Is Ford (NYSE: F) poised for a sales breakout?
It's looking possible. U.S. auto sales are finally starting to gather steam, industry watchers say, with February's sales totals set to build on the strong overall results seen in January. Ford itself says that sales of its key compact car are up sharply. And other signs suggest that Ford could be gaining market share, even as key Japanese rivals work hard to pick up the pace.
Strong results in an improving economy
The industry analysts at Edmunds are expecting February's numbers to show a big jump, with sales up 19.9% over January's strong totals and up 10.3% over last year. That's expected to put the SAAR, or Seasonally Adjusted Annualized Rate of auto sales (a widely watched industry indicator) at 14.4 million, up from an already impressive 14.1 million last month.
That's good news for all of the automakers. But it's particularly good news for Ford, which may be grabbing market share. Edmunds expects Ford's February sales to come in at 35.6% above January's numbers, good for a substantial 18.3% YOY gain.
What's driving that? We won't know for sure until Ford reports its sales later this week, but some factors are already apparent. Mild weather in the northern states may be boosting overall sales, and as Edmunds' Jeremy Anwyl recently noted, more older vehicles are being traded in than at any point since the "Cash for Clunkers" months in 2009. That suggests that consumers who have been postponing car purchases might finally be willing to spend, a sign that this rise in sales could go on for a while.
Ford's finding that small is sweet
Rising gas prices may be pushing more buyers toward smaller cars, a trend that -- unlike in past years -- may work in Ford's favor. Ford said on Monday that sales of its Focus compact were expected to double in February versus year-ago numbers, which would make it the best month for the model in over a decade.
If that result holds up -- and if it's driven by retail sales instead of low-margin fleet sales to rental-car companies -- it will be impressive. The current Focus, like its smaller sibling, the Fiesta, has won critical accolades ever since its introduction, and for good reason: They're Ford's best-ever small cars, and rank with the best in the world. But while the Focus has been a strong seller in Europe and elsewhere, it hasn't yet managed to gain significant ground here on segment leaders from Toyota (NYSE: TM) and Honda (NYSE: HMC) -- something even General Motors (NYSE: GM) has managed with its own compact, the Chevy Cruze.
If that's changing, that's good news for Ford, and a possible challenge for the still-recovering Toyota and Honda.
Don't forget the Japanese … and the General
Speaking of Toyota, the Japanese giant is expected to show a 5.6% YOY gain, says Edmunds, another sign that its supply lines are back up to speed. And Honda, which was still struggling as recently as last month, is expected to post a 5.2% gain.
February 2011 was the last month before the earthquake and tsunami that devastated parts of Japan (and key Toyota and Honda suppliers), so YOY sales gains would be a strong positive sign for both automakers.
Less strong are GM's numbers, which are expected to be down a bit versus those from a year ago for the second straight month. It may be that GM and its hit-or-miss product line is bearing the brunt of the Japanese resurgence, while Ford's stronger lineup holds its sales ground. Key products like GM's trucks are still selling well, but they're a bit dated next to more-recently refreshed models from Ford and Chrysler. Chrysler has recently upped its product game in a big way, of course, and Edmunds expects the company's YOY gain to once again be the biggest among the major automakers.
But if Edmunds projections hold, Ford will be the big story when sales numbers are released on Wednesday. How will that play out? Stay tuned.
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