If you follow Ford Motor Company (NYSE:F), General Motors Company (NYSE:GM), or the automotive industry as a whole on a regular basis then you know what to expect during the quarterly reports. The industry is very transparent with monthly sales figures, incentives, and transaction prices – and all those factors have been very positive now that the first half of 2013 is in the record books. That’s part of the reason for the optimism in Ford Motor Company (NYSE:F) and why its share price is the highest it’s been in about two years. There’s one number in Ford’s second-quarter earnings report that could throw a wrench in its momentum: losses in Europe.
What we know
For the second quarter, Ford Motor Company (NYSE:F) saw an uptick in sales volume and market share. Ford basically said that it learned its lesson during the U.S. recession and wouldn’t resort to dishing out massive incentives and taking huge losses per vehicle sold to salvage market share. Ford essentially conceded it would lose some share to minimize its profit loss. Instead, year-over-year June market share numbers show that Ford has actually gained a full percentage point, from 7.2% to 8.2%, in the 19 traditional European markets.
That means that Ford Motor Company (NYSE:F) gained in market share every month in the second quarter compared to the previous year. The quarter ended on a solid note as Ford Motor Company (NYSE:F)’s sales volume increased 6.4% in an industry that did the opposite – it fell 6.5%. The reason for this is Ford’s strategy to focus on delivering a vehicle worth buying, rather than pushing unpopular models off the lots with the incentives I mentioned earlier – and it’s working.
“With all the new vehicles and technology we are bringing to market, we made a big bet to focus on retail share and very deliberately reduce participation in sales channels that are less healthy for our brand and residual values,” said Roelant de Waard, vice president, marketing, sales and service, Ford Motor Company (NYSE:F) of Europe in a Ford press release. “This is paying off with the success of new vehicles like the Fiesta, Kuga, B-MAX and Transit Custom.”