It wasn't an easy month for major automakers that sell cars in the U.S. market. Industrywide deliveries fell 5.9% in October, against a very strong seasonally adjusted annualized sales rate (SAAR) of 18.2 million from a year ago -- the highest SAAR recorded during this cycle. So even though last month turned in a healthy SAAR of 17.98 million, it was tough sledding in terms of comparisons.
This month hasn't started off much better for Ford Motor Company (NYSE: F), which started the week off with a fire at its Dearborn, Mich., HQ, delaying sales results for a day. Then came the numbers, showing that Ford had a rough October. Here are the details, along with some key takeaways.
Just the facts
Starting from the top, Ford's total vehicles sales in the U.S. were down a significant 11.7% during October and remain 0.4% lower for the full year. Breaking that down into retail and fleet sales, the former totaled 143,145 units, a 7% decline from the prior year. Fleet sales were down 24%.
Breaking sales down by segment, it's clear where much of the pain came from: passenger cars. Ford's car segment posted a drastic 30.8% decline in October compared with the prior year, led by two of its most popular units. The Fusion and Focus, Ford's two best-selling cars in the U.S., posted declines of 21% and 43%, respectively.
Despite the recent success of SUVs and trucks, neither segment could avoid a decline in October. Ford's SUV/utility segment declined 9.3% in October, led by the Escape's 4.9% decline and the Explorer's 14.1% drop. And while Ford's bread-and-butter F-Series managed to gain 0.1%, or 42 trucks, over the prior year, Ford's overall truck segment couldn't copy that success and recorded a 2.2% decline.
A bright spot in Lincoln?
No Ford-branded segment managed to post a gain, but Lincoln did manage a 6.9% gain in October, thanks to small gains from the MKZ and MKX and incremental sales from the Continental. More specifically, the Continental tallied 1,222 sales in October, which was completely incremental to Lincoln's total, as the vehicle wasn't selling last year at this time. Meanwhile, the MKZ and MKX managed to post small gains of 3.1% and 4.1%, respectively.
Now it makes more sense
Late last week, Ford said it will idle its Wayne, Mich., car factory -- which produces the Focus and C-Max -- for an additional two weeks by the end of 2016 to better match supply and demand. Ford also noted recently that it will take one of the three shifts at the F-150 pickup plant in Kansas City, Mo., off line for a week to accomplish the same thing.
Those moves make a little more sense now that we have Ford's October sales data, which shows the company's days' supply for October hitting 90. That's much higher than the typical 60 days, and investors should expect the figure to be a little elevated as we head into the holiday selling season -- just not that high.
Show me the money
Lastly, it's always important to keep an eye on average transaction prices and incentive spending as the market cycle peaks. Ford's overall incentive spending was up roughly $180 compared with the prior year, less than the industry average increase of $390. That spending was offset by its pricing gains.
"High customer demand for our new Super Duty, including top-trim-level pickups, continues to boost transaction prices," said Mark LaNeve, vice president for U.S. marketing, sales, and service, in a press release. "New Super Duty is turning on dealer lots in just 18 days, and Ford's average transaction prices are up $1,600 versus a year ago -- far outpacing the industry average of $600."
Ultimately, it was a rough month for the industry and an even rougher month for Ford. Ford's market share is now at its lowest since September 2008, and the next few months will be very telling for how the company will respond to adversity as the new-vehicle market peaks.