With a 183% Gain on Ford Motor Co.'s Shares, This Money Morning Stock Pick Was Truly a "Better Idea"

The Outlook for Ford's Shares

Although the short-term stratospheric gains are past, this stock offers very solid prospects going forward, especially if the global recovery continues to gather strength. Expect Ford shares to continue to move higher, especially if they pull back below their recent 10-day moving average of about $12.90. The shares have rebounded after several other recent pullbacks.

The company's progress in Europe is definitely also worthy of note. By selling 192,500 cars in March, Ford actually knocked the domestic incumbent Volkswagen AG (PINK ADR: VLKAY) out of the top spot. Those sales included 68,000 Ford Fiestas, the largest European monthly sales total for any model in the company's history.

Back in 2009, while GM and Chrysler were talking bailouts, Ford was talking about products. Rob Stevens, chief engineer of commercial vehicles, told one automobile journalist "we are freshening our product line globally [with] unique models [and] new models."

By the end of 2013,  at least seven Ford vehicles will be built on "global" platforms, meaning that the basic designs will be the same from one country to the next, with the only differences being due to safety or environmental regulations, or perhaps some detailing differences that are related to different customer preferences. That's a strategy that will enable Ford to control costs, shift production around to take advantage of currency swings, and streamline its development programs. In short, it's a winning global formula.

It's going to have to be: If Ford is going to take this turnaround to the next level, the Detroit stalwart will have to add some serious global muscle, and prove itself able to compete in such tough markets as India and China.

Moving Up in India

Ford is making major investments in India, a promising market but one that has proved "vexing" for Ford in the past, according to automotive journalists. Just last month, Ford finally launched its new "Figo," a made-for-India model aimed at that country's "small-car" market, which accounts for 70% of the new car sales there.

Domestic Indian automaker Tata Motors Ltd. (NYSE ADR: TTM) grabbed major headlines around the world a few years ago when it announced - and again when it introduced - the Tata Nano, a conventional car aimed at entry level drivers that was intended to carry a sticker price of $2,500. At the time, the nearest competitor product was the Maruti Suzuki India Ltd. Maruti 800, priced at $3,988.

Ford has never done well in India, but that appears to be changing.

Take the Ford Figo. Aggressively priced at $7,690, the Figo will go head-to-head against such established models as the Hyundai i10, the General Motors Beat, Chevrolet Spark, Volkswagen Polo, and the Maruti Suzuki India Ltd. Ritz and Swift. Renault SA, Nissan Motor Ltd. (PINK ADR: NSANY), Toyota Motor Corp. (NYSE ADR: TM), and Honda Motor Co. Ltd. (NYSE ADR: HMC) also have plans to introduce models for India's small-car market within the next few years.

"If you are not in a segment where 70% of cars in India are purchased, you are not there at all," Ford India President Michael Boneham said at a March 9 press conference announcing the new car. "This is the right product and at the right price point for Ford ... we are not in the business to lose money. You can get profits of scale and you can also compete in a very price-sensitive environment."

Ford is building the new car at its $500 million plant in Chennai, Tamil Nadu, which has an annual production capacity of 200,000 vehicles.

The U.S. automaker is already seeing results. Earlier this month, Ford said its March sales for India soared 203% on a year-over-year basis. The 9,478 cars sold in March represented a 194% increase from last year. The surge was ignited by the Figo, which was so well received by India's budget car market that Ford received orders for more than 10,000 vehicles in the first month alone. The company already started a second shift at its Chennai factory.

"The launch of Figo is the start of a transformed Ford in India, and a true reflection of our commitment to delivering world-class products that allow Indian customers to feel the difference," Boneham, the Ford India president, told Dow Jones.

Ford right now operates 164 dealerships in 97 cities in India; plans call for that to reach 200 by the end of the year.

Revving Up Record Results in China

Ford's upbeat India news was actually eclipsed by blowout first-quarter numbers in China, where the company reported record results for the first three months of the year.

First-quarter sales - including revenue from joint ventures - zoomed 84% to 153,362 units. The results underscore Ford's growing success in the China market: The record sales number wasn't due to any one particular model, but was due to the growing popularity of its entire model line. Sales of the company's Focus, Mondeo, and S-MAX models each increased between 47% and 56% last month, while the Ford Fiesta broke its monthly sales record in China with 7,448 cars sold. Focus sales totaled 14,793.

Much of the company's China production is managed by its Changan Ford Mazda Automobile Corp. Ltd. joint venture.

Ford continues to streamline its operations wherever necessary - even in China, which last year became the world's No. 1 automobile market as measured by actual vehicles sold. On March 28, Ford finally offloaded its Volvo unit to China's Zhejiang Geely Automobile Co. Ltd., a subsidiary of Geely Automobile Holdings Ltd.

Company leaders believe Ford is well positioned for the growth they expect to see in China, India and other parts of emerging Asia.

"We are pleased that our continuing momentum helped get 2010 off to such an exceptional beginning," Ford Motor China CEO Robert Graziano said in a statement. "Chinese consumers appreciate the products developed under the ONE Ford plan and our efforts to provide a full product lineup of Ford vehicles that are class-leading in quality, fuel efficiency, safety, styling, and drivability."

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• Hoovers.com:
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