Another Big Month for Ford?

Wouldn't it be nice if the economy really were recovering?

Several promising signs suggest it might be. Retail sales for Black Friday weekend were up 9.2% over last year, according to one estimate, and online sales were similarly strong. And auto sales, a good proxy for how consumers are feeling financially, have been picking up in recent months as well.

November's auto sales results will be available later this week. Industry-watchers suggest it'll be another strong month, with Edmunds predicting a 12.1% increase over last year's numbers when adjusted to account for difference in the number of selling days.

But this rising tide isn't lifting all boats equally. Once again, a certain automaker from Dearborn looks poised for another big jump.

Ford's sales momentum continues
Just like your crazy uncle on Thanksgiving, it's looking like Ford (NYSE: F  ) is about to grab yet another slice of the U.S. market-share pie. But unlike your uncle's pie habit, there's nothing unhealthy about this extra piece. Edmunds forecasts a 20% year-over-year jump in Ford's U.S. sales, good for (they predict) a 17.3% market share.

How good is that? Edmunds predicts that General Motors' (NYSE: GM  ) U.S. market share will reach roughly 19.4% for November. That's more or less where it was in October, but down considerably from 20.3% last November. Ford's surging right into that decline.

GM's U.S. sales operation is actually doing a decent job of holding its ground while the General waits for its post-bankruptcy product development efforts to bear fruit. Like Ford, GM's profits per sale are up as incentives dwindle and consumers choose more heavily optioned vehicles (another sign that the economy is improving).

But if Ford's share of U.S. sales is surging, and GM's is holding steady, who's losing out?

Going the other way
The rest of the field is a mixed bag, but Edmunds clearly thinks that Toyota (NYSE: TM  ) is in for another big sales decline. The forecaster predicts that the Japanese giant's adjusted U.S. sales will be down 5.9% over last November's, the only decline among the top six automakers in the U.S. market.

Toyota's problems are well-known: A lingering hangover from its unintended-acceleration debacle earlier this year, and a dearth of exciting new products. I suspect that reduced consumer anxiety around gas prices, combined with new fuel-efficient alternatives from other automakers, may also be mitigating the appeal of Toyota's "green" reputation. And simply put, key competitors such as Ford and GM have upped their game.

Toyota's fighting back on multiple fronts. Between its newfound respect for the U.S. Department of Transportation and some high-visibility green moves (its partnership with Tesla Motors (Nasdaq: TSLA  ) , its announcement of a forthcoming "plug-in" version of the Prius), Toyota seems to be making some small progress -- but so far, those advances haven't really shown up in its U.S. sales numbers.

The rest of the field
So who's benefiting from Toyota's lingering troubles? Obviously, those woes aren't doing anything bad for Ford's sales, and Toyota's archrival Honda (NYSE: HMC  ) is keeping pace with the overall growth of the market (Edmunds sees Honda up 11.4% on the month). But there's another big victor that Edmunds doesn't track. Korean manufacturer Hyundai is riding a series of hit products to big sales growth, with Edmunds competitor TrueCar predicting a whopping 45% year-over-year sales gain.

Hyundai has been overlooked by many for years, but it's past time to take the company seriously as a player in the U.S. market. Hyundai's vehicles have gone from being cheaply made low-price leaders to strong competitors on their own merits, and the company's U.S. market share is now about the same as Nissan's, at a bit less than 8%.

Chrysler, too, is showing signs of sales life. I hesitate to celebrate the company's predicted 17.3% increase too loudly, since last year's numbers were pretty awful. But the smallest of the Once-Big Three is making progress. With well-regarded new products starting to come into showrooms, the company's shotgun marriage to Fiat is starting to look like an inspired idea.

But does any of this matter?

The industry's current leaders in Detroit, well aware of their predecessors' concern for market share at the expense of profits, tend to downplay relative sales gains these days. Instead, they point to successes of particular new models, or higher transaction prices, as indicators that more directly reflect the success of their products and their companies' bottom lines.

But for Ford, GM, and Toyota shareholders, these monthly horse-race numbers are important illustrators of trends over time. The U.S. is one of the world's two largest auto markets and a huge part of the bottom line for each of these companies. In an era of fierce competition and tight margins, small changes in the sales pecking order can mean big things -- good or bad -- for profits, and ultimately, for share prices.

Want to read more about Ford? Add it to My Watchlist, which will find all of our Foolish analysis on the Dearborn dynamo.

Fool contributor John Rosevear owns shares of Ford, which is a Motley Fool Stock Advisor recommendation. You can try any of our Foolish newsletter services free for 30 days. We Fools don't 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.


Read/Post Comments (6) | Recommend This Article (17)

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 November 30, 2010, at 6:51 AM, Detfan wrote:

    I certainly will be happy when GM sales aren't compared to their 8 brands from last year!! For GM to eliminate Pontiac, Saturn, Saab, and Hummer, and still have lost less than 1% in market share from last year is just astounding!! Ford on the other hand loses Mercury at the end of this year, so Ford's comparisons will be skewed all of 2011. For this author to describe GM's market share with 4 brands as "down considerably" sounds like a concerted effort to downplay GM to make Ford look even better, which just isn't true. GM passed Toyota, and is now the number one seller of vehicles globally through the 3rd quarter. Where does Ford rank, globally?

    Don't get me wrong. I am happy that Ford is doing well, but GM is doing well, also, and missives that indicate they aren't, are misguided.

  • Report this Comment On November 30, 2010, at 1:49 PM, langco1 wrote:

    fords stock has been living in dreamworld since it broke $5 it will soon have to face reality and return to earth....

  • Report this Comment On November 30, 2010, at 2:01 PM, TMFMarlowe wrote:

    @langco1: Ford's P/E is still under 9. The historical norm is more like 10-11, and Ford's on a very un-average upward trajectory. Dreamworld? Care to explain that?

    John Rosevear

  • Report this Comment On November 30, 2010, at 2:09 PM, EnigmaDude wrote:

    John,

    I agree that Ford is looking good and is in my mind a strong buy at the current price, especially given the tremendous strides in quality improvement they have been making in the past couple of years. Now if they can just compete in the E-V market...

  • Report this Comment On December 01, 2010, at 1:32 PM, baldheadeddork wrote:

    The numbers are rolling in. GM beat the estimate by 800 units. Chrysler and Ford both missed the analyst estimates, Ford by 1.3% and Chrysler by 2.3%. No numbers in yet for Toyota, Honda or Nissan.

    The big news I've seen so far are the November numbers from Japan - down 31% and Toyota was down 35%. Worse, a spokesman for the Japan Auto Dealers Association told Reuters that they haven't hit bottom yet.

    @Detfan - I'll be glad when GM's dead brands drop off YoY comparisions so we won't have to keep having this argument with GM fans about meaningless "core brands" numbers.

    About GM's performance without Pontiac, Saturn, et al - it's a mixed bag. They've stemmed the losses with big gains from GMC, Buick and Cadillac. Their YTD numbers are up 28-54%, but Chevy is only up 17%.

    The growth of sales from Buick, Cadillac and GMC is great for their profitability, but the underperformance from Chevy means they're not capturing former Pontiac buyers. Last month Ford brand vehicles outsold Chevy by 14% and Ford's YoY sales gain was 28% higher than the gain at Chevrolet.

  • Report this Comment On December 02, 2010, at 1:14 PM, TMFMarlowe wrote:

    @baldheadeddork: The Japan news is big, and Not Good for Toyota. Chevy needs product -- a re-do of the Impala and a refresh of the Malibu that's good enough to get the attention of Fusion/Accord shoppers would be timely about now. The Cruze is way ahead of last year's Cobalt numbers, which is a good sign, but Camaro sales have fallen off considerably, which isn't.

    I just filed a look at the numbers for F and GM and TM, should be up on the site later this afternoon or tonight. More detailed thoughts on each of those coming in the next few days.

    John Rosevear

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