U.S. Auto Sales: Ford Motor Company Investors Shouldn't Overlook These Details in May's Results

By Markets Fool.com

Heading into the release of the May U.S. auto sales numbers last week, analysts were a bit cautious with their expectations. The industry seasonally adjusted annual rate, or SAAR, for vehicle sales was projected to check in at a healthy 17.3 million, but with a year-over-year sales decline of 4.4% -- mainly because May 2014 was a strong sales month and tough comparison.

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But U.S. auto sales for May 2015 actually surged to an SAAR of 17.7 million, and a 1.3% sales gain, on the back of a strong Memorial Day holiday and a five-weekend month.

Ford Motor Co.'s 1.3% sales drop last month was better than the expected 3.1% decline, but investors might have overlooked a few important details. Let's dig in.

F-Series: Good and bad
Like many Ford investors, in each monthly sales press release I first look to sales of the F-Series, the best-selling truck in the United States. Things looked a bit harsh for May, with sales down nearly 10% to just under 62,000, but it was more of a supply issue, rather than lack of consumer demand, because production of the 2015 F-150 has yet to reach full capacity.

There are a couple of things to consider here, though. First, 62,000 is still a good monthly F-Series sales figure -- Ford itself has long considered any month when sales top 50,000 to be a strong month.

On the other hand, the competition did gain ground in May. In May 2014, Ford sold 68,520 F-Series trucks, outdoing the combined sales of64,974 Chevy Silverados and GMC Sierras fromGeneral Motors. Last month, however, the GM trucks' combined sales topped 70,000, while the F-Series maxed out at 61,870.

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Considering that these full-size trucks represent the automakers' most profitable products, it's a big deal to lose significant ground to competitors. In fact, GM's two full-size trucks together are on pace to outsell the F-Series in 2015 for the first time in five years. One question remains: When the F-Series reaches full production this quarter, will it begin to take back market share at a significant clip?

Smaller summer shutdown
In part because Ford believes it can sell more F-150s when production reaches full capacity this quarter,the automaker plans to shorten its standard summer shutdown for a majority of its North American assembly plants. By slashing the closure from two weeks to one week, units produced -- among multiple models -- should increase by about 40,000.

The majority of those 40,000 units will be Ford's full-size trucks and popular SUVs/utilities. That's good news for investors, as the 2015 F-150 is spending only 26 days on dealer lots, which is less than the roughly 60-day industry average. Also, sales of the Ford Edge were up 34% year over year in May, and the crossover was being driven off dealership lots in just 13 days on average. Inventory for the Ford Escape also remains tight, and this should be a busy summer for dealerships, as the new 2016 Explorer just went on sale in May.

Speaking of tight supply, that brings us to the last figure that investors might have overlooked last week: average transaction prices.

Ford's 2015 F-150 King Ranch is one of multiple high-end trims available. Image source: Ford Motor Co.

Money, money!
Many factors go into vehicles' average transaction prices, but it's clear that Ford's 2015 F-150s are generating an increasing amount of revenue per sale. How much more, you ask? The new F-150 full-size truck averaged a price tag of $43,300 in May, which was a hefty $3,000 increase from a year ago; it was also a record high for the truck.

One reason for the F-150's higher price tag is that the truck's premium trim packages are selling extremely well. In fact, Ford executives noted that 65% of F-150 retail sales in May were of high-end trim packages; that rate compares very favorably to its historical mix of about one-third of F-150s selling with high-end trim packages.

Looking ahead, investors should keep an eye on sales of Ford's trucks and SUVs/utilities. If gas prices and interest rates remain low, the automaker should finish off 2015 with strong revenue and profit numbers.

The article U.S. Auto Sales: Ford Motor Company Investors Shouldn't Overlook These Details in May's Results originally appeared on Fool.com.

Daniel Miller owns shares of Ford and General Motors. The Motley Fool recommends Ford and General Motors. The Motley Fool owns shares of Ford. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.