Ford Motor Company (NYSE:F) had another strong month in May, with its U.S. sales rising 14% over year-ago levels, ahead of both analysts’ estimates and the overall market’s sales pace.
The story here is a simple and good one for Ford: Good products plus an improving economy equals great sales gains.
Sales of Ford’s newest products continued to show strong growth, while its most profitable products – the F-Series pickup line – hit sales levels not seen since 2007.
That all suggests great things for Ford’s second-quarter profits. But behind the headlines, there’s more good news for Ford shareholders. Let’s take a closer look.
Two big economic forces driving strong results at Ford
According to Ford Motor Company (NYSE:F)’s sales analyst, Erich Merkle, there are two big dynamics at work in the U.S. auto market right now.
As he put it in a conference call on Monday morning, “We have seen a long-term trend toward smaller cars and utilities, which began in 2004.” That trend is still very much in force, Merkle said. “At the same time, we also witnessed a cyclical rebound in full-sized pickups.”
What’s that mean in terms of Ford’s sales? Simply put, it means that Ford’s sales gains are outpacing the overall market’s, because Ford Motor Company (NYSE:F) has strong products in the areas that are booming right now.
Sales of the F-Series line of pickups – that’s the F-150 and its Super Duty F-250 and F-350 siblings – totaled 71,604 in May, up almost 31%. That’s the first time Ford has sold more than 70,000 full-sized pickups in a month since March of 2007, the company said.
Meanwhile, Ford’s sales of its fuel-efficient car models were also strong. The small Fiesta, compact Focus, and mid-sized Fusion each gained about 10% over year-ago sales totals in May. And Ford’s entry in the compact utility wars – the Escape, all-new last year – continued to show impressive strength, up 28% for the best month in Escape’s 13-year history. Yep, best ever.
Making gains in Toyota Motor Corporation (ADR) (NYSE:TM) and Honda Motor Co Ltd (ADR) (NYSE:HMC)strongholds as well
Ford’s U.S. sales chief, Ken Czubay, spoke enthusiastically on Monday about the company’s recent sales gains in what has not always been Ford-friendly territory – coastal U.S. cities.
Again and again, Czubay pointed to gains in the Los Angeles, San Francisco, and Miami regional markets for Ford’s fuel-efficient new models like the Fusion and Escape. Those are Toyota Motor Corporation (ADR) (NYSE:TM) and Honda Motor Co Ltd (ADR) (NYSE:HMC)strongholds – and Ford is very pleased to be gaining ground on its longtime Japanese rivals.