It's not all about Ford and it's not all gloom and doom.
03-03-08: Ford released their February 2008 sales figures today and yes the numbers were generally considered to be bad. We have written a good number of “Ford Sales Are Down” articles in the past 12 months here at TMN which spill all the blood while offering up editorial on what they are doing wrong or not doing right. Not today.
To get it out of the way however, sales were down 7% company-wide in February over last year at this time including Lincoln, Mercury, Jaguar and Land Rover brands. The Mustang saw a continued sales decline of 28%. The Mustang’s performance in the showroom is no shock, as the car is four years into it’s design cycle. It’s up for a re-design next year and most savvy buyers know it. We’ll wait too.
When monthly sales figures are announced, Ford holds an online web-cast and conference call to verbally present the facts and figures and paint it up with some positive backdrop. Then they allow the press, stockholders, and wall street analysts to ask questions. It’s an illuminating 45 minutes if you don’t get bored with all the wall street chat. What you do get is the positive news that the media usually skips over when writing the headlines. More importantly, you also get an insight into the nuts and bolts of the company to hear what they are doing behind the scenes to change the future.
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That said, the 7% drop in sales this month is not as bad as you might think. Consider first that Chrysler and GM were both off 13%. If you look into individual GM brands, it’s actually worse. GMC and Hummer are off nearly 20% each. Buick and Pontiac are sliding fast. Saturn even saw a 34% decline despite some pretty nice new metal (not plastic) in the showrooms. Then consider that even Toyota, Nissan, BMW, and Infinity also posted sales losses. Yep, Ford was the least worst of the Detroit automakers. When you hear this, it tends to soften the picture a bit, making it more about the economy in general than Ford alone.
Now, what is going on at Ford? Well the good news first. Last year Ford said that their turnaround would be led by new products. That is showing to be true. While hardly all-new, the 2008 Focus is showing a 10% increase sales over the old one. The big news is on the new crossovers including the Ford Edge and Lincoln MKX. Their sales were up 45% and 22%, showing where the action is.
The Ford Fusion and Lincoln MKZ saw big increases in sales as well. Even the venerable Ford Ranger saw 27% more customers this month. What this says is that Ford’s new products by-in-large are indeed resonating in the market and are leading the way to Ford’s recovery. Well, almost.
As great as those new products are, their sales in pure numbers aren’t enough to washout the bleeding on the other side of the showroom. The Taurus and Taurus X for example are selling far less than even the old Five Hundred and Freestyle they replaced. Ford is however working on a truly all new Taurus that is said to be completely different from the current one, that should turn that tide next year. A Ford spokesman said that the new metal should drive new customers to the dealers.
Other vehicles that continue to drive Ford’s numbers down include the large trucks and SUV’s hit by high gas prices such as the Expedition, Explorer and F-Series trucks. The new 2009 F-150 shown at Detroit in January will launch this summer. Ford says that it gets better gas mileage across the line and that will be a central marketing hook when they roll it out. So, while the crashed out housing market has decimated truck sales across the country those who can buy one should see Ford as a good choice based on efficiency.
The Ford Flex is also getting ready to launch soon. Billed as a “game changer”, the seven passenger full-sized crossover SUV should do well to bring people into the showroom. Its interior is nearly the same size as the Expedition but it is built on a much lower and lighter car based chassis. Powered by a 270hp 3.5 liter V6 it should also perform much better at the gas pump. It looks kind of funky fresh too.
Other new products in the pipeline that should really start to turn Ford’s fortunes are a new small car based on the Verve Concept. Ford has finally taken the advice of everyone outside the glass house and will bring one of their European sales successes here to America. That car will revive the Fiesta nameplate and is just slightly smaller than the current Ford Focus.
Another European success story, the Ford Transit Connect, will be coming to our shores soon as well. The Transit Connect is a small commercial parcel van with a fuel efficient four cylinder engine and there is nothing like it in the States. Also, a new redesigned Explorer is due around 2010.
Ford is also ready to announce within the week, the sale of its Jaguar and Land Rover brands to Tata, a growing auto builder in India. Where that company will take the two ailing English luxury brands is in many ways irrelevant. What is relevant is the cash infusion to Ford, who mortgaged off the company last year to pay for it’s losses of today. The sale has been rumored to be worth around $2 Billion, a welcome deposit in the bank for Ford.
In summary, the news at Ford is shall we say “less bad” than it has been in the past year. Sometimes you have to take that and say it is an improvement. The stock price dipped to near historic low to $5.50 in January and has only hovered in the $6.00 - 6.50 range since. While I am not a big time investor, I felt it opportune to buy some of it up at a such bargain. At some point, sometime, things are going to look up.
