Image source: Ford Motor Company.
Ford Motor Company (F 0.29%) has made substantial progress in Europe. It reversed years and billions of dollars in losses to a profit recently, but part of that momentum was nullified when the U.K., where Ford sells a hefty chunk of its vehicles in Europe, voted to leave the European Union. However, because the U.K. isn't expected to pull the trigger on proceedings until next year, it's mostly business as usual, which led to Ford posting its highest August sales figure since 2007 in its traditional 20 European markets. But was the automaker's August sales result as good as it sounds?
By the numbers
Looking at Ford's traditional 20 European markets, the automaker's sales volume checked in at 74,800 during August, the highest level since August 2007. For the same markets, Ford's sales volume tallied nearly 900,000 units year to date, Ford's best mark for that time period since 2009.
Despite those soundbites looking great in headlines, much of that rise was due to Europe's slow and consistent sales improvement across the industry. In fact, despite Ford posting its best August sales result since 2007, its market share in the Euro 20 dropped 30 basis points in August to 7.6%. It's year-to-date market share in the Euro 20 also declined by 10 basis points to 7.9%.
Sales mix continues to improve
While Ford's market share decline was disappointing for investors, the good news is that the company's sales mix continues to remain very healthy in Europe. Looking only at August, the EcoSport SUV doubled its sales to 3,200 and the Kuga (Escape) increased its sales by 2,500 to reach 7,800 for the month -- that helped drive SUV sales 71% higher during August, compared to the prior year. Ford's SUVs, which generate fatter margins for the automaker, have tallied more than 122,000 sales through August, which was almost a 39% jump.
Another highlight in Ford's August data was that its premium trims continue to gain momentum in Europe. More specifically, Ford's Titanium trim sales were more than 41% of total car sales in August. The Titanium specification has increased its amount of total sales by 300 basis points year to date, which is a trend Ford hopes will continue. When you add in other high-end models, such as the Mondeo Vignale, Fiesta and Focus ST, and Red/Black Editions of certain models, they generated nearly 60% of ford's car sales last month, a 200 basis point improvement.
What investors can expect with the Brexit
"We're pleased with our performance in August, especially as it is historically a quieter month for the industry as customers wait for the registration plate change in September in the UK when a very significant percentage of annual sales goes through our dealerships," said Roelant de Waard, vice president, Marketing, Sales and Service, Ford of Europe, in a press release.
Speaking of the U.K., the auto industry faces more significant headwinds due to the Brexit vote as the European Union imposes a 10% import tariff on vehicles. And as many major companies produce vehicles in the U.K. and export them to the rest of Europe, it could pose a serious threat to margins.
The good news is that the U.K. isn't expected to officially depart the EU until 2017 and the full impact could be years away, especially if the U.K. is able to negotiate a potential reduction in tariffs with the EU. For now, though, it's mostly business as usual and Ford continues to increase its sales in the region as vehicle demand in Europe continues to improve.
