Ford Focus Triumphs Over Toyota Corolla

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Ford (NYSE: F) Focus is giving Toyota (NYSE: TM) Corolla a run for its money and has managed to unseat the 47-year old veteran from the number one position in 2012 clocking over 1 million sales compared to 970 thousand by Corolla. Given that the Focus together with the Fiesta represent the best of Ford CEO Alan Mulally’s ‘One Ford’ strategy, the performance of these cars would have a strong bearing on investor confidence.

Ford is promoting the new 2013 Ford Focus like never before – and why not! The car seems to have been re-born shrugging off its unimpressive exteriors and cheap looking interiors. The 2013 Ford Focus is suave and stylish with a sporty look that is almost unmatched in the compact sedan segment. And it is not just about good looks either for the car offers impressive fuel economy at 26/36 mpg (city/highway) with manual and 28/38 mpg for AWD. Fuel efficiency has been one of the determining factors sealing the fates of car makers and this has pitted Ford Focus against seasoned performers like Honda Civic and Toyota Corolla. 

It is true that the Corolla is still ahead of the Focus in the US. But what we find significant is that Corolla grew its sales by 21% and remained at the 8th position while in comparison Focus clocked 40% growth and moved up to the 11th slot from its earlier 18th. Overall both auto makers are outpacing the US market. The January numbers reveal that the US market has grown by about 14%. Against this, Toyota posted a 27% increase and Ford 22%.

To regain its position Toyota is planning to re-vamp the Corolla whose last makeover happened in 2008. The company is yet to announce the timing and details of the roll out, but it is obvious that the focus (no puns intended) would be on giving the Corolla a more youthful look. For the worldly wise the Corolla has always meant value for money but it is often regarded by the youngsters as plain boring! And it is this image that Corolla would attempt to shred in its new avatar.

We would also keep an eye on China as the outcome in this market would be a crucial factor in determining the tilt in 2013. And guess which car topped the charts in 2012 at this hot spot – none other than Ford Focus! Sales increased by a whopping 57% to 296,360 units. The Focus surged past from its 9th position in 2011 to become the new champion toppling the 2011 No. 1 - General Motor's Buick Excelle. In fact, China has emerged as the largest market for the Focus bigger than both the US and Europe. And what happens to the Corolla? Well, if it was harboring any desire to get into the top 10 that was not to be. It fell from 11th to 16th position. It is true that Japanese car makers suffered from the boycott of Japanese cars in China in the second half of 2012 due to the two countries being at loggerheads over the islands issue. But now that things are getting better and the outlook for Japanese manufacturers improving, Corolla would need to figure out a clear strategy for this market if it were to make a comeback in 2013.

All in all it looks like the Ford has a winner with the Focus. If the car continues it’s winning run in 2013 as well it will go a long way for the stock. It will add to Ford’s success story and bolster its valuations. We think that Ford makes a solid investment proposition and its many upsides including the success of the Focus make the stock very attractive at its current valuation.

Tina De has no position in any stocks mentioned. The Motley Fool recommends Ford. The Motley Fool owns shares of Ford. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!

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