The sale of new automobiles has been growing steadily and reached a 9 year high of 1.6 million automobiles in the month of May. Demand for cars such as sports utility vehicles and pickup trucks increased, resulting in higher sales. Hence, automobile retailers too witnessed growing sales.
Ford (NYSE:F) too registered growth in sales for the month of May, especially in the markets of China and U.S. Europe was the only market where sales declined 0.9% over last year. Let us analyze further.
The sales decline in the European market is mainly because of unusually higher sales in May 2013. May 2013 witnessed a jump in sales because of sudden jolt since there was a disruption in supplies for a few months before that. Hence, sales were up more than what it should have been.
However, if we compare it on a year-to-date basis, the picture will get clearer. Sales for the first five months of 2014 actually surged 7.7% over last year’s period. Further, it is more than the industry average of 6.6%. This has resulted in an increase in Ford’s market share in Europe, which stands at 7.9%.
Also, Ford’s commercial vehicle sales soared 12.8% in the month of May, resulting in an increase of market share to 10.5%.
The automaker did exceptionally well in China, the largest automotive market. Sales jumped 32% in May over the prior year. Some of the best selling models were that of the Fiesta and Focus which largely dominated the Chinese market. Focus’ sales jumped a whopping 50% over last year, clocking in at 403,000 vehicles in 2013. In fact, Ford was able to outpace two rivals in China, Toyota and Honda, in the last one year.
Furthermore, Ford’s launch of models such as Explorer, Kuga (also known as Escape), and Mondeo (also known as Fusion) should help in driving sales in the region. This will help the car retailer in expanding its market share in China. Also, it will be introducing Escort and Mustang in the coming months.
The company also performed well in the U.S. as Fusion and Escape continued to drive revenue higher. Sales increased 15% and 10% for Fusion and Escape, respectively. However, the most popular F-Series witnessed a 4.3% decline in May. Nonetheless, the new F-150 is expected to be launched during this year, which should boost sales.
In fact, Ford’s latest quarter performance was also good wherein its top line grew over last year. Its wholesale volume also rose 6% over the previous year, which drove revenue higher. Additionally, the automaker is expected to introduce 23 new vehicles which should be a winning move for the company. Ford is also doing research on the use of tomato fibers in composite materials for vehicles. This will be in addition to eight bio-based materials already being used by the company.
Ford is paving its way to a bright future. Its growing sales and market share in all the markets are clear indications of its success. Moreover, it reaffirmed its guidance and raised its dividends by 25%. These factors, coupled with new launches to be made by the next year, makes Ford a worthy investment.