Ford's all-new Super Duty truck is driving average transaction prices higher. Image source: Ford Motor Company.
Continue Reading Below
Ford Motor Company (NYSE: F) trailed the automotive industry in September sales, with total sales dropping 8%, down to 204,447 units, compared to the prior year. A large part of the decline was due to a 21% decline in fleet sales, but Ford's retail sales were also off 4%. The industry's total light-vehicle sales dropped 0.7% in September, but are still clinging to a year-to-date increase of 0.3% compared to the same time frame in 2015. While it wasn't a strong month for Ford in terms of total sales, there were some bright spots in the data.
Let's talk about trucks
One of the highlights in Ford's data came from its bread-and-butter full-size trucks. Investors have been spoiled over the last couple of years as Ford's F-Series sales have consistently checked in above 50,000 units each month, but that 50,000 unit threshold is considered a strong month in the grand scheme of things. So, while Ford's F-Series sales were down 3% last month compared to the prior year, the sales total of 68,000 was still a very strong result. Furthermore, September was the F-Series' best retail month of 2016, and the truck's market share also moved 100 basis points higher.
It also appears that the all-new Super Duty is starting off on the right foot, as it represented roughly 23% of Ford's total Super Duty sales, higher than management had anticipated. Better yet, Ford's new Super Duty is selling a lot of high-end trims, and selling them quickly: The high-end Lariat trim was a large chunk of total sales in September and days to turn was a very quick 13-day pace. That brings us to the next takeaway: average transaction prices.
Show me the money!
Thanks to consumers opting for high-end trims, it's helped boost Ford's truck prices to a very strong level. Consider that the all-new Super Duty was selling at an average of $62,000 in September. Overall, Ford's average transaction prices last month jumped by $1,100 compared to the prior year. That increase was much larger than the industry's averagegrowth of $400.
While the increase in average transaction prices was a welcome development for investors, Ford did note incentives were rising as well. More specifically, the industry's incentives were up $430 in September compared to the prior year, and up $230 from August. Ford's incentives were up, but to a lesser extent: Ford's incentives increased $290 compared to the prior year and increased $90 from August.
Lincoln continues to gain momentum
Lincoln quietly notched another strong month as it remains in good shape to post a rare third consecutive year of sales increases. Lincoln's total sales were only up 1.3%, but its retail sales increased 8% last month, which is even more impressive when considering that management believes the premium segment declined roughly 2% to 3% in September. The MKX continues to be a runaway success story for the brand, with its sales up nearly 50% year to date.It was also the first month of deliveries for Ford's flagship Lincoln Continental. The all-new Continental posted sales of 775 units and units were being driven off dealership lots within just six days.
"They [dealers] couldn't be more delighted with the launch to date, and not just the reception of the Continental, but some of the other Lincolnsthat's brought new customers into the Lincoln showroom. And they're selling MKZs, MKXs off of that traffic," said Mark LaNeve, vice president of U.S. marketing, sales and service, on the sales conference call.
While September won't go down as one of Ford's most thrilling sales months, the rising average transaction prices, sales increases for Lincoln, and positive receptions to the all-new Super Duty and Continental are certainly developments for investors to be happy about. One of the most important things for investors to watch through the rest of 2016 is rising incentive levels, and whether or not major automakers can tone down incentive spending as the market plateaus.
A secret billion-dollar stock opportunity The world's biggest tech company forgot to show you something, but a few Wall Street analysts and the Fool didn't miss a beat: There's a small company that's powering their brand-new gadgets and the coming revolution in technology. And we think its stock price has nearly unlimited room to run for early in-the-know investors! To be one of them, just click here.
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.