Ford Motor Company (F 5.10%) said its U.S. sales fell 9.8% in the fourth quarter from a year ago, as supplies of its best-selling pickups were extremely tight following factory shutdowns earlier in 2020.
For Ford investors, the results are a mixed bag. The decline in overall volume (and particularly the lost pickup sales) will hurt fourth-quarter results, but there are some reasons for optimism as we dig into the numbers.
The high points of Ford's sales report
- Ford's overall U.S. sales were down 9.8%, but its retail sales fell just 3.4% from the fourth quarter of 2019. That's good news for Ford's profit margin: Retail sales, meaning sales to individual customers via dealers, are generally more profitable than fleet sales. With its pickups in short supply, Ford appears to have prioritized higher-profit retail deliveries over commercial-fleet orders.
- Ford's SUV sales were up 4.7% in the quarter; retail sales of Ford's SUVs were up 9.8%. Sales of the new-last-year Ford Explorer were particularly good, up 28.7%; the big Ford Expedition and brand-new Bronco Sport also did well.
- For the full year, Ford sold just over 226,000 Explorers -- enough to make it America's best-selling midsize SUV, the company said.
- Ford's electric Mustang Mach-E was expected to begin arriving at dealers in early January, but a few landed early: Ford sold three before the end of December.
The low points of Ford's sales report
- There's no hiding from this one: Sales of Ford's F-Series pickups fell 15% from a year ago. Supplies were already tight after the long COVID-19 factory shutdowns in the spring; the situation was made worse by a second shutdown as Ford retooled its truck plants to build the all-new 2021 F-150. (The good news: Those new trucks began arriving at dealers in early December.)
- Sales of the compact Escape (down 1.8%) and midsize Edge (down 15%) lagged the other Ford-brand SUVs.
- Lincoln sales fell 7%. The discontinuation of the brand's sedan models, the Continental and MKZ, didn't help.
What it means for investors
Simply put, the lost pickup sales will hurt revenue, profits, and Ford's operating margin in North America. Strong Explorer and Expedition sales, and the relatively good sales of trucks and SUVs at retail, will offset that somewhat. But investors should expect Ford's fourth-quarter profit to be fairly thin.
The good news for auto investors holding Ford's stock is that things will get better in the first quarter -- probably a lot better. While Ford's brand-new F-150 was in extremely short supply in the fourth quarter, the new trucks that did get to dealers were selling very quickly, spending an average of just six days on dealer lots. That suggests that demand is strong, and that sales will be good as Ford gets more trucks to dealers.
We'll learn more when Ford reports its fourth-quarter earnings on Feb. 4.