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Mayank Marwah
Mayank Marwah
Articles (580) 

Ford’s February Auto Sales Decline in the US market

A fall in SUV and retail sales may act as headwinds to its first quarter profit margin

March 13, 2018 | About:

The American automaker Ford (NYSE:F) recorded a 6.9% U.S. sales decline year-over-year to 194,132 vehicles in February 2018, representing the second consecutive month of U.S. sales decline on a year-over-year basis.

F-Series show strength

Highlight of the month remained strong F-Series sales. Total F-Series truck sales came in at 68,000 units, which represent a gain of 3.5% on a year-over-year basis. On a month-over-month basis, this reflected a 1.6% sales growth. Digging deeper into the F-series segment, major growth drivers for the month were F-Series Super Duty premium truck models, including King Ranch and other high-end variants. Furthermore, the recently launched 2018 F-150 truck was also in high demand for the month.

The stellar show that was put up by F-Series in February brought the average transaction price (ATP) up by $1,500, to $47,200. Needless to mention, customers are shifting from small cars to SUVs and trucks. Given the situation, persistent rise in sales of SUVs and F-Series can benefit the Blue Oval considerably in the long run.

Bird’s eye view

The company saw steeper decline than what was forecasted. This was due to drastic fall in sales of SUVs and cars, down 12.3% and 12.1%, respectively. What also attributed to the sales decline were poor fleet sales, down 3.8% to 71,000 units. Retail sales, too, declined 8.5%.

What’s been the key for the company was that it continued to sell the right mix of vehicles, which increased the company’s ATP to $36,200 that was more than the industry average of $32,200. Some of the popular SUVs that were responsible for ATP growth were Explorer, Edge and Escape.

At the end of February, Ford’s inventory level stood at 89 days' supply. Ford’s inventory levels were somewhat high when compared with General Motors’ (NYSE:GM) inventory level of 85 days’ supply.

The Blue Oval’s retail amounted to 123,000 units, which reflected an 8.3% decline from February 2017. Sales of Expedition and Mustang dropped 26.2% and 30.1%, respectively.

Last word

There were few positives that the company could take out of its February performance. However, SUVs and retail sectors remain areas of concern. SUVs generate significant bottom line for the companies in general. A fall in Ford’s SUV sales in US could well and truly hamper Ford’s first quarter results. Additionally, poor retail sales can also take a toll on the company first quarter results. Time will tell how the company would be able to bounce back and take advantage of huge demand of trucks and SUVs, which is currently prevailing in the U.S. economy.

Disclosure: I do not hold any positions in the stocks mentioned in this article.

About the author:

Mayank Marwah
A seasoned writer with keen interest in the automotive, technology, telecommunication, retail and aerospace sectors.

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