Ford Ends 2011 With a Bang

Here's a cheerful-sounding note from the PR crew at Ford (NYSE: F  ) for the last business day of 2011: The Blue Oval announced on Friday morning that "U.S. sales of the Ford brand this week topped 2 million vehicles for the first time since 2007."

According to the Blue Oval's PR mavens, this makes Ford the "best-selling [automotive] brand in America" and "the first automotive brand to hit the 2 million mark since 2007."

Speaking as a Ford shareholder, I'd say that sounds good. So is it?

A little context is in order
As far as auto sales go, 2007 was a different world, with total U.S. light-vehicle sales over 16 million, a number the industry hasn't come anywhere near since. (When 2011's totals are added up next week, the result is likely to be in the neighborhood of 12.8 million.) And while it was a sales bonanza compared with the economic crisis that would follow in 2008, it was seen at the time as a rough year for Ford, and a tough one for the industry in general:

  • 2.1 million Ford-brand vehicles were sold in 2007, a total that was down almost 14% from 2006 numbers. 
  • Ford also sold about 168,000 Mercury-brand vehicles (remember Mercury?) that year, most or all of which should probably be folded in with the Ford-brand results for a fair comparison, if one should be needed.
  • Ford-brand sales were third in the U.S. pecking order in 2007, behind General Motors' (NYSE: GM  ) Chevrolet and Toyota (NYSE: TM  ) , which was then challenging for the U.S. sales lead. (Remember Toyota? Yes, I'm joking. Sort of.)

Of course, Ford was in deep trouble in 2007, with then-new CEO Alan Mulally just getting started on the daring all-or-nothing turnaround plan that would transform the company (and Detroit). And now? Ford's total U.S. sales may be a smaller number in 2011 than was seen in 2007, but it's a bigger and (more to the point) much more profitable piece of a smaller pie.

So yes, I'd say that's a milestone worth trumpeting. But how does it look in today's context?

The emerging picture as 2011 ends
TrueCar.com released its December auto-sales forecast earlier this week , and while it's largely consistent with trends we've seen in recent months -- solid incremental year-over-year gains for Ford and GM, more dramatic increases for Chrysler and Hyundai (OTC: HYMTF.PK) -- there are some other themes emerging.

First, while this has been predicted (here and elsewhere) for months, it's looking like Toyota's long sales nightmare might finally be coming to an end. TrueCar predicts that the long-suffering Japanese giant's U.S. sales will be down just 1.7% over last December's. That's a sign that inventory troubles may finally be receding -- and a promising sign of early success for the company's all-new Camry sedan.

That's important: The Camry is perhaps the company's most important model in the United States, and critics greeted the latest iteration with some skepticism. But with a brand-new "Recommended" rating from Consumer Reports issued just this week, the revamped Camry seems to be well on its way to success.

Hard-hit rival Honda (NYSE: HMC  ) , which suffered badly in the wake of flooding in Thailand, may not be so lucky: TrueCar sees Honda's year-over-year sales down almost 16%. Honda, of course, has other problems, with its mainstay Civic compact losing sales ground (and its long-held Consumer Reports recommendation) to strong competition from Hyundai, Ford, and GM. Honda's rushing a refresh of the Civic, but it may be a year before we see it at dealers.

Meanwhile, Ford appears to be on course for a year-over-year increase of about 7%. That's a so-so result, perhaps, but in the light of history -- and the company's relentless push toward even greater profitability -- it's one that could turn out to be better than you'd think.

Finally, while Ford's long-awaited dividend will be back in March, you don't have to wait to put the power of reinvested dividends to work in your portfolio. In a special new report, Motley Fool analysts identify "11 Rock-Solid Dividend Stocks," all great additions to a long-term investor's portfolio. This new report is completely free for Fool readers -- get instant access.

Fool contributor John Rosevear owns shares of Ford and General Motors. You can follow his auto-related musings on Twitter, where he goes by @jrosevear. The Motley Fool owns shares of Ford. Motley Fool newsletter services have recommended buying shares of Ford and General Motors. 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.


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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 December 31, 2011, at 10:31 PM, baldheadeddork wrote:

    I'm still not buying the Toyota turn around story. Closing the YoY gap to -1.7% is a lot less impressive when you remember that Toyota's 2010 numbers were horrible. They'll need a huge December to hit 13% market share for the year, and even if they do that's a 220bp fall from 2010 and a 380bp drop (-22%) from 2008. Toyota still faces major problems with the strong yen, and while the Camry will sell well it's not the home run car Toyota needed. It's not going to dominate the segment like it has for almost twenty years.

    Ford's advantage will continue to be new product and it will be even stronger next year. In 2012 they have an all-new Escape, Fusion (described as stunning by reporters who have seen it) and C-Max, plus a mid-cycle refresh to the Taurus and Flex. The other big players are having a light year after big releases in 2010 and 2011. Toyota put out new/refreshed versions of the Corolla, RAV4 and Camry in the last two years, Honda has updated the Civic and Accord, Hyundai/Kia have made their big refreshes and launches, Chrysler has revamped practically everything, and after two solid years GM appears to be pushing out 2014 product early just to have something new. (If anyone can explain the logic behind selling the new and old

    Malibu side-by-side for a year, I'm all ears. I can't see how it doesn't hurt both.)

    So Ford will have a clear advantage with new product in 2012, and if the economy continues to recover they have the opportunity to score some major gains. But what's their goal? Do they continue to focus on getting the greatest profits out of each unit to improve their financial position, as they have since the turn around began? Or now that they have are in the black on net cash, have restored the dividend and are thisclose to being investment grade - do they sacrifice a little profitability to seize market share while their competitors are relatively weak?

    I think how they answer that question is going to be a good indicator of where Ford's share price is going next year. I think the market will only get behind Ford in a major way if they go after market share this year. They still have to beat the earnings estimates, but Wall Street wants to see Ford take a bigger chunk of the market, too.

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