Why Are Ford Focus Sales Down?

Critics have raved about Ford's Focus. It's a best-seller in many parts of the world. But here in the U.S., sales have been dropping. Photo credit: Ford Motor Co.

Ford (NYSE: F  ) had lots to shout about when it released its year-end sales numbers on Friday.

F-Series pickup sales were up big, as were sales of the Escape SUV. The Fusion gained ground on Toyota (NYSE: TM  ) and Honda (NYSE: HMC  ) . The Ford brand outsold the Toyota brand for the third year in a row.

It's all good news. But as I dug a little deeper into the numbers, I discovered that a surprising trend is starting to emerge: Ford's small cars are getting clobbered

Fiesta and Focus sales dropped hard last month
Ford's compact Focus and subcompact Fiesta have been bright spots for the Blue Oval all over the world. They're both among Europe's biggest sellers, and the Focus has become one of the best-selling cars in China's huge (and still booming) auto market.

But both models are facing tough sledding at home. The Fiesta did well for much of 2013, but things recently took an abrupt turn: Sales were down 20% in December. 

Focus sales were down 31% on the month. And they've been soft all year: Sales of the Focus fell 4.6% last year.

What's that about?

Ford says that small cars as a category have been weak recently. The company points to stable gas prices, the advent of winter conditions in many parts of the U.S., and to the strong sales increases posted by other models in its lineup.

When I first saw the sales declines for the Focus and Fiesta, I thought there might be another factor hurting Ford's small-car sales: competitive pressure. But with a couple of minor exceptions, Ford's key small-car competitors had a tough time in December, too. 

Ford's rivals had a tough time, too
Toyota (NYSE: TM  ) has been pushing its all-new Corolla compact hard. But despite Toyota's best efforts, the Corolla had a tough time in December: Sales were down 8.6%. Sales of Toyota's Prius hybrid were down over 21%, confirming the trend.

Ford's crosstown rival General Motors (NYSE: GM  ) has posted good sales with its well-regarded Chevy Cruze compact. But not in December: Cruze sales fell 14.5%. The smaller Chevy Sonic is a direct rival to Ford's Fiesta. It fared even worse: Sales were down 26%.

Likewise, Honda (NYSE: HMC  ) had a good year in the U.S. in 2013. Sales of its redesigned Accord were strong all year long. But like its rivals, the Focus and the Corolla, Honda's compact Civic lost ground in December: Sales were down 12.4%. 

Honda's subcompact Fit bucked the trend: Sales rose 25.5% in December. But Honda still sold fewer than 5,000 of its little hatchbacks.

Nissan's (NASDAQOTH: NSANY  ) Sentra compact posted a big gain -- 39% -- but with just over 10,000 sold in December, that gain wasn't anywhere near enough to account for the declines of its larger-selling rivals.

So what are compact-car shoppers buying instead?
As near as I can tell, here's the answer: compact SUVs.

As Focus sales have dropped, Escape sales have been rising. Photo credit: Ford Motor Co.

Ford Escape sales were up 21.5% in December. Honda CR-V sales were up 11.8%. Toyota RAV4 sales were up a huge 46.1%.

That's an interesting shift. It might be a seasonal fluke: Winter came early to some parts of the U.S. Or it might be the beginning of a larger trend. Maybe stable gas prices have made buyers more willing to choose a somewhat less-efficient ride.

But getting back to Ford, the Focus and Fiesta have been bright spots over the last couple of years, helping the Blue Oval gain ground against its Japanese rivals. If small-car sales are coming under pressure, that could lead the company to rethink its strategy. 

What do you think? Is this just a snow-season fluke, or are buyers shifting away from small cars and back toward SUVs? Scroll down to leave a comment and let me know.

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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 January 04, 2014, at 10:55 AM, MelMac50 wrote:

    The Fiesta's sales have never been what was expected, though they were somewhat strong in 2012 and earlier this year. I assumed that Ford slapped some hefty spiffs on them to get them moving. They have also been saddled with a balky transmission that has hurt their recommendation from places like Consumers Reports.

    The Focus is a tougher nut. It actually was outsold by the Cruze this year after soundly beating it last year. It's generally considered to be one of the top vehicles in its class so your hypothesis that buyers are moving into CUTEs is compelling. The Escape is based on a variation of that same platform. On the plus side, the Focus gets a facelift later this year for MY2015 so that should stir up some fresh interest.

    Finally, the fact that December was lukewarm for everyone lends credence to the theory that November sales borrowed from December and the cold weather kept people out of the showrooms.

  • Report this Comment On January 04, 2014, at 3:36 PM, SkepikI wrote:

    Gas stabilizes near $3/gal. people opt for functionality over economy. Focus is not very comfy.

    QED.

    Excellent ARTICLE JR. A thinking man's piece.

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