Ford’s August Sale Results Have A Silver Lining

by Trefis Team
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Recently, Ford Motor Company (NYSE: F) reported its sales numbers for August 2017 and while overall vehicle sales have declined by 2.1% year on year, the company reported a 15% increase in its F-series pickup truck sales. The industry environment has improved in the last couple of months, with an overall decline of 2-3% in August compared to the 7% number for July. However, Ford Motors was not able to perform better than the industry (while General Motors reported a 7.5% increase in sales) and its August results are in line with the industry performance. As passenger car sales soften in the U.S., several automakers including Ford are bearing the brunt of this decline. Ford’s overall car sales declined by nearly 9% in August and in the retail segment this number was around 13%.  The company’s luxury car brand Lincoln also suffered a 6% decline in sales. The only silver lining was the strong performance of its F-series which is the primary revenue driver for the company

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F-Series Remains A Strong Performer

While Ford Motors has suffered from the softening industry environment and consumer preferences shifting away from sedans to SUVs and crossovers, its F-150 pickup truck has continued to perform strongly. The company’s incentive spend on this brand had been down $1,280 year on year, despite aggressive competition from other players. In August 2017 the company’s Super Duty trucks, Lariat, King Ranch, and Platinum accounted for more than 50% of its retail sales. The company also started the sales of its new 2018 Ford F-150 and the initial response has been encouraging. Ford Motors generates the highest revenues from its North American trucks segment and a strong performance in this market is crucial for the company’s revenue growth.

Disappointing Sales In China

China has been a bright spot for Ford with its Lincoln brand gaining popularity in the region. However, in August 2017 the company’s sales in the region were down by 1% year on year. Lincoln continued to see demand in the region with sales in August doubling compared to the same month in the previous year. However brands such as Focus and Taurus sold under Changhan Ford (CAF) performed poorly, dragging the overall performance of CAF to a 8% year on year decline in August 2017. The company is working on launching new energy vehicles in the region to comply with the changing regulations and these initiatives should drive sales in the region going forward.

Ford’s sales in August were disappointing especially given General Motors’ stellar performance. However, the strength of the company’s F-150 brand will ensure that Ford is able to weather the storm of falling car sales as customer preferences shift towards SUVs and crossovers.

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