Monthly sales results for major automakers are key data points for investors, as they give insight into how well a company is going to fare on its top line. But it can be fairly difficult to keep track of sales releases in major markets given all the noise surrounding these massive companies. To help with that, here are Ford Motor Co.'s (NYSE: F) sales results and highlights for November from its three most critical markets: U.S., Europe, and China.
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The profit engine
Image source: Ford Motor Co.
Investors know that as goes the United States, so goes Ford. Sales in the carmaker's most critical market were up 5%, but that doesn't tell the full story. Ford's total sales were driven higher by healthier retail sales, which are preferable to fleet sales. The result here is strong -- they were up 10%. Meanwhile, fleet sales, which are decent business but less preferable from a profit standpoint, were down 9%.
Factor in the sales performance of the F-Series, which sold a staggering 72,089 trucks, and you have much of the recipe for Ford's current strong results. In fact, the F-Series hadn't topped 70,000 sales during November in 15 years. Those trucks helped drive Ford's average transaction prices (ATPs) $1,000 higher compared to the prior year -- far ahead of the industry's average gain of $320.
Ford's SUVs also did well, with sales increasing 20% of the prior year to more than 60,000 units. Lincoln continued its rebound, selling more than 9,400 vehicles last month, a 19% gain compared to the prior year. That strong result was due to the Continental, which posted its best sales month since launch, and the MKX, which was up 30% from the prior year.
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World's largest auto market
Image source: Ford Motor Co.
Ford also chalked up a strong November sales result in the world's largest automotive market, China. Ford and its joint ventures sold more than 1 million vehicles through November, reaching that milestone one month earlier than last year.
One great trend is that the SUV love affair is clearly no longer exclusive to the U.S., as it used to be. Chinese sales of the Ford Explorer were up 73%, and the Edge posted a 21% gain during November. In addition to the surging SUV lineup, Ford's sedans continue to excel in China, with the Focus selling 28% more vehicles last month and the Escort posting a 50% gain. Heck, even the Mustang, which has only recently sold worldwide, posted a 48% gain in November and holds a 40% gain for the full-year.
Now, it's only fair to note that these year-end results could have been goosed due to China's purchase tax incentive changing on Dec. 31. It wasn't known until this week that China's purchase tax on a vehicle would move from 5% to only 7.5%, not up to 10% as many believed. That means that up until this week, many consumers on the fence about purchasing a vehicle were likely being pulled forward into buying before year's end, which could lead to a slowdown when the tax rate moves up to 7.5% in 2017. Sales in China will continue to be a matter of huge interest for investors of Ford, so keep an eye on how consumers react to the purchase tax hike this winter.
Image source: Ford Motor Company.
Europe has been the largest enigma for Ford investors since the Great Recession. The company has made consistent and profitable progress there in recent years, and 2015 was a breakout year for an annual profit. That sent expectations higher for 2016, until Brexit left a cloud of uncertainty looming over manufacturers. Ford and many others have significant operations in the U.K.
On one hand, sales have been largely unaffected, and Ford's were up 4% in November, topping 104,000 units. Vice president of marketing, sales and service for Ford Europe, Roelant de Waard, summed it up perfectly: "November was another strong month for Ford as we continued making progress toward increasing high-revenue sales, such as commercial vehicles, SUVs, performance cars and higher-spec vehicles. Our strategy helps build a sustainable business, strengthen the Ford brand and improve residual values."
More specifically, sales of premium trims -- think Titanium, the Vignale family, and ST versions, among others -- accounted for roughly 60% of total sales, year-to-date. Ford's SUV lineup sold 35% more units through November, compared to the prior year. Essentially, Ford is selling much more profitable vehicles in Europe, despite losing marginal market share. That's helped the company post more than $1 billion in profits during the first three quarters of 2016. And while the full impact of Brexit has yet to surface, the factors under Ford's control are continuing to improve.
Ultimately, Ford is having a strong and profitable fourth quarter thus far. It will face increased costs due to Brexit and new vehicle launches, but investors should rest assured that the company is continuing to perform well even if Wall Street refuses to buy in due to a new-vehicle sales plateau in the U.S.
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