The second-largest U.S. carmaker Ford (F, Financial) registered solid sales in September on account of rising demand for trucks and SUVs.
The Michigan-based automaker sold 222,248 vehicles, up 8.7% on a year-over-year basis. Ford’s fleet sales, too, experienced growth, up a mammoth 25.1% to 52,704 units in September. The fleet segment made up for nearly one-fourth of the company’s total sales in September. Commercial and government sales were also impressive. The company’s monthly growth was due to the combined growth seen in almost all the segments. In contrast, car sales dropped 1.3%.
Source: www.goodcarbadcar.net
Trucks and SUVs keys to Ford’s success
Decline in the car segment was more than offset by gains in SUVs and trucks. Trucks and SUVs usually generate higher profits for the company. For Ford, continuous growth and improvement in this segment could boost its bottom line in the third quarter.
F-Series trucks are Ford's powerhouse. F-Series trucks witnessed gains in all the months so far barring April. A total of 82,302 F-Series pickup trucks was sold in September, up 21.4%. September, notably, was the best month for the company’s F-Series on a volume basis. There was robust demand for premium Lariat, King Ranch and Platinum. There was also an increase in the average transaction price of F-Series trucks by $2,300 in September.
Source: www.goodcarbadcar.net
SUV sales, on the other hand, grew at the rate of 1.8% to 68,705 vehicles versus 67,496 units delivered in September 2016. The combined sales of Explorer, Sport and Sport Trac SUVs totaled 21,207 vehicles, up 10.8% from the same period last year.
Outlook for third quarter
Over the past two years, the consumers’ craving for big and heavyweight vehicles has gone up significantly. If this trend continues, it will lead to higher margins for Ford. Retail sales surged 4.4% to 169,544 units as compared with September 2016. On a volume basis, retail sales can not only generate revenue but also help the company grab greater market share in the U.S.
Last word
U.S. automakers are witnessing the impact of Hurricane Harvey in Texas in their sales volume. Ford, in particular, is experiencing considerable replacement demand. So far the company has delivered nearly 6,000 vehicles on account of the replacement requirement. The company feels that the U.S. auto industry will grow throughout the year due to Hurricane Harvey.
Ford’s stock surged 8.5% which was the highest monthly gain for the company. Demand for the high-margin SUVs and trucks is projected to be high for the remainder of the year and a further increase in the replacement options can help the company generate more revenue. The company undoubtedly would enter the fourth quarter with great momentum.
Disclosure: I do not hold any position in the stock mentioned in this article.
