Ford CFO: China will be 'bumpy and volatile' in 2016

Ford ChinaChina Photos/Getty ImagesChina will continue to be unpredictable for Ford.

After Ford reported strong fourth-quarter and full-year earnings on Thursday, we spoke with CFO Bob Shanks about the company’s record-setting performance and the outlook for 2016.

The thinking throughout the industry is that after a record year of sales — 17.5 million new cars and trucks in 2015 — could represent a peak, but that the auto sales cycle in America isn’t yet played out.

The rest of the world is a different story, and all eyes have been on China, which for years has rewarded automakers with substantial growth.

“China is going to bumpy and volatile,” Shanks said, when asked whether the worst of the country’s recent downturn had passed. “It’s an emerging market transitioning to more domestic consumer consumption.”

Nevertheless, Shanks anticipated that the auto industry in China will “grow modestly” in 2016. For the fourth quarter, Ford’s Asia Pacific operations enjoyed a record profit, and in combination with North America and Europe, this helped offset weakness in South America.

A good story for Ford out of China is the growth of its Lincoln brand. Some Chinese Lincoln dealers are beating out US dealers in terms of business, Shanks said.

Lincoln has been undergoing a brand revival at Ford for several years. After the financial crisis, there were serious discussions about killing the marque, but Ford decided to invest billions in a comeback. In China, this strategy is evidently starting to pay off as Lincoln is now firmly established in the luxury market.

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