Thanks to solid sales data and improving profitability, shares of Ford Motor Company (NYSE:F) have been running at full speed lately. But the company´s product portfolio provides plenty of potential for growth in the middle term, and the stock is trading at attractive valuation levels. So fasten your seatbelt and keep your hands on the wheel, because Ford Motor Company (NYSE:F) is running at full speed.
Pick up those profits
With its big fat profit margins and growing volume The F-Series is the biggest profit maker for the company, and sales data has been nothing but encouraging over the last months. April sales were 24% higher versus the same month in 2012, and year-to-date data is showing a 19.1% increase in comparison to last year.
The F-Series has been America´s bestselling car for 36 consecutive years, and there is no slowdown in sight for this iconic product. The average age of trucks on the road is 13 years, and housing activity is positively correlated with truck sales, so the F-Series will continue benefitting from an improving housing sector over the next months.
has been doing notoriously well in that segment too. The Chevrolet Silverado increased its sales by 28.1% in April and 23.5% year-to-date thanks to generous sales incentives. GM is redesigning its Silverado and Sierra models, and the new versions are expected to hit the market this spring. The company is also planning to strengthen its position in this segment by launching new versions of its midsize pickups – the Chevy Colorado and the GMC Canyon – to ensure broad coverage of the truck market.
GM is increasingly doing well in the truck segment, and it’s increasing its competitive pressure against Ford Motor Company (NYSE:F) in the middle term, so it´s certainly a competitor to monitor closely. On the other hand, Ford enjoys remarkable customer loyalty in this business, and a growing market will provide enough room for both companies to benefit from increasing trucks sales over the next quarters.
Japanese competitors Honda Motor Co Ltd (NYSE:HMC) and Toyota Motor Corporation (ADR) (NYSE:TM) have been well known for producing better and more fuel efficient cars than those built by Ford Motor Company (NYSE:F) and its American peers, but things seem to be changing lately. Ford has achieved remarkable success with products like Fusion and Escape, and this creates a whole new area of promising opportunities for the company.
The Ford Motor Company (NYSE:F) Escape delivered an amazing 52% increase in sales for the month of April versus the same month last year, outgrowing its closest competitor, the CR-V from Honda Motor Co Ltd (NYSE:HMC), by a wide margin. With 98,809 units sold in the first four months of the year, the Escape is now above the Honda CR-V, which sold 91,893 units in the same period.
The Escape has been named “Car of the Year” by Popular Mechanics, and international reception for the product has been encouraging too, so Ford is planning to expand sales in Europe and Asia. If the company can internationally replicate the success it´s having in the US, the Escape could mean a big boost to Ford Motor Company (NYSE:F)’s revenues.
The Ford Fusion is a true game changer for the company, not only in terms of sales, but also when it comes to improving consumer´s perception about the brand and the quality of the cars that Ford Motor Company (NYSE:F) manufactures. The Fusion has won a considerable amount of awards: it has been named “Green Car of the Year,” “Best Car for Families,” and “Best Car for the Money.”
Sales of Fusion increased by 23.7% in April to 26,722 units, doing much better than its competitors the Toyota Camry (-13.9%) and the Honda Accord (-5.2%). Although the Camry and the Accord are still bigger than the Fusion with 31,710 and 33,578 units sold in April respectively, the Fusion is clearly closing the gap and gaining market share versus Japanese competitors.
Building high-quality competitive vehicles is the best kind of free advertising a company can have, and Ford Motor Company (NYSE:F) seems to be enjoying the benefits of a clearly improved product portfolio.