Ford's China sales bounce back in June as tax impact fades

BEIJING (Reuters) - Ford Motor Co said its China sales surged 15 percent in June, their strongest pace of the year, and it was optimistic about the outlook for the second half as the industry puts the phasing out of a tax cut behind it.

FILE PHOTO: Ford Taurus cars are seen during a presentation at the 16th Shanghai International Automobile Industry Exhibition in Shanghai, April 21, 2015. REUTERS/Aly Song/File Photo

Peter Fleet, Ford’s Asia-Pacific chief, said the first quarter had been difficult after a purchase tax on small-engine cars rose to 7.5 percent from 5 percent previously.

Although Ford’s China sales declined 7 percent in the first-half from the same period a year ago, they were up 7 percent in the second quarter.

Sales for June alone climbed to more than 100,000 vehicles with deliveries of sedans including the Escort and Mondeo, which were hurt by the tax increase, improving.

“I would expect to see for the third quarter strong single digit percentage growth (for) the industry. That’s certainly how it looks to us based on the run rate and how the month of July has opened up,” Fleet said in an interview.

Ford’s level of discounting tracked an overall 4 percent price decline for the industry so far this year.

“I’m not interested in driving our prices down to drive market share,” Fleet said.

Year-on-year comparisons will “get a bit tricky” in the fourth quarter because sales rose so fast at the end of 2016 as consumers rushed to buy cars before the purchase tax went up, he added.

The purchase tax on small-engine cars is set for another increase back to its normal 10 percent rate in 2018.

Ford aims to focus its efforts on the sport-utility vehicle market, the fastest growing segment in China, with plans to launch a new version of the EcoSport small SUV later this year.

Outside of China, Ford continues to post positive sales growth in Southeast Asia, India and Australia, he said.

Reporting by Jake Spring and Norihiko Shirouzu; Editing by Edwina Gibbs