Ford's Fusion and Escape Are Driving Success

 

Photo courtesy of Ford Motor

The results are in and Ford's (NYSE: F  ) success is driven by two of its hottest models – the Fusion and the Escape. Those two have a chance to do something that no other Ford vehicle besides the F-Series has done in almost 10 years – top 300,000 sales in the U.S. It's only a recent trend: Ford was long known for producing a quality truck and its car models were largely left for dead. Let's look at some numbers and see why some investors are excited about Ford.

Over the first four months of the year Ford's car and utility segments are up 12.5% and 18.1%, respectively, versus last year. The segment leaders are the Fusion and the Escape; take a look at what they've done over the last five years, and at this year's pace.

 

2013 number based on YTD pace.

Happy consumers creates happy investors
It's simple really, if the consumer continues to eat up these new models the resulting market share and revenue growth will make investors like me happy. The Escape's review on Edmunds.com has some great insight. Edmunds says that the new model Escape is better in every way from its predecessor and that its primary competitors can't match its EcoBoost engine options. Most of the competitors can't match its interior either. Edmunds follows that up by saying that one possible downside is that once you load up on premium add-ons, it becomes one of the more expensive models. Well, looking at the huge wave of sales, consumers are buying it up – and that makes investors like me happy. Look for situations like this to help keep Ford's operating margins strong – a key factor for a successful investment.

Market share
Toyota and Honda have topped Detroit in U.S. market share for some time now and only recently has Detroit begun to gain a little market share back. In the first quarter, Ford's brand – excluding Lincoln – increased its market share up to 16.5% from 15.5% in 2012. This point is very important right now as the U.S. automotive market is gaining steam and producing nearly all of Ford's profits, and much of GM's. Any gain in market share here is very valuable. It's also very profitable as plants are running near capacity, allowing each vehicle to roll off more profitable than the one before it.

Undervalued?
I think both General Motors (NYSE: GM  ) and Ford are undervalued today, for different reasons. General Motors is the No. 2 global automaker in sales and is making a concerted effort to take the top spot. It's refreshing a ton of models to further boost its top-line sales that aren't optimized because of old age – it owns the world's oldest vehicle portfolio.

Ford on the other hand can't yet compete with GM on top-line-sales revenue; it doesn't sell enough vehicles. What Ford has done, though, is even more important: It has created economies of scale and is running more efficiently than its competitors – taking home more of each revenue dollar. It's U.S. margins for the first quarter were 11%, which is extremely strong.

Bottom line
If you were to combine the top-line sales of GM and bottom-line efficiencies of Ford, the resulting fictional company would crush competitors all over the globe. Each one is striving to become that company by fixing its respective weakness. If Ford is going to accomplish this success it will need winners similar to the Fusion and Escape across its entire vehicle line. 

Worried about Ford?
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 Motley 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.


Read/Post Comments (11) | Recommend This Article (4)

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 05, 2013, at 11:27 AM, Jason87467 wrote:

    Not so fast, I think the new Chevy Impala will top the Fusion......just wait and see.

  • Report this Comment On May 05, 2013, at 11:55 AM, Webatola wrote:

    I am a lifelong engine builder and Presidential Candidate because I understand why and what has been done to prevent efficiency in the past. I built engines that were surpassing 105 MPG. In 1978. Today I am out to far supersede that by rebuilding companies existing engines. Ford is a company showing interest in me and me in them and I was a Chevy guy.

    I will work with Ford as I believe their electric technology cars combined with efficiency systems I have developed would allow people to drive for FREE. I am trying to get some investment capital up but we live in a very corrupted world that doesn’t want me getting anywhere. Working together with Ford and possibly GM and Chrysler though I believe I can bring the best of every world for everybody. Jobs would be everywhere.

    I am very impressed with the commitment to new technology and quality Ford has done. It's about time, now all we need is for people to understand without a repatriation tax for America we are destroying the Country. When foreign Countries come here and employ and sell their products the money is clawed back the original Country and hurts America but people are stupid.

    The U.S. goes to China etc and nothing is clawed back and we are in fact destroying our livelihood and jobs buying foreign cars whether made here or not. We need to work with our American Car Companies and tell, them what WE WANT AND WILL BUY AND THE QUALITY IT SHOULD HAVE and put an end to making tiny Countries like Japan the richest economies in the world off the backs of America people buying their quality made Japanese products.

    My name is Robert Sandera and I am not afraid to stand up and voice my opinion and facts on this issue. I just wish I could get the public behind me to fight for them to do this.

    Energy cost has bankrupted every average American household and we continue to do nothing while the Wall Street Crooks that deregulated and did this to us multiplied their fortunes by at least five times while the rest of us suffer in economic depression.

    Americans are going to have to get mad and get tough and Unite or we are done. It's as simple as that.

    Robert Sandera

  • Report this Comment On May 05, 2013, at 12:23 PM, gemini77375 wrote:

    @Jason87467 - I disagree with your comment on the Impala vs Fusion.

  • Report this Comment On May 05, 2013, at 12:50 PM, MotorCityKid wrote:

    Bravo to the Ford Motor Company. They did not take tax payer dollars and are now top dog of the Big 3. Someone posted the Malibu will pass the Fusion in sales? I've seen the Malibu.....you're crazy.

    TC

  • Report this Comment On May 05, 2013, at 12:54 PM, TMFTwoCoins wrote:

    I agree with you both, and doubt the Impala overtakes the Fusion. That said, GM really needs the impala to be a success so it's going to get some advertising dollars, for sure.

    @Webatola

    I think more people are with you than you realize. I've been hearing things here and there about a new type of engine from Ford, "Nano" something. I wish I had more information on it, I just haven't been able to follow up on it yet.

  • Report this Comment On May 05, 2013, at 12:54 PM, josciak wrote:

    My 2002 Escape has over 275,000 miles on it and is still going strong. Best thing I ever bought!

  • Report this Comment On May 05, 2013, at 1:53 PM, bushhead wrote:

    Are you kidding me. Finally decided to buy Amerian. Have been waiting for Ford to deliver Fusion to dealers. They can't. They advertised and even on miodels they could'nt and still don't make available to the consumer. Oh well, Just bought a Toyota and a Honda. See you in another 10 years Ford.

  • Report this Comment On May 05, 2013, at 1:59 PM, TEXASCITIZEN wrote:

    With success Ford has become a chisler. If you want the Escape in red or white, two of the more popular colors, red is $400 extra and white is $600 extra. That is price grabbing extortion.

  • Report this Comment On May 05, 2013, at 2:23 PM, TMFTwoCoins wrote:

    @bushhead

    I've been hearing some similar complaints, Ford seriously can't keep enough Fusions at dealerships. I think some plants are running over capacity just to get as many out as possible.

    @Texascitizen

    I'll assume what you say is true, that is pretty outrageous...

  • Report this Comment On May 05, 2013, at 3:26 PM, bigdog5012 wrote:

    Well you can brag on ford all you want, but the truth is if you put the escape or fusion next to a hyunda or kia the body lines are exactly the same. Nothing but copy cat JUNK. i HAVE OWNED FORDS IN THE PAST AND WHEN THEY HIT 80,000 MILES PLUS .YOU HAD BETTER HAVE DEEP POCKETS BECAUSE YOUR PROBLEMS HAVE JUST BEGUN. I ll never own another piece of crap ford in my life time. They can win all the honors and recigniton they can but that will never ever change my stance they build JUNK///////////////.

  • Report this Comment On May 05, 2013, at 6:45 PM, mistacy wrote:

    "recigniton" is definitely the correct word.

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