One of Ford Motor Company's (NYSE:F) most important stories over the past couple of years was its slow, yet consistent, progress in turning around its European operations. The good news, despite the recent "Brexit" situation, is that Ford's first half of the year in Europe went pretty well -- more on that in a second. The bad news is that the initial impact of the U.K.'s decision to leave the European Union will be felt more in the third- and fourth-quarter results. The long-term impact is still up in the air as the details are hammered out.
With that aside, though, let's check out Ford's figures in Europe for last month, and the first half of 2016.
What's the story?
The story is pretty simple: Ford continues to truck along on a consistent turnaround in Europe. As such, it posted its best first half for total vehicle sales since 2010, and best commercial vehicle sales since 1993, in its traditional 20 European markets ("Euro 20"). However, also important for investors to note is that Ford trailed the industry's gains last month.
Looking specifically at June's sales, Ford's registrations were up 2.6% to 130,200 in its Euro 20, compared to the industry's larger 6.7% rise. That holds true for Ford's total "Euro 50" markets, as well, with Ford posting a 3.7% increase in registrations to 148,400, compared to the industry's 4.7% rise to 1.9 million registrations.
Furthermore, you can see that the industry's sales were slightly hindered by a hit in consumer confidence, due to the U.K.'s decision to exit the European Union; the industry's gains in the Euro 20 were 9.3% year to date, compared to June's slower 6.7% growth. They absolutely bear watching over the next few months, though, to see if deteriorating consumer confidence causes a larger slowdown.
Despite Ford losing a little ground to the industry last month in its Euro 20 markets, there were certainly positives in the data.
One of the bright spots is that consumers in Europe are buying higher-end Ford vehicles. Sales of Ford vehicles with the Titanium trim increased 400 basis points in June, or from 36% of total sales to 40%, in its Euro 20. If you add in sales of other high-end models, such as the Vignale, ST, and Red and Black Editions, those combined to generate 60% of Ford's passenger car sales – a 300-basis-point improvement from last June. It's a trend that should continue as Ford launches more Vignale models in the future, as well as three new ST models by the end of the year.
Another bright spot was a similar story globally, as SUV sales continue to accelerate just about everywhere. Ford's Kuga (the twin to the Escape) had its best-ever first half of sales in the Euro 20, with a 22% increase compared to last year. In the smaller compact SUV segment, Ford's EcoSport posted a strong 64% increase in sales, to more than 30,000 units during the first half of 2016.
"The second half will be another exciting product story for Ford of Europe," said Roelant de Waard, Ford of Europe's vice president of marketing, sales and service, in a press release. "With the Edge coming out now, the updated Transit vans with our all-new EcoBlue engine and the new ST-Line, we will continue to surprise customers. We are also excited about the KA+, an entry-priced small car that offers outstanding interior space, fuel efficiency and fun-to-drive dynamics at an affordable price."
Ultimately, while Ford's sales slightly lagged the industry's gains, it was still a strong first half for the company in a region that has been a thorn in automakers' sides for years. However, investors would be wise to listen in to Ford's upcoming second-quarter conference call for any details about what actions, if any, the company plans to take in light of the U.K.'s vote to exit the EU -- which could directly impact bottom-line results in the coming quarters.