Detroit cousin Chrysler might have posted the gaudiest gains, but Ford (NYSE: F) posted the numbers that impressed the most: A 10% year-over-year gain in U.S. sales in December, capping a year in which Ford saw its overall U.S. vehicle sales increase by 11%, topping the 2 million mark for the first time in four years.
That was well ahead of the average of analyst estimates collected by Bloomberg, which called for a 7.7% gain for the Blue Oval in December. It was also ahead of ancient rival General Motors (NYSE: GM), which eked out a 4.5% jump on the month, as Ford continues to slowly gain ground on the market leader.
That's a solid result. But for Ford shareholders, it raises a couple of questions: What's driving that growth, and are those trends sustainable as we enter 2012?
Strong products, shifting demand
Several points jumped out as I read through Ford's sales tables:
- Trucks are back. High gas prices and a tough economy crushed pickup sales for a while, but those pressures seem to be abating. Ford (like its Detroit rivals) saw strong pickup sales in December, with sales of the market-leading F-Series up 24.4% on the month, good enough to drive a 10.7% increase for all of 2011. Pickup trucks may not be as exciting as some products, but these are important gains -- the F-Series is Ford's (and America's) best-selling vehicle, with more than 10,000 sold every week on average, and it's one of the company's most profitable model lines.
- Good SUVs drove good results. Sales of Ford's SUVs were up 23.4% in December and a whopping 31.2% for all of 2011. SUVs were the bread and butter of old Detroit and a big reason why GM and Ford ran aground when gas prices rose, which makes it tempting to view strong numbers in the category with some concern. In this case, though, we can safely resist the temptation, as those numbers were driven almost entirely by strong sales of the new-for-2011 Explorer and the Escape, Ford's smallest SUV. The new Explorer, more car-like and fuel-efficient than its predecessor, has been a smash hit since the moment it arrived at dealers last winter. Overall 2011 sales more than doubled the 2010 totals of the old model, and that momentum continued through December. Meanwhile, the boxy little Escape has recently struck a chord with buyers drawn to its practicality, value, and fuel efficiency -- a chord Ford is hoping to strike again with the all-new (and less boxy, which may or may not be a good thing) 2013 model, which will arrive at dealers shortly.
- Cars were a mixed bag. Sales of Ford's acclaimed compact Focus remained strong, up 12.1% on the month, despite renewed competition from finally recovering Toyota (NYSE: TM) and its Corolla, but sales of the smaller Fiesta have drifted down after a strong year. Fiesta sales were off almost 30% in December as the little car seems still to be hunting for its market, in a niche where Honda's (NYSE: HMC) Fit -- perhaps the troubled automaker's best car -- remains strong. Sales of the mainstay Fusion sedan were also down in December, a 4.5% drop after a strong year, but that's probably attributable to limited supplies: Ford's preparing to roll out an all-new model shortly.
- Lincoln lingers in limbo. Sales of Ford's last remaining "other" brand were essentially flat on the year and represented just a tiny portion, 4%, of Ford's U.S. sales. Ford has been a bit coy about its plans for its venerable luxury brand, but it has said that an end-to-end product-line overhaul is in the works. It's possible that the first fruits of that overhaul could break cover during the North American International Auto Show in Detroit next week, but until those vehicles start to hit dealer lots, treading water is probably the best we can expect from Lincoln's sales.
Long story short, Ford's best products are continuing to drive strong gains, and new versions of the Fusion and Escape should help sustain that momentum into 2012.
Why Ford's gains are impressive
One last thought: I said up front that Ford's gains were arguably more impressive than Chrysler's 37% December increase, which is grabbing headlines in the financial press as I write this. Here's why: Chrysler's products, and its sales, were awful until the fruits of its huge product-line overhaul began to hit dealers at the end of 2010. Sales really began to pick up for Chrysler last spring once those new products were available, so until then, the year-over-year comps will look a little outsized.
Meanwhile, Ford rolled a couple of new models early last year, just as it's rolling out a couple more this year, but the new vehicles replace solid entries so above-market sales gains will be a little harder to win. Ford's gains are evidence of continued incremental improvements to already-good products, continued solid marketing efforts, and slow but steady economic improvements that should add to the Blue Oval's gains in 2012.
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