Ford Sets the Table for Another Big Profit in Europe
Ford's Escape is called the Kuga in Europe. Like the Escape, the Kuga was revamped for 2017. Sales jumped almost 50% in September. Image source: Ford Motor Company.
Ford Motor Company (NYSE: F) said that its sales in Europe rose 4.1% in September, as it sought to sustain momentum after a profitable first half in the Old World.
Decent overall growth that slightly trailed the market
Ford sold about 145,900 vehicles in the 20 Western and Central European markets that it considers its traditional core market in Europe last month. That's up 4.1% from a year ago, and it caps the Blue Oval's best first nine months in Europe since 2009.
But once again, Ford's year-over-year sales gain slightly trailed the overall market's. Ford's market share in the "Euro 20" slipped slightly to 8.6% in September, down 0.2 points from a year ago.
For Europe as a whole, including Russia, Turkey, the former Soviet republics, and the countries of Eastern Europe (what Ford calls the "Euro 50"), Ford sold about 160,100 vehicles in September, up 2.5% from a year ago. Its market share slipped 0.2 points to 8.3%.
Continued strength in high-profit market segments
Ford CFO Bob Shanks credited "strongly favorable product mix" for the Blue Oval's big $467 million profit in Europe in the second quarter. Translated, that means the "mix" of products sold by Ford last quarter included a lot of its most profitable products: SUVs, commercial vehicles, and high-trim-line versions of its mainstream models, including performance versions.
Ford continued to have success in all of those segments in September.
SUVs: Ford now sells three crossover SUVs in Europe, including the small Fiesta-based EcoSport (up 39% from a year ago), the compact Kuga (up over 49% from a year ago), and the midsize Edge (new, but sales are growing). The Kuga, a near-twin of the Escape, is Ford's biggest-selling SUV in Europe; about 14,500 were sold last month.
Commercial vehicles: Ford doesn't sell its massively profitable F-Series pickups in Europe. But it does sell its Transit commercial-van line along with the smaller Ranger pickup in the Old World, and they're hugely popular with European commercial-fleet buyers: Year to date, Ford is the European commercial vehicle market leader. Sales of the group were up almost 24% to 39,425 vehicles in September.
"High specification" models: These are the European equivalent of Ford's "Titanium" and "Platinum" trim lines, and high-performance variants like the Fiesta ST, Focus ST, and Focus RS. These are highly profitable, and Ford has been selling a lot of them. As a group, they accounted for nearly 64% of Ford's passenger-vehicle sales in Europe in September.
Ford appears to have set the table for another strong quarter in Europe
Long story short: Ford posted good overall sales growth in Europe in September, with a strong emphasis on its biggest drivers of profit in the region. That was true in July and August, too -- a good quarter "on the ground."
While Shanks warned that costs related to Brexit could dent Ford's European profit in the third quarter, it appears that the Blue Oval's sales folks have done their part and then some to deliver a profitable quarter. We'll find out when Ford reports its third-quarter earnings in a couple of weeks.
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John Rosevear 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.