash flow was up 80 percent compared to the same period last year with EBIT for the first nine months of the year up 10 percent. The higher operating results were attributable to mark-to-market investment gains and improvements in the company’s businesses in North America, Europe and China, as well as continued strong performance by Ford Credit. Please refer to the link for release details and guidance for the full year.
In China, wholesales were down 12% with consolidated revenue down 27%. At the same time, EBIT was up 26%, the third consecutive quarter of YoY EBIT improvement. Our EBIT loss narrowed to $281 million, an improvement of $97 million year-over-year, supported by improvements in pricing, lower tariffs and structural costs, as well as a more favorable exchange rate compared to the same period last year.
For Q3 China sales, we continue to see share stabilized, and progress towards improving dealer profitability and freshening our product line up, as detailed below. We remain confident in our regrowth plan and delivering continuous improvement as we execute the Ford China 2.0 plan with our One Team mindset across our operations and joint ventures.
Product and Technology Promote New Growth
The total retail sales for Ford reached 28,119 units in September, up by 5% compared to August and 25% compared to July. As for Lincoln, the total retail sales in September was 4,165 units, increasing by 11% as compared to August and by 13% as compared to July. Sales of the pickup family (Ranger and F-150 Raptor) hit 1,396 units, up by 29% compared to that of the second quarter and 24% year-over-year.
In the third quarter, Ford introduced an increased number of new products, continuously launching the Focus Active, new Taurus, new Edge ST/ST-Line, and Territory EV, Ford’s first BEV in China. Furthermore, according to the upgraded needs of Chinese consumers, Ford introduced the luxury flagship pickup F-150 LTD. For Lincoln brand, Aviator was introduced with early results exceeding expectations. The launch of this series of new products are significant steps to freshen Ford and Lincoln showrooms.
At the same time, 8AT transmission, the SYNC+ infotainment system – which has been developed in cooperation with Baidu – and the application and deployment of new technologies, such as the Ford Co-Pilot360TM suite of advanced driver-assist technologies, of which some driver-assist features are defined as SAE Level 2 automated driving, have also improved Ford’s new products in the area of smart technology and strengthened the competitiveness of Ford’s products in the market in the second half of 2019.
Improved Marketing and Sales fundamentals
Retail driven volume planning has been a top priority to improve dealer networks performance across our markets. By firmly implementing a demand driven policy, dealer inventory has reached an efficient level below the market average. Meanwhile, regional marketing campaigns including local activities, such as Ford FUN Day, have been used to enhance dealer marketing capability and increase customer traffic, in order to improve dealers’ throughput and profitability.
To build confidence, the National Distribution Services Division (NDSD) has also brought tangible benefits with new inititives such as the “One-stop Good Service” plan the “Dealer’s Business Development Fund” to benefit consumers and distributors through innovative ways.
New Product Plans for 2020
Ford will locally produce five more newly introduced name plates starting in 2019. This includes localizing signature products including Ford Escape, which is slated for its official reveal at the Auto Guangzhou, Lincoln Corsair over the coming months, and Ford Explorer also in next year.
By 2021, we will have launched over 10 new electrified vehicles from Ford and Lincoln. In Q3, we lauched the China unique Territory BEV. Ford will unveil our first Mustang inspired BEV SUV Q4 this year globally, which will also be produced in China in the future.