Ford: Don’t Get Discouraged by September Numbers

Ford Motor Company (F) recently reported its sales numbers for September, and they were not that great. But, in my opinion, investors should not get discouraged by Ford’s sales.

Let’s see why.
A look at the numbers

In total, Ford Motor sales for September fell significantly over the same period last year primarily driven by fall in customer demand for Ford vehicles.
This was somewhat offset by healthy growth in Ford Transit sales all through the US.

Ford’s overall vehicle sales in the US for September declined 7.7% over last year to about 221,599 vehicles, with a 8.1% decline in Ford branded vehicles sales somewhat offset by a 1.3% sales expansion of Lincoln vehicles. Weak results were driven by a 21% decline in car sales, a 3.4% decline in sales of sport-utility vehicles, and a nearly 1.8% reduction in overall truck sales.

Traditionally the highest selling vehicle, Ford Fusion sales declined 17.5%.
Ford: Don’t Get Discouraged by September Numbers
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The similarly high-selling Ford Explorer saw sales fall 12.3% while the F Series truck saw sales slip 2.6%. Ford stock has fallen about 15% year-to-date, whereas the industrial index S&P 500 (SPY) has grown 5.9% for the period.

Smart investors look past the near-term weakness

The complete Ford vehicle sales for September quarter fell year-over-year but were somewhat offset by healthy sales for a few selected models of the company vehicles. Still, the company is continuing to witness industry-leading declines in vehicle sales for the quarter that can be primarily attributed to the rising competition from other manufacturers coupled with poor global macroeconomic conditions.

Over the long-term however, Ford is continuing to witness robust customer demand, particularly for pickup trucks and vans.A solid demand for Ford’s advanced and affordable new Super Duty pickups enabled the company to boost its average deal prices by approximately $1,100 compared to last year, outperforming the industry’s average of $400.

Ford’s compact sedan, the all-new Ford Aspire, has also gained sales traction in the past few months. The vehicle has the potential to enhance overall company sales, especially in conjunction with the new Figo hatchback.

Ford Figo sales for this month were recorded at nearly 1,400 units, whereas Ford Aspire sales nearly doubled to 2,613 units during September compared to 1,304 units during August.

Expect a reversal over the coming months.

I suspect that Ford's latest weak results won't continue for long. The automobile maker looks likely to keep on growing the overall sales figure by launching attractive car models into growing market segments like hatchbacks and trucks.

If you're a long-term Ford investor, don't worry too much about recent results.
Published on Oct 11, 2016
By Yaggyaseni Mittra

Copyrighted 2020. Content published with author's permission.

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