Ford is Selling a Lot of Hybrids

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Ford's Fusion Hybrid. Photo credit: Ford Motor Company

Here's a bit of good news for Ford (NYSE: F  ) : The Blue Oval's sales of hybrids were up 324% in the first quarter, thanks to strong sales of several new models.

Ford now has a 16% share of the U.S. market for "electrified vehicles" – electric cars and hybrids, it said on Wednesday.

And even better for Ford, many of the hybrids it's selling are loaded.

A serious push into the green-car market for Ford
Ford said that it sold 21,080 hybrid vehicles in the U.S. in the first quarter. That's not a huge number when compared to something like Ford's pickup sales, but hybrids don't (yet) represent a huge market. Market leader Toyota (NYSE: TM  ) sold 55,724 Priuses here in the first quarter, along with hybrid versions of several of its other models.

Clearly, Ford has a long way to go to catch up with Toyota on the hybrid front. But, just as clearly, the automaker that only a few years ago was known mostly for its pickups and SUVs has made good progress with its greener models in a short time.

It's already paying off for Ford. The company said on Wednesday that its hybrid and plug-in versions of the Fusion sedan and C-MAX compact were helping Ford make inroads into markets that were previously cold to the Detroit automakers – like California. Ford says that 73% of Fusion Hybrid buyers in Los Angeles, and 77% in San Francisco, are coming to Ford from another brand.

What's more, those sales are particularly profitable ones for Ford, because hybrid buyers turn out to like lots of high-tech options.

Why these sales are particularly profitable
As is true with most automakers, options packages are worth big bucks to Ford. The profit realized by the manufacturer on any given car or truck increases significantly if it's loaded with options, and Ford has put a lot of effort into offering premium options packages that have strong appeal with buyers.

Ford says that 70% of Fusion Hybrid buyers are opting for the MyFord Touch package, Ford's well-known touchscreen "infotainment" system, versus about 50% of buyers of the conventional gas-powered Fusion. Ford also says that Fusion Hybrid buyers select high-tech safety options, like its blind-spot alert and active parking assist systems, at about twice the rate of regular Fusion buyers.

That should add up to an outsized contribution to Ford's bottom line -- and another reason why this is a good business for Ford to be capturing.

Competing well with Toyota
As I said above, Ford still has a ways to go to catch Toyota, still the undisputed global hybrid leader. But Ford's making progress: Ford cited data from showing that the Fusion Hybrid and C-MAX Hybrid were getting "consideration" from potential buyers roughly equal to Toyota's Camry Hybrid and Prius.

The company also pointed out that it was winning those sales with incentives that have been lower than Toyota's. It's one more sign that the company once identified with gas-guzzling SUVs is doing a pretty good job of selling its new, greener self.

Is Ford a buy right now?
If you're concerned that Ford's turnaround has run its course, relax -- there's good reason to think that the Blue Oval still has big growth opportunities ahead. We've outlined those opportunities in detail, in the Fool's premium Ford research service. If you're looking for some freshly updated guidance to Ford's prospects in coming years, you've come to the right place -- click here to get started now.

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