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Why Ford's U.S. Sales Are Stalling

By John Rosevear - Feb 1, 2018 at 5:03PM

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There's a big reason why Ford is lagging in some of the market's hottest segments.

Ford Motor Company (F 1.71%) said that its U.S. sales fell 6.6% in January, as a sharp drop in sales of sedans and sluggish results for its SUVs were exacerbated by the unfavorable timing of deliveries to Ford's fleet customers. 

The decline broke a four-month streak of year-over-year U.S. sales increases for Ford, and it was bad enough that the Blue Oval was outsold by surging Toyota (TM 0.84%)

It isn't hard to see why Ford's sales are stalling. But fixing it will take a lot of time and money. 

A white 2018 Ford Explorer crossover SUV.

Crossover sales are booming, but somebody forgot to tell Ford's Explorer: Sales fell 2% in January. Image source: Ford Motor Company.

How Ford's sales stacked up against rivals in January

Here's a look at how Ford's U.S. sales in January compared to its major rivals'. 

Automaker January 2018 U.S. Sales Year-Over-Year Change
General Motors (GM 1.35%) 198,548 1.3%
Toyota  167,056 16.8%
Ford  161,143 (6.6%)
Fiat Chrysler Automobiles (FCAU) 132,803 (13%)
Nissan  123,538 10%
Honda  104,542 (1.7%)
Hyundai and Kia 76,871 (6.4%)

Data sources: The automakers' monthly U.S. sales reports. 

Why did Ford lag Toyota and GM? 

That's a question that should be of growing concern to Ford shareholders. Part of the answer has to do with flukes in the timing of deliveries to fleet customers: Ford's fleet sales were down 12% from January 2017. But Ford's retail sales (excluding fleet) were still down 4.4%, and it's becoming clear that part of the issue lies with Ford's product portfolio: It's getting stale.

Consider crossover SUVs, the hottest corner of the market. Nearly all of GM's crossovers were all-new for 2017 or 2018, but with the exception of the brand-new-to-the-U.S. EcoSport, all of Ford's are older:

  • Escape was all-new in 2013, refreshed in 2017. The related Lincoln MKC was launched in 2015. 
  • Edge was all-new in 2015. The related Lincoln MKX was all-new in 2016.
  • Explorer was all-new in 2011, refreshed in 2016, and given another mild update for 2018.
  • Flex was all-new in 2009, refreshed in 2013. The related Lincoln MKT was all-new in 2010 and refreshed in 2013.

Why does that matter? Generally speaking, fresh products draw more buyers and get better prices. Sales of GM's crossovers as a group rose 20% in January, while Ford's (including the Lincolns) fell 7.9%. 

Sedans have been a relatively weak corner of the market, but again, the story isn't that different. Toyota invested in all-new versions of its Corolla, Prius, and Camry for the 2014, 2016, and 2018 model years, respectively (another all-new Corolla is expected next year). Ford? The Focus and C-Max were last all-new in 2011, and the Fusion in 2013. (The C-Max joined the U.S. lineup as a 2013 model.)

The upshot? Hybrids are a tough sell right now for both automakers. But Camry sales were up last month while Corolla sales were flat. Ford? Fusion sales dropped 33%, and Focus sales fell 31%. The pool of sedan buyers may be shrinking, but Toyota is competing hard for those sales (as is arch-rival Honda). Ford? Less so. 

You get the idea. Ford could really use some new products, particularly in the hot-selling crossover segments.

Where Ford does have new products, they're selling well

The truth of the newer-equals-better argument is borne out in the segments in which Ford does have new products. The F-150 pickup was all-new for 2015 and refreshed for 2018, while its Super Duty siblings were all-new for 2017. No surprise that F-Series sales were up 1.6% last month, or that its average transaction price of $47,800 was a record (and up $1,400 from a year ago). 

A red 2018 Ford F-150 pickup truck.

Now in its fourth model year, Ford's F-150 is still selling very well and bringing home fat profits, thanks to frequent updates. Image source: Ford Motor Company.

GM's full-size pickups also posted a sales gain, but pricing wasn't nearly as strong. Sales of FCA's Ram pickups fell 13%. (Both FCA and GM will launch all-new full-size pickups later this year.)

Ford's newest products are its big SUVs, the Ford Expedition and Lincoln Navigator. Both are still rolling out, but they're selling very quickly, with transaction prices up sharply from a year ago. We'll have a better idea of how they're competing in a few months, when Ford's dealers have full supplies, but early indications are strong.

The upshot: Another part of Ford's "fitness" that needs work

Ford CEO Jim Hackett often talks about improving the company's "fitness." Generally, he's talking about cost and profitability -- but he has also pushed Ford to move more quickly on a variety of fronts, including product development.

That said, it's not that Ford's global product-development crew has been asleep. Ford rolled out an all-new Fiesta in Europe last year, and it will launch a brand-new Focus (again, in Europe) later this year. But Ford appears to have no plans to launch the new Fiesta in the U.S. -- and those aren't the segments in which it most urgently needs new products here anyway.

What Ford needs, in the U.S. at least, are new crossovers, as soon as possible. The arrival of the EcoSport will help somewhat. But I suspect that all-new (and good) versions of the Escape and Explorer would help a lot more. 

They're coming, of course. But Ford may have a tough time holding on to its U.S. market share until they arrive. 

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