Ford Motor Company Brushes Off Brexit Concerns and Posts Solid July Sales in Europe

By Markets Fool.com


Ford's Mondeo Vignale in Europe. Image source: Ford Motor Company.

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Ford Motor Company (NYSE: F) investors breathed a sigh of relief Friday morning when details surrounding the automaker's sales in Europe hit the news. For those concerned that auto sales would slump due to the Brexit scenario, July's sales figures are a good sign that the impacts are thus far minimal. While it will take at least a year to fully understand what's going to happen, it's at least a big win that there hasn't been a knee-jerk negative reaction by consumers in the region.

Let's glance at Ford's total figures out of Europe, some highlights, and, of course, how Britain's sales fared.

By the numbers

It was a pretty solid month overall, with its best July passenger car sales total since 2011 and its best commercial vehicle sales since 1993, in its traditional Euro 20 markets. In total, it was Ford's best July sales month since 2009.

Ford's sales moved 4.5% higher to over 105,000 units during July with its market share moving 50 basis points higher to 8.1% for the month. While it was still a good month, it was a slower pace than the year-to-date gain that stands at a 7.1% increase to 826,800 units.

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Some of that slowdown was indeed caused by slumping sales out of Britain following the Brexit vote, but it wasn't as bad as many would have guessed considering all the gloom-and-doom headlines. During July, Britain remained Ford's top market in terms of sales volume, but it did decline from 30,800 units during last year's July down to 29,800 units last month.

Show me the highlights

Ask and you shall receive. There were a couple of notable highlights within Ford's European sales data. One such highlight was the continued trend of Ford selling a more profitable mix than the industry average. Seventy-six percent of Ford's passenger car sales were in higher value retail and fleet segments during July, 470 basis points higher than the industry average.

A real bright spot in Ford's sales data throughout 2016 has been its surge in CVs, which is an extremely valuable business. Ford continues to be Europe's No. 1 CV brand for July and for the full-year with a 21% sales gain last month and 18% gain year to date. It's also a larger chunk of total sales than many realize, with Ford's July CV sales tallying more than 24,000 units.

Another continued trend for 2016 has been the success of Ford's premium trim models, which help both the top and bottom lines for the automaker. Consider that sales of premium trims -- the Titanium, Mondeo Vignale, Fiesta ST, Focus ST, Fiesta and Focus Red/Black editions -- generated a lopsided 79% of all Ford passenger car sales during July. Ford's Titanium trim is driving that huge gain as Titanium sales rose a staggering 3,600 basis points, or 36 percentage points, to 72% of total sales in July.

Sales of premium trims and editions are more important than many investors realize; because passenger cars carry thinner margins than luxury vehicles or larger SUVs/trucks, being able to increase the price tag through premium trims and options is critical for improving financial results.

All in all, it was a solid July report from Ford's Europe operations at a time when many expected much worse out of Britain. On the positive side, there are new Vignale versions of the S-MAX, Kuga (Escape) and Edge that will roll out later in 2016 and also the Fiesta ST200 performance car. Europe was a bright spot for Ford during its worse-than-expected second quarter and, hopefully, these results will continue to sustain profits on the company's bottom line despite a slight slowdown in Britain.

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Daniel Miller owns shares of Ford. The Motley Fool owns shares of and recommends 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.