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The closing of the federal government, a stock market plunge in late 2018, higher interest rates, and severe winter conditions all weighed on US auto sales in the first or first two months of 2019 As a result, the sales volume of the industry decreased in the first quarter. .
Like most car manufacturers, Ford engine (NYSE: F) announced a decline of one year on the other of its domestic shipments in the first quarter. However, outside the passenger car market – where the Blue Oval brand is removing most of its vehicles – Ford has seen impressive growth in the first quarter. Sales trends could improve even further in 2019 and in 2020, some of the headwinds that held Ford back in the last quarter are beginning to fade.
Title numbers
In the first quarter, Ford delivered 590,249 vehicles to the United States, down 1.6% from one year to the next. Ford's consumer brand posted a 2.1% drop in sales, but high-end Lincoln brand shipments jumped 11.2%, thanks to Lincoln's return to growth in the last two months of 2018.
For both brands combined, car sales fell 23.7% in the first quarter. Ford, however, offset most of the decline with a 5% increase in crossover / SUV deliveries and a 4.1% increase in the van and truck market.
Ford will continue to witness a sharp decline in the auto market over the next two years. Last May, it stopped production of Ford Focus for the United States, halted production of Ford Taurus last month and should stop building the Fiesta Can. The Ford Fusion is also on the block, but the end date of production has not yet been fixed. Fortunately, cars already account for less than 17% of Ford's domestic delivery mix, which will mitigate the stopping of the removal of all these models.
Ford is abandoning most of its car models in the United States. Source of picture: Ford Motor.
The only real impact on Ford's performance in the last quarter was the fact that it benefited from a significant jump in low-margin deliveries to car rental companies. That being said, Ford plans to end the year 2019 with stable rental segment deliveries or slightly down year on year.
Growth in the main market segments
Fresh produce fueled Ford's sales increases in the crossover / SUV and truck segments. EcoSport was launched in the United States in early 2018 and more than doubled its revenue last quarter as the sub-compact SUV continued to gain ground. In contrast, the full-size SUV Ford Expedition is experiencing strong demand since a brand new version was sold to dealership lots at the end of 2017. Shipments jumped 61.9% in the quarter latest.
Ford has also seen strong growth in the truck market, thanks to the relaunch of the mid-sized Ford Ranger pickup. Importantly, F-Series sales also increased slightly, indicating that the Ranger had not significantly cannibalized the more expensive F-150 sales. In total, Ford truck sales have increased by almost 5%, although the availability of the Ranger is still extremely limited.
Finally, Ford is once again growing in the luxury market, with Lincoln's four crossovers and SUVs recording double-digit sales growth in the last quarter. This more than offset the 16.6% drop in shipments of Lincoln's last two car models.
Strong growth in average transaction prices too
The rapid shift in Ford's sales mix from cars to crossovers, SUVs and trucks led to an average 5% increase in average transaction prices (ATP) in the last quarter. PTAs increased by $ 1,859 from the previous year – more than double the industry average – to about $ 38,000.
As a result, even with a slightly lower number of deliveries, Ford can generate decent revenue growth through higher adjusted outlets. This trend is expected to continue over the next few years, as the abandonment of cars will not be complete for at least two or three years.
Product update will add momentum to Ford
It should be noted that Ford has been able to record growth in the crossover / SUV market in the last quarter despite lower sales of the Escape and Explorer models. These two models – which are in dire need of updating – accounted for 59% of Ford brand crossover and commercial vehicle sales in the first quarter. Fortunately, new versions of the Escape and Explorer will reach dealer lots later this year, which should boost sales of both models in 2020.
Ford also plans to increase production of the Ford Expedition and Lincoln Navigator this summer to meet the strong demand. In addition, at least two new SUV Ford models are expected to appear in 2020 to rebuild Blue Oval's position in the all-terrain vehicle market. Meanwhile, Lincoln is expected to launch two all-new crossovers later this year.
Together, these measures should lead to much faster growth for Ford in the crossover and SUV markets. The drop in car sales makes it difficult to achieve significant growth in total deliveries, but the current trend towards more expensive vehicles is positioning Ford in modest revenue growth and strong earnings growth in the coming years. come.
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