DETROIT — The world's largest vehicle market is causing some of Ford Motor Co.'s biggest headaches.
The automaker lost $378 million in China during the third quarter, down from a $102 million profit there a year earlier. That nearly half-billion-dollar swing dragged Ford's otherwise-profitable Asia Pacific region into the red and was a big reason executives said they no longer expect to meet a companywide target of 8 percent global margins by 2020.
In light of the dismal performance, Ford last week hired a new CEO for its China operation, Anning Chen, and separated the country into a standalone unit directly accountable to company headquarters. Chen, 57, a former Ford executive with 25 years of industry experience, was most recently CEO of China's state-owned Chery Automobile and chairman of Chery's joint venture with Jaguar Land Rover.
Ford is facing slower sales in China due to an aging product lineup, as well as increased competition and trade barriers created by the Trump administration's tariffs and retaliation by Beijing.
It's a stark turnaround for a country that just a few years ago represented a big growth opportunity for Ford, which began selling vehicles there later than many of its rivals. Ford's new-vehicle sales in China plunged 43 percent in September from a year earlier and were down 30 percent in the first nine months of 2018.
"China has really changed," Jim Farley, Ford's president of global markets, told Automotive News this month.
Farley said Ford's profits in China are driven by three key vehicles: the Ford Edge, Kuga and Transit. All are at the end of their life cycles.
The company is attempting to fix that problem with a product blitz that includes 50 new models by 2023, including a China-only crossover called the Territory and a redesigned Ford Focus sedan that won't be coming to North America.
"These launches and the growth opportunity of improving profit really come down to those products and how they land in the market," Farley said.
Chen, who starts as CEO of Ford China on Thursday, Nov. 1, previously spent 17 years at Ford in executive management roles focused on product and technology platform development and JV expansion. He joined Chery in 2010, when it was the seventh-largest vehicle manufacturer in China. He earned an MBA from the University of Michigan and a Ph.D. in engineering from the University of Cincinnati.
"Success in China is critical as we reposition our global business for long-term success," CEO Jim Hackett said in a statement.
Despite a 37 percent decline in third-quarter net income, Ford's stock jumped 9.9 percent the day after last week's earnings report. That was its largest one-day gain since April 2009, though the shares still ended the week below $9.
Ford's earnings beat analyst expectations by a penny per share, and revenue rose 3 percent to $37.6 billion, driven by higher sales of big-ticket vehicles in North America, including the redesigned Ford Expedition and Lincoln Navigator SUVs.
In North America, earnings rose 7.5 percent to $1.96 billion. Profit margin for the region was unchanged from the same period a year ago, at 8.8 percent, despite fewer sales and a drop in market share. That's because Ford is selling fewer low-margin sedans as it phases them out and more high-profit SUVs and pickups.
Hackett said those results "demonstrate early evidence" that his restructuring plan is improving the business.