The reason behind Ford Motor Company (NYSE:F)’s success is quite simple. It makes great vehicles. It continually invests in new models, which results in a fresh line-up that creates a huge demand.
In May, the seasonally-adjusted annual rate (SAAR) of new-vehicle sales climbed to 15.3 million in the US with the auto industry noting an 8.3% increase. In the backdrop of improving consumer confidence and huge pent up demand from the aging US vehicles, the Blue Oval is becoming unstoppable.
Taking the industry by storm
Ford Motor Company (NYSE:F)’s May performance with its 14% year-over-year surge was most spectacular. Analysts had expected an 11% increase. It sold 246,585 vehicles in the US compared to 216,267 in the year ago quarter and 212,584 in April. Sale of F-series pickups were up by 31% year over year, Ford Fusion grew 10%, and Ford Escape grew 26%.
The other two Detroit automakers – General Motors Company (NYSE:GM) and Chrysler which is owned by Fiat – are also putting up solid numbers.
In May, after Ford Motor Company (NYSE:F), Chrysler was most impressive with its 11% year-over-year increase, way ahead of the 6.4% predicted by analysts. Ram trucks, which grew 22%, drove sales together with the Jeep SUV and Dodge Dart.
General Motors Company (NYSE:GM), with its 3.1% increase, trailed analysts’ estimates of 5.5%. Although the Silverado pickup put up a 25% year-over-year increase, there was a 3% decline in Buick and ongoing weakness in the Malibu mid-size sedan and Impala full-size car.
Through May, out of the top 20 bestselling vehicles in the US, Ford has five, a feat matched by no other automaker. The vehicles are F-Series, Fusion, Escape, Focus, and Explorer. GM has four in that list – Silverado, Equinox, Cruze, and Malibu. Chrysler’s only contender is the Ram trucks.
Ford has an edge where it matters the most
Ford Motor Company (NYSE:F) sells the maximum pickups in the US, which gives it a solid competitive edge. This is significant because pickups carry much larger margins than passenger cars, something to the tune of $10,000 per truck.
In May, Ford sold 71,604 pickups, crossing the 70,000 mark for the first time since March 2007. Neither General Motors Company (NYSE:GM) nor Chrysler is anywhere close. GM sold 59,344 trucks for Silverado and Sierra combined, while Chrysler sold 31,672 Ram trucks.
Between Ford, GM and Chrysler, they hold 93% of the entire pickup market in the US. The F-series has been the national bestseller for the past three and a half decades. Now, GM is planning to challenge this with its redesigned Silverado, which has started arriving at the dealers.
The new Silverado, with fantastic fuel efficiency, is a great vehicle, and the market is buzzing with excitement over the upcoming duel between Ford Motor Company (NYSE:F) and General Motors Company (NYSE:GM) in the truck market. Although Chrysler trails the other two in truck sales it is a force to reckon with. The new Ram models reached dealers a couple of months back and after a slow start, sales are now growing fast.
The market dynamics between these three would be quite interesting over the coming months and a determining factor for deciding their fates. So far, Ford has not shown any anxiety and boldly announced capacity additions for building more F-150 pickups. This will involve adding a third shift at its Kansas City assembly plant from the third quarter.
In 2012, Ford Motor Company (NYSE:F) sold around 645,316 F-Series trucks and analysts expect that the number may exceed 700,000 this year.