Shares of Ford Motor Company (F -1.30%) have told two very different stories in 2025.
To start the year, Ford's stock slumped for months on concerns over tariffs, trade wars, and the broader economy. However, shares have rebounded throughout the spring and summer, and are now near their 52-week high.
The company has posted some impressive sales figures, the result of a prudent marketing strategy that leveraged its brand power and American roots. It will unveil its third-quarter earnings in a few weeks.
Should investors buy the stock now? Here is what you need to know.
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Ford continues to sell vehicles, but there are concerns
President Donald Trump announced aggressive tariff proposals in April that sent the automotive industry reeling. To Ford's credit, the company decided to lean into the situation with a marketing strategy centered around its American brand identity and offered discounts on its vehicles to U.S. buyers.
The plan was a resounding success, with second-quarter vehicle sales surging 14.2% above 2024 levels. The momentum continued into the third quarter. Recently released sales data indicates that Ford's vehicle sales increased 8.2% year over year in the U.S. during the third quarter, surpassing its domestic rivals General Motors, which grew sales by 8%, and Stellantis, which grew sales by 6%.
While the sales momentum has helped contribute to the stock's strong performance over the past six months, there are some concerns. Growth in vehicle sales decelerated significantly in the third quarter, and a closer look reveals some distress signals beneath the economy's surface.
For instance, sales of heavy-duty trucks, a crucial profit engine for Ford, have declined sharply since June. And auto loan delinquency rates have risen to their highest levels since the pandemic. These are signs of an economy that could be slowing, and if so, it likely would reduce consumer appetites for new vehicles.
A tariff deal could be a big break for Ford
It's not all bad news. Tariffs have been a front-and-center issue for automotive stocks throughout this year, and some help could be on the way.
Recent reports indicate that President Trump is considering a deal that would provide tariff relief to automakers that assemble their vehicles in the U.S. That includes Ford, of course, which had estimated that tariffs could cost it roughly $2 billion this year.
Management is currently guiding for $6.5 billion to $7.5 billion in EBIT (earnings before interest and taxes) in 2025, so alleviating any sizable effects of those tariff headwinds will be a tremendous boost for Ford's bottom line.
Trump has frequently changed his stance on various tariff policies since April, making it difficult for investors to count on anything until any such a deal crosses the finish line. That said, U.S. automakers employ many Americans, so aiding domestic manufacturers would likely be well received, and politicians generally enjoy scoring points with voters.
Is the stock a buy now?
If tariff relief does come, there might be some upside in Ford stock from here, simply due to the resulting earnings boost the company could enjoy. Unfortunately, it's difficult to predict, and any further deterioration of the economy over the coming months could also weigh on the business and the stock.
I would argue that the best time to invest in Ford is usually during economic downturns, when business is slumping and the market is pessimistic. Its business fluctuates with the economy, so buying during downturns allows investors to benefit from the company's prosperous stretches.
It doesn't look like that time is now. The business and the stock performed well over the past six months, but the economy may be worsening, indicating that a downturn might be on the horizon.
Instead, consider exercising some patience. The automotive industry is ruthlessly competitive, and Ford has underperformed the S&P 500 index throughout its history. There's no harm in waiting for an ideal buying opportunity while exploring blue chip stocks elsewhere in the meantime.
