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Ford Motor Company (F)’s New Models Are Hitting Their Stride

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On Friday, Ford Motor Company (NYSE:F) reported strong February sales, with total deliveries up 9% year over year. One thing that was particularly notable about the report was that Ford achieved very strong sales of the Escape crossover and Fusion midsize sedan, two major products that were refreshed last year. While Ford generates most of its profit from the F-Series line of full-size pickups, the Escape and Fusion are critical products for Ford as it tries to diversify its product lineup. This is because the crossover and midsize car segments are two of the largest segments in the U.S. auto market (with the midsize segment recently becoming No. 1).

Ford Motor Company (NYSE:F)Month in review
Ford Motor Company (NYSE:F)’s F-Series trucks had another strong month in February, with sales up by 15% to 54,489. However, the Escape and Fusion were the real stars of the show. Escape sales grew 29% to 24,110, while Fusion sales grew 28% to 27,875. The Fusion’s gains were particularly remarkable given that the car’s February 2012 sales were already a record high for the month.

Both strong performances came after similarly good results in January. Escape and Fusion both generated record January sales this year, with Fusion up 65% to 22,399 vehicles. It seems that car buyers are shrugging off Ford Motor Company (NYSE:F)’s recent quality control problems: The new Escape was recalled four times in 2012, while the Fusion was recalled twice. Fortunately, there have been no new recalls for either model since early December, which should reassure customers.

Fusion gaining traction
While the Escape and Fusion results were both very impressive, the Fusion’s growth is probably more important at this point. The midsize car segment was the largest in the U.S. last year, and it has long been dominated by the Japanese automakers. Toyota Motor Corporation (ADR) (NYSE:TM) has built a massive following for its Camry midsize sedan, which has been the segment leader for a long time. The Honda Motor Co Ltd (ADR) (NYSE:HMC) Accord has also performed well and typically takes the second spot.  In 2012, the Fusion was the fourth-best-selling midsize car in the U.S., with 241,263 units sold. The Camry led the segment with 404,886 sold, followed by the Accord with 331,872, and the Nissan Altima with 302,934.

In 2013, Ford has vaulted over Nissan into the third spot in the midsize market: Fusion outsold the Altima for the second straight month in February. While Nissan’s February Altima sales total of 27,725 put it only 150 vehicles behind Fusion, it is still impressive that Ford has quickly closed what was a 20% gap in 2012. Moreover, the Honda Accord’s grip on the No. 2 slot is becoming tenuous; the Accord outsold the Fusion by only 124 units last month. The Toyota Camry maintained a significant lead with 31,270 units sold, but Fusion has certainly come within striking distance of the category leader.

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