Ford Scores Big Again

Watch stocks you care about

The single, easiest way to keep track of all the stocks that matter...

Your own personalized stock watchlist!

It's a 100% FREE Motley Fool service...

Click Here Now

Did you buy a new car in April? Apparently, a lot of folks did.

Most automakers saw gains, with headliners Ford (NYSE: F  ) and Toyota (NYSE: TM  ) , scoring impressive year-over-year increases. But is that a surprise? Just think about where we were last April, when two-thirds of the Detroit Three looked like they were going out of business, and the great economic panic had just barely begun to subside.

Any automaker that didn't improve on last year's end-of-the-world-is-nigh numbers has some explaining to do, I'd say. And while all of the major players did post some gains, digging down into the details reveals some interesting -- and maybe surprising -- themes.

The big headliners won't surprise you
In what has become a monthly ritual, Ford posted big double-digit gains across the board, with overall sales up 25% versus a year ago. Deeper trends were strong as well, with retail sales rising 32% and low-margin fleet sales receiving less emphasis. The midsize Fusion sedan had another record month, the mainstay F-Series trucks were up 42%, and sales in other key categories were strong as the company claimed a retail market-share gain for the 18th time in the last 19 months.

Toyota's gains over last year were similar -- about 24% -- though more subdued than last month's incentive-fueled eye-poppers, as the Japanese leader continues its recovery from months of scandal. Gains were solid across the board, with the small Corolla sedan posting a 51% sales increase. Not surprisingly, fuel efficiency was also a theme, as sales of hybrid vehicles across Toyota's brands rose 41% against last year's totals.

Ford and Toyota were hardly the only companies to post big gains, as an improving economy continued to push almost everyone's totals higher. Chrysler finally got some good news, as sales rose 25%; Chrysler's former owner Daimler (NYSE: DAI  ) saw a 19% gain; Nissan, Hyundai, and VW all posted solid increases; and even Jaguar Land Rover, which has all but fallen out of sight since its sale to India's Tata Motors (NYSE: TTM  ) , cranked out a 10% gain.

And then there was General Motors
When compared to the fat double-digit increases posted by several of its rivals, General Motors' mere 7% gain over last April looks pathetic -- they were going down the tubes last April! How could sales possibly be this low? But the story-within-the-story was a little brighter for a couple of reasons. First, GM was clearly No. 1 in the U.S. market this month, solidly out in front of both Ford and Toyota. Second, and more importantly, if we factor out fleet sales, and look just at retail sales of GM's four core brands -- Chevy, Cadillac, GMC, and Buick -- sales were up a satisfying 33%.

That's good news for reasons beyond the obvious: Like its crosstown rivals, GM is actively seeking to reduce its reliance on fleet sales. In the long term, the company would like to have fleet sales, bulk sales of rental and government cars that typically have low margins, represent about a quarter of its total. GM is moving in the right direction -- 32% of the company's April sales were to fleets, down 2% from last year -- and the emphasis on profitable sales versus total sales is welcome.

But if GM really follows through on this pledge to reduce fleet sales, over time, it could end up being the No. 2 or even No. 3 automaker by U.S. sales. I'm not sure I'm ready to believe that GM -- even under new management -- is willing to go there.

What's up with Honda?
Toyota's archrival Honda (NYSE: HMC  ) , which has long shied away from incentives wars, has been running an aggressive discounting campaign in recent months. But despite the incentives, the results so far have been uninspiring -- a 13% gain over last April, and a 12% gain year-to-date over the first 4 months of 2009, well behind the pace set by most of its rivals.

So what's up with the Japanese giant? The company itself is still doing well -- it recently posted a hearty 92% year-over-year gain in operating profits -- but it's feeling squeezed on one side by the low-cost Korean rivals, and on the other by Ford and GM. As the latter have turned their focus away from SUVs and toward fuel-efficient cars -- Honda's longtime bread and butter -- Honda's market position has suffered, with its U.S. market share falling to 10.1% in the first quarter from 10.5% a year ago.

So how will Honda keep up? The same way all of the other players in this brutal marketplace will: By building the best products it can -- and hoping they're good enough.

More auto coverage from the Fool:

Fool contributor John Rosevear has been car shopping and is at risk of being seduced by a Cadillac, of all things. He owns shares of Ford. Ford is a Motley Fool Stock Advisor pick. You can try any of our Foolish newsletter services free for 30 days. The Motley Fool has a disclosure policy.

Read/Post Comments (3) | Recommend This Article (14)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On May 04, 2010, at 3:23 PM, bossbill wrote:

    The car buying public is responding positively to Ford...and on a pretty consistent basis. Come on Wall Street...time to do the same!

  • Report this Comment On May 04, 2010, at 8:44 PM, baldheadeddork wrote:

    Good job, John.

    Toyota's April numbers surprised me because they were so far off the analysts expectations. Everyone but Chrysler missed the estimates. But Ford only missed by three points and GM missed by just over one point. Toyota came in ten points under expectations. Their market share slipped, too, from 17.5% and first place to 16% and third behind Ford.

    I think this is kind of a big deal because Toyota still has their foot planted on the gas when it comes to incentives. (Sorry, couldn't resist.) GM, Ford and Chrysler all cut their year-over-year incentives by 10-20%, but Toyota was still spending 50% more on incentives last month than they were in April 2009.

    I think Toyota has to look at these April sales and be incredibly disappointed. Are they going to have to spend $2500 per vehicle on incentives just to hang on to third place? If the May numbers look like April, they've got a very hard road ahead of them.

    About Honda, I've compared them to Southwest Airlines. The most competent and smartest management in their business, sterling reputation with customers, amazing corporate culture - but it's conservative philosophy means they're never going to rule their industry or set the world on fire.

    Honda's lost a little of their mojo since the passing of Sochiro, but they're still an amazingly strong company. They had record incentives last month, but they still spent less per unit than GM, Ford, Chrysler, Toyota, Nissan or Hyundai.

  • Report this Comment On May 04, 2010, at 9:10 PM, TMFMarlowe wrote:

    baldheadeddork, I've got a followup piece coming on Toyota's April incentives and where they're at. It'll probably run Thursday.

    I actually like to compare Honda to Apple in that it's a company that had insanely good products driven by the vision of a charismatic founder, but when the founder passed on the company kind of lost its focus. Put another way, I think they've lost more than a little of that mojo, and I suspect they're in a decline that will become more apparent over the next few years.

    John Rosevear

Add your comment.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 1173048, ~/Articles/ArticleHandler.aspx, 10/27/2016 1:37:10 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 4 hours ago Sponsored by:
DOW 18,199.33 30.06 0.17%
S&P 500 2,139.43 -3.73 -0.17%
NASD 5,250.27 -33.13 -0.63%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

10/26/2016 4:06 PM
HMC $29.94 Up +0.02 +0.07%
Honda Motor CAPS Rating: ****
DAI $47.42 Down +0.00 +0.00%
Daimler AG CAPS Rating: *
F $11.88 Up +0.03 +0.25%
Ford CAPS Rating: ****
TM $115.50 Up +0.25 +0.22%
Toyota Motor CAPS Rating: ***
TTM $38.90 Down -1.71 -4.21%
Tata Motors CAPS Rating: ****