Will Sales Start Rising for Ford Motor Company?

Ford's Fusion had a very strong year in 2013 -- but sales are down 11% through the first two months of 2014. Is a bounce coming? Source: Ford Motor Co.

Few things worry auto company investors more than a slowdown in the U.S. new-vehicle market. And for good reason: Nearly all of the major global automakers rely on the U.S. for a substantial share of their profits.

Like most of its rivals, Ford  (NYSE: F  ) posted some decidedly somber sales numbers in the first two months of 2014. Heavy winter weather in many parts of the country kept consumers away from new car dealers. Ford has mostly held its ground, while -- officially, at least -- remaining optimistic that lost sales would be made up once the weather started to improve.

Is that happening? So far, it's hard to tell. As Fool contributor John Rosevear notes in this video, the latest analyst estimates for U.S. auto sales are a mixed bag -- but there's no question they're not as promising as some had hoped.

A transcript of the video is below.

Free report: The inside secrets to saving big on your next new car or truck
Think you got a great deal on your last new car or truck? Think again. Chances are good that you could have spent even less on that same vehicle. We all know that new-car dealers are a dangerous place for your wallet -- but do you really know all the tricks they use? The Motley Fool's top auto experts do, and they've decided to fight back. We've done a ton of research and created a brand-new report with all of The Car Buying Secrets You Must Know. We think the advice inside could save you thousands of dollars on your next new-vehicle purchase. Best of all, it's completely free -- click here now for instant access.

John Rosevear: Hey Fools, it's John Rosevear, senior auto analyst for Fool.com. It's looking like auto sales turned up a bit in March. We won't have the official numbers until Tuesday, but analysts at edmunds.com have released their forecast, and the word is that sales appear to have picked up, at least somewhat.

New vehicle sales in the U.S. have had a tough time so far this year; numbers were very soft in January and February as severe winter storms in many parts of the country kept consumers away from car dealers. The thinking among analysts, or at least the hope, was that we'd start to see a rebound as the weather got better, as those folks who want or need new cars start to make their way to dealerships.

We may have seen a little of that in March, though in truth, it kind of depends on how you look at it. When we look at auto sales in the U.S., you often hear experts talking about the "SAAR," which stands for seasonally adjusted annualized rate. Basically it's shorthand for, if cars keep selling at this pace, here's how many will get sold this year, so it's an indicator of the rate of new vehicle sales. And this is for what we call "light vehicles," which is cars, SUVs, and pickups -- bigger trucks have a separate category. Edmunds sees the SAAR for March coming in at 15.8 million, that's up from 15.3 million we saw for February.

But the actual year over year increases aren't that big, Edmunds expects overall sales to be up just 1.7% versus March of last year, but that comes with a little asterisk courtesy of the calendar.

We look at what experts call "selling days," when we look at auto sales, that excludes Sundays because many new car dealers are closed on Sundays, and this March will have had 26 selling days versus 27 in March of 2013, so that makes the year over year comparison a little tricky.

But we can still look at relative strength among the automakers, and there are some interesting trends there. Edmunds expects another big jump for Chrysler, or maybe we should start saying Fiat Chrysler Automobiles  (NASDAQOTH: FIATY  ) . They've been up big so far this year even while most of the other guys were posting declines, and Edmunds sees that continuing with an 11.1% increase for them in March.

Edmunds expects Ford, Toyota  (NYSE: TM  ) , Nissan (NASDAQOTH: NSANY  ) , and General Motors  (NYSE: GM  ) to all post small sales increases, while Honda  (NYSE: HMC  ) , Hyundai/Kia, and VW Group  (NASDAQOTH: VLKAY  ) will all post declines, they say. Chrysler has been a little more aggressive with pricing and incentives than Ford and certainly GM, though GM stepped it up with a big Chevy truck promotion in March. It'll be interesting to see how pick-up truck sales played out among the Detroit automakers, as those are huge drivers of profits, and this is the end of the first quarter. We'll have much more for you on all of this when the official numbers are released next week. Thanks for watching.


Read/Post Comments (2) | Recommend This Article (0)

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 March 31, 2014, at 9:20 PM, AmericanFirst wrote:

    John,

    FYI, the final sales numbers for March aren't in yet, but per True Car, Edmunds, GM's incentives in March were an average of over $400 per vehicle sold more than Ford and the highest in the industry.

  • Report this Comment On April 01, 2014, at 2:29 AM, jackfleming wrote:

    Ford’s debt to equity ratio has subsequently declined to 75.8%, compared to 86.9% in 2011. Meanwhile, the company has also returned $1.3 billion in dividends to investors during the last 12 months, compared to the $763 million paid out in fiscal year 2012

Add your comment.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2897001, ~/Articles/ArticleHandler.aspx, 9/19/2014 10:09:12 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement