Big Sales Growth Sets Up a Strong Quarter for Ford in Europe

By John Rosevear Markets Fool.com

Ford Motor Company (NYSE: F) said that its sales in Europe rose 14% in March, as the global SUV boom continued to drive growth for the Blue Oval in the Old World.

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The raw numbers: Ford gained share in the heart of Europe

Last month, Ford sold about 199,900 vehicles in the 20 Western and Central European markets -- the "Euro 20" -- that it considers its core market in Europe. That's up 14.3% from March 2016. Ford's market share in the Euro 20 rose to 9.2% in March, up 0.3 percentage points from a year ago -- and good enough to makeFord the second-best-selling "nameplate" in Europe, afterVolkswagen.

For Europe as a whole, including Russia, Turkey, the former Soviet republics, and the countries of Eastern Europe -- the "Euro 50" -- Ford sold about 215,900 vehicles in March. That's up 12.7% from a year ago. Ford's market share in the Euro 50 also rose 0.3 percentage points in March, to 8.9%.

European sales of the Ford Kuga, a sibling of the Escape, rose 45% in March. Image source: Ford Motor Company.

What worked and what didn't for Ford in Europe in March

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The big story is a theme that's been playing out for a few quarters now. Historically, Ford offered a small portfolio of models in Europe, mostly sedans. It has recently expanded its European model range to include several of its well-regarded SUV models -- and European buyers like what they've seen.

Sales of the small Ecosport crossover SUV rose 46% from a year ago, the one-size-up Kuga (twin to the U.S.-market Escape) jumped 45% with just over 21,000 sold, and the bigger Edge added another 2,300 to the total.

Ford's two perennial best-sellers in Europe, the Fiesta (sales up 12% to about 47,000) and Focus (up 8.8% to just over 33,000), also did well in a market that -- like the U.S. and China -- is increasingly favoring crossover SUVs over traditional sedans.

These are profitable sales, too. Ford noted that its 'high-series vehicles," meaning those with upper-level luxury or performance trims, represented 68% of its passenger sales in Europe in March. That's up 4 percentage points from a year ago.

Ford's commercial vehicles, the Transit line of vans and the Ranger pickup, also did well: Sales rose 9% to about 43,700 in March, good for 15% market share in the Euro 20.

What didn't work? It's a very short list: Sales of the midsize Mondeo sedan, the European-market twin of the Fusion, fell about 18% from a year ago. As with its U.S. sibling, the Mondeo is the principal victim of that shift in buyer preferences toward SUVs.

Analysis: A good first quarter for Ford in Europe

The analysis here is short and sweet: Ford's sales gains in Europe outpaced the overall market's increase in the first quarter, and the gains came primarily from Ford's more profitable product lines. That suggests that we'll see a solidly profitable result when Ford reports its first-quarter earnings later this month. Ford earned a solid $1.2 billion before taxes in Europe in 2016.

Ford's sales rose 9.4% in the Euro 20 in the first three months of 2017, ahead of a 7.9% gain for the overall market. In the full Euro 50, Ford's sales rose 8.3% through March, versus a 6.8% gain for the market as a whole.

Keep in mind, the first quarter of 2016 was a terrific quarter for Ford in Europe. Ford appears to have built on that success in 2017.

What's next for Ford: Earnings

The Blue Oval will report its first-quarter 2017 results before the bell on Thursday, April 27.

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John Rosevear owns shares of Ford. The Motley Fool owns shares of and recommends Ford. The Motley Fool has a disclosure policy.