Ford’s Market Share Benefitting from “One Ford” Plan
Ford’s (NYSE:F) car sales in North America has benefited from the global recovery in the automotive industry as well as from its One Ford vision, which entails a focus on producing more fuel-efficient products with better designs and launching them in global markets. These steps have resulted in 22% year-over-year increase in Ford’s Q1 2011 earnings and has also boosted its market share. (See Ford’s Earnings Highlight Positive Trends) Ford primarily competes with global automakers like BMW (GR:BMW), GM (NYSE:GM), Honda (NYSE:HMC), Toyota (NYSE:TM), Daimler (ETR:DAI) and others.
While we estimate Ford’s car market share in North America will continue rising and reach 12% by the end of our forecast period, Trefis members expect the share will rise slightly higher. See the below chart. The members estimates have a marginal impact on our $25.59 Ford’s stock price estimate since Ford’s car business in North America constitutes only around 12% of the company’s stock value by our analysis.
Continuing Recovery in Global Automotive Industry
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Global automotive industry is continuing to recover from the automotive crisis and recession witnessed during 2007-09. According to a market report, Global Top 10 Automobile Companies: Industry, Financial and SWOT Analysis, the recorded revenues of the top 10 global automobile companies will increase from $1.08 trillion in 2009 to to $2.5 trillion in 2014. [1]
Another report by US Global Investors states that rising vehicle penetration in emerging markets like China, Turkey, Brazil and India will be the major growth factor for the automobile industry. The report further states that the improving job environment in the U.S. is encouraging consumers to buy high-ticket items like automobiles. [2]
“One Ford” Vision Benefiting Ford’s Car Business
Ford’s “One Ford” plan, which focuses on restructuring to achieve better operating profitability, developing new products and improving balance sheet, helped increase vehicle sales for Q1 2011. Under this plan, Ford aims to accelerate the development and production of new cars with focus on better designs, fuel-efficiency, safety and value add for customers with the latest launches. The contribution of cars to Ford’s total vehicle sales increased from over 33% in 2010 to 35% in 2011 Q1 and displays customer confidence in Ford’s fuel efficient product such as Fiesta, Fusion, Edge, Escape, etc. that continues to fuel demand.
Our complete analysis for Ford’s stock is here.
Notes:- Global Automobile Industry to Accelerate Recovery, clubdoconline.com, March 2, 2011 [↩]
- Investing in the Auto Industry’s Recovery, TheStreet.com, Feb 28, 2011 [↩]