Why Ford's F-150 Is Falling Behind Chrysler and GM

It'll be an uphill battle for Ford's F-150 for the rest of the year, as the company reworks its factories to make an all-new model. Source: Ford Motor Co.

Ford's  (NYSE: F  ) F-Series line, which includes the super-popular F-150 pickup as well as its Super Duty siblings, is arguably the Blue Oval's most important product line anywhere in the world.

Ford may sell more Focuses, and its compact and midsize cars may be much more familiar sights in most of the world than the brawny pickups that are America's best-selling vehicle line. But it's the F-Series pickups that drive the bulk of Ford's profits in North America -- and with Ford investing to expand in Asia, and restructuring in Europe, those North American profits are carrying the company right now.

For investors in Ford stock, F-Series sales are an important indicator of the company's health. But those sales were down 11% last month, while Fiat Chrysler's  (NASDAQOTH: FIATY  ) Rams and General Motors'  (NYSE: GM  ) Chevy Silverados gained market share at Ford's expense.

Is it time for Ford investors to worry? Not necessarily. As Motley Fool senior auto specialist John Rosevear explains in this video, there are extenuating circumstances here -- and while Ford's pickup sales may be down, its profits might still end up being strong.

A transcript of the video is below.

Warren Buffett's worst automotive nightmare (Hint: It's not Tesla Motors!)
A major technological shift is happening in the automotive industry. Most people are skeptical about its impact. Warren Buffett isn't one of them. He recently called it a "real threat" to one of his favorite businesses. An executive at Ford called the technology "fantastic." The beauty for investors is that there is an easy way to invest in this megatrend. Click here to access our exclusive report on this stock.

John Rosevear: Hey Fools, it's John Rosevear, senior auto specialist for Fool.com. Sales of Chrysler's Ram pickups were up 12% in June, sales of GM's Chevy Silverado were basically flat, and sales of Ford's F-Series, the longtime market leader, were actually down 11% on the month.

Now, we should say up front that this was a funny year-over-year comparison, June of 2013 had more selling days, meaning days that aren't Sunday, days when car dealers are open, than June of 2014 did, so really all the automakers lost two key days of sales in the year over year comparison. So it's not a surprise, for instance, to see that Chevy Silverado sales were flat year over year, that works out to a gain in terms of the daily selling rate.

But Ford was down about 7500 trucks on the month, and that's a drop no matter how you slice it. So what's going on here? Are the Ram and the new Chevy finally starting to eat the old F-150's lunch?

If you listen to what Ford says, it's not that simple.

I recently talked to Ford's North America chief Joe Hinrichs, who is also Ford's top manufacturing expert, and he explained what's going on with the F-Series pickups right now. Ford is gearing up to change over the two factories that make the F-150 to make the all-new 2015 model, which has aluminum body panels.

Aluminum-bodied vehicles require substantially different manufacturing techniques because aluminum body panels are bonded and riveted, basically assembled using high-tech glue, instead of being welded like the current steel panels. That means Ford needs to install and test a lot of new machinery in the plants in order to build the new trucks, and it needs to train all its workers to build them, and that's going to take time.

The two factories were shut down for three weeks in the first quarter, they'll be shut down for much of July, and they'll be shut down again for a total of seven more weeks by the end of the year. Now, the factories will be able to make up some of the lost production, but Hinrichs says that Ford will lose 90,000 units of production, 90,000 F-Series trucks that they won't have to sell that they probably could sell.

But they want to make sure that all the Ford dealers have plenty of trucks to sell right up to the moment when the shipments of all-new 2015 trucks start to arrive late this year, so what are they doing? Well, they're managing supply and demand the old fashioned way.

GM and Chrysler have been fairly aggressive with incentives on their trucks, but Ford has ratcheted theirs down. Ford US sales chief John Felice said last week that Ford's average per-truck spending on incentives in June was down about $800 from last year, well below $4,000, that's a big drop and it definitely cost them some sales.

Now what Ford is probably hoping is that the sales they lose are the ones to the most price-sensitive buyers, so that they can get the best prices possible on the trucks they have and keep their profits strong, I think they'll probably be able to do that but we'll know a lot more when we get Ford's second-quarter earnings numbers in a few weeks. We'll talk about this again then, the F-Series pickups are probably the biggest single factor in Ford's profits right now. Thanks for watching. 


Read/Post Comments (9) | Recommend This Article (20)

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 July 13, 2014, at 8:42 PM, Jason87467 wrote:

    The answer is simple why Ford sales are down. Chevy trucks are better. It takes time for the word to get out and it's now getting out, Ask Consumer Reports. They rate Ford trucks third behind the number one Chevy,

  • Report this Comment On July 13, 2014, at 9:14 PM, yuckfu wrote:

    all 3 trucks are great trucks,myself I like the simplicity of the pushrod v8 in the Silverado but I have driven fords and their are things I like better about their truck.

  • Report this Comment On July 13, 2014, at 9:47 PM, blubydstudios wrote:

    I set up an account just to reply to you Justin. Sales are down because Ford is about to have another historical launch of the new f series trucks. The new trucks are highly anticipated and a lot of new truck buyers are waiting on the new trucks with 700 lbs shaved, new alumimum frame, better gas mileage, and the only truck to qualify as American Made. Once the new truck is released, we'll pull in our 38th year straight as the top selling truck.

    Who in their right mind would buy a truck from a tax payer owing, government bailed out, murdering, lying, 10 years behind ford, made in china, pos truck from Chevy? I'd rather drive a Toyota. At least they didnt lie about their problems for 15 years.

  • Report this Comment On July 13, 2014, at 11:03 PM, AlanM wrote:

    Indeed the reason is simply that those who don't need a 1/2 ton truck now (such as businesses who can't wait) are holding out for the 2015's to hit the showroom.

    The same would happen if Chrysler had a major change coming for the RAM 1500, and RAM buyers are very much style/image conscious than Ford and GM buyers.

    I don't like to get into this/that/the other brand is better - but a lot of people are resisting GM. Some due to recall issues, some are still ruffled over the bailout, and for those of us in the rust belt - we just don't buy a truck that is going to rust out long before the drive train even shows signs of age.

  • Report this Comment On July 13, 2014, at 11:32 PM, vinnieboiblue wrote:

    This is only temporary. What remains to be seen is how the new FORD's with aluminum do. FORD is better prepared than either Fiat/Ram or GM. GM is stuck on stupid, with their latest trucks looking way too much like the ones they replaced. As for the Ram, they don't have the capital to compete on a large scale. They would make headway if they made a Ram Suburban/Tahoe type full size SUV. But they don't have the balls to do it.

  • Report this Comment On July 14, 2014, at 1:08 AM, btc909 wrote:

    Wait until you see the price hike. I bet Ford will tout the fuel economy gains / price hike and compare it to the RAM Diesel along with its Diesel price hike.

    Also on that Ecoboost 2.7L if you want those advertised performance & MPG numbers you have to run Premium.

    Personally i'd just dump 87 & 89 octane and only sell Premium.

  • Report this Comment On July 14, 2014, at 10:35 AM, Zil wrote:

    "...tax payer owing, government bailed out, murdering, lying, 10 years behind ford, made in china, pos truck from Chevy? I'd rather drive a Toyota. At least they didnt lie about their problems for 15 years."

    Are you really that ignorant ? Ford owes the govt 6 billion bucks ! Toyota didn't lie about Quality/Engineering issues ! ? ? ? ? ?

    Please do not spread false information , it gives you no credibility , even if you are not doing it on purpose.

  • Report this Comment On July 14, 2014, at 12:57 PM, ejazz2095 wrote:

    The title of this article and the author are retarded!

  • Report this Comment On July 14, 2014, at 10:12 PM, blubydstudios wrote:

    Ford doesn't owe the government anything. For those who are to ignorant to pay attention to details, Ford was given grants for creating fuel efficient vehicles. These same grants were given to Chrysler, GM, Toyota, etc. Hence the return of the electric car. Ford was, as usual, the smartest of the big 3 and began a restructuring of their business when the first signs of a depression were being presented. Chevy needed the bail out even though they were already robbing Americans of money by simply not implementing a 1.00 fix that took the lives of innocent people. So GM owes us more than anyone. GM is on its way out. It is 10-15 years behind Ford. Ram is the only competition but as mentioned before they dont have the capitol to put behind them.

    Ford has led the way since the Model T and will continue to do so. This coming from a country boy who hauls 4 wheelers, cattle, horses, hunting dogs, and his family all in a ford. I wouldnt even sell chevys to North Korea. It'd be like cheating.

    You also have to remember that the Ford F 150 is also the most American Made Vehicle and has the highest resale value, other than Tundra and Tocoma, and has the highest customer loyalty with 65-72% of customers returning. Why would you risk driving anything else?

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: 3025266, ~/Articles/ArticleHandler.aspx, 10/25/2014 1:49:19 AM

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