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Ford Now Thrives in Small-Car Sales

Ford world headquarters. Photo Credit: Ford Motor Company.

It's been a busy couple of weeks for major automakers, which have mostly posted strong second-quarter results, and today posted a fast start to the third quarter with a solid July sales report. For July, Ford (NYSE: F  ) and Chrysler both posted an 11% gain over last year, and General Motors (NYSE: GM  ) jumped 16% compared to last year. Ford's numbers were mostly all good news, but there were a couple points to keep an eye – here are the details.

July numbers
Ford's increase of 11% year over year was its best total July monthly sales since 2006 led by its F-Series and Escape models. In fact, just about one of every three vehicles sold by Ford was a full-size pickup – making for a very profitable month as we kick off Ford's third quarter.

In addition to the success of Ford trucks, which is up 13.4% this year as a segment, utilities contributed greatly to a strong July. Every single Ford utility model had a sales increase, and the Escape topped 20,000 in sales for the seventh straight month at 22,343. Ford's Edge and Explorer posted strong gains of 14.9% and 12.6% respectively, for sales of 10,541 and 12,742 in July.

Ford's car results were a mixed bag of results with the best-selling Fusion model down 12% from last year to 20,522 units sold. The main reason was a lack of supply because dealers can't get enough stock to sell to consumers which has resulted in a sales decline. Ford is ramping up additional production in its Flat Rock assembly plant but won't have additional units producing until the fall – the only bad news of the report.

The Mustang also took a 21.7% dip to 5,768 in sales, but the pony car is in the last year of its current form and will be redesigned for the 2015 model. Ford's entire car segment managed a 5% gain over last year led by small cars. The Fiesta was up 88.9% to 7,667 units sold, and Ford's C-MAX sold well and posted a 2,700 incremental gain on last year (it wasn't selling at the time). Combining those two results with the Focus boosts Ford's small-car segment up 32%, resulting in its best July in 13 years.

"We saw continued strength and growth in our retail business, particularly in the coastal regions of the country," said Ken Czubay, Ford vice president, U.S. marketing, sales, and service, in a Ford press release. "Our small cars and hybrids continue to attract new customers to Ford and away from our competitors, thanks to the vehicles' combination of styling, technology, fuel economy and performance."

Ford's struggling luxury lineup was flat compared to last year but the MKZ continues to sell well after its new model was delayed for months due to a fumbled launch. If it wasn't for two lost months of sales in January and February then the MKZ would be posting a nice improvement over last year, instead it's down 1.8% through July.

Graph by author. Information via Ford monthly sales releases.

The plan for Lincoln's resurgence continues. Ford will be redesigning four Lincoln vehicles as well as introducing the line into China's booming luxury market. Both of those factors will make the next two to three years much more profitable and successful for Lincoln – be sure to stay tuned as this will be a huge factor for Ford as an investment.

Bottom line
Ford is continuing to see strength in sales from its popular models and, better yet, management announced on the conference call that transaction prices have improved year over year. Ford is seeing consumers load up on options, boosting top-line revenues and sales. With a solid start to the third quarter I see no reason for Ford's great results to slow down and investors must agree because we aren't seeing a standard pullback after Ford went ex-divdend yesterday – a great sign for the long haul.

Ford's growth in its Lincoln line, and in China, will be huge. Does that make Ford one of the best two auto investments though? A recent Motley Fool report, "2 Automakers to Buy for a Surging Chinese Market", names two global giants poised to reap big gains that could drive big rewards for investors. You can read this report right now for free -- just click here for instant access.

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Daniel Miller

As a Motley Fool Industrial Specialist, I use my marketing and business background in the automotive industry to evaluate major automakers and other large industrial corporations. Follow me on twitter for tweets about stocks, cars, sports, and anything I find amusing.

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