The 2014 Ford Fusion Will Be a Huge Seller

As Ford (NYSE: F  ) switches over from its 2013 model-year Fusion to the 2014 model, its poised to see a big jump in sales. The 2014 Ford Fusion is almost guaranteed to be a hit for two simple reasons.

The 2013 Ford Fusion has been a strong seller. Photo: Ford.

First, the 2013 Ford Fusion has generated massive customer interest because of its bold design and premium options. Sales are up 16.5% year-to-date, despite significant supply shortages. Second, supply of the 2014 Ford Fusion will be much better, because Ford recently started producing the Fusion at a second plant in North America.

With a continuation of this year's robust demand and better supply, the 2014 Ford Fusion has a chance to challenge Toyota Motor's (NYSE: TM  ) Camry sedan for the U.S. midsize car sales crown. This would be a significant accomplishment, considering that Camry has led the segment for 11 straight years (and is almost certain to lead again this year).

Strong demand
Ford took a calculated risk by adopting an aggressive design for the Fusion when redesigning it for the 2013 model year. While midsize cars have historically been very conservative in terms of styling -- and the new Toyota Camry is true to form -- Ford executives hoped to make the Fusion a more "aspirational" car. This bet has paid off in a big way, as demand for the new Fusion has been overwhelming.

The Toyota Camry has maintained fairly conservative styling. Photo: Toyota.

The strength of demand for the 2013 Ford Fusion can be seen in the model's strong sales results for the first five months of this year. Through the end of May, Ford had sold 136,833 Fusions, up 21.7% year over year! Another indicator of strong demand is the Fusion's average selling price, which was $26,338 through the end of August. That was up 4.4% year over year and put the Fusion's ASP nearly 10% above the Toyota Camry's ASP for 2013.

With such strong customer demand, Ford's plant in Hermosillo, Mexico, couldn't keep dealers fully stocked with inventory. Ford Fusion sales suffered over the summer because of these persistent inventory shortages.

Supply improvements coming
Ford started to benefit from better Fusion supply last month. As a result, sales increased more than 60% compared with September 2012 (when the 2013 Fusions were just starting to hit dealer lots). Most importantly, though, Ford recently increased production by adding a second manufacturing plant for the Fusion.

Ford began building Fusions at its Flat Rock Assembly Plant in late August, thereby increasing Fusion production capacity by more than 30%. Fusion vehicles from the Flat Rock plant are expected to start arriving on dealer lots later this month. This will help bring supply back in line with demand in time for the busy fall car-buying season.

With additional supply, it should be easy for dealers to boost Fusion sales by another 10% to 20%, just based on the sales "left on the table" over the summer when dealers ran short of Fusion inventory. Depending on how Toyota reacts, Ford may have a chance to take the midsize car sales crown next year, for the first time in nearly two decades.

Foolish bottom line
Ford's plan to win with the 2014 Ford Fusion is very simple: make it just as good as the 2013 Ford Fusion, and then build a lot more of them. This is great news for customers interested in buying a Fusion. With more supply, potential customers are more likely to find a Fusion with the features they want in stock at a local dealer. Furthermore, once dealers have an ample supply of Fusions, customers will have more leverage to negotiate discounts.

For investors, this is also great news. There's no real risk to adding additional production capacity, because the level of customer demand has been so strong over the past year. While average selling prices may drop a little bit as Fusion shortages recede, the car will remain an important driver of profit growth for Ford.

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Read/Post Comments (6) | Recommend This Article (5)

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 October 06, 2013, at 11:41 AM, wscarp1 wrote:

    Ford needs something to compete with the V6 Camry. How about a dual-turbocharged 4?

  • Report this Comment On October 06, 2013, at 3:33 PM, kogified wrote:

    The Ford Fusion is lightyears ahead of the crowd, particularly with their Hybrid version. SEXY FAST SLEEK FUEL EFFICIENT= One fill up a month...it's a rock n roll groupie, this car! My 2010 Fusion Hybrid is gorgeous, handles awesome & it so quite it's downright stealth. Toyota - hell no, yuk!

  • Report this Comment On October 06, 2013, at 3:58 PM, reguired12 wrote:

    Which Fusion will have better build quality...the ones mane in Mexico or the ones made in Detroit?If I were to buy one, I would check the data plate for the one made in Detroit !

  • Report this Comment On October 06, 2013, at 4:00 PM, reguired12 wrote:

    Fusion great car...I only wish they would have named it Torino.

  • Report this Comment On October 07, 2013, at 11:17 AM, TMFGemHunter wrote:

    @required12: Obviously Ford has a lot of confidence in the Hermosillo Mexico plant. Not only did it build all of the 2013 Fusions there (which were very well received), Ford's also building the Lincoln MKX at Hermosillo. I doubt there will be a noticeable difference in quality between Hermosillo and Flat Rock Fusions.

    Adam

  • Report this Comment On October 07, 2013, at 1:49 PM, FoolinSD wrote:

    @required12, I would bet the ones made in Hermosillo would have better quality since they have more experience. I'd wait a year for Flat Rock to warm up.

    foolinsd

    almost bought a focus but my addiction to incentives lead me to a prius with 0% financing

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