Ford Motor (NYSE:F) has had a great year in 2013. One of the biggest factors driving Ford's strong profitability has been sales growth for its F-Series pickup trucks. Recovery in the housing sector has boosted U.S. pickup truck demand, and Ford's decision to discontinue the smaller Ranger pickup has helped dealers sell more Ford F-150s (by far the most popular of the F-Series trucks).
Through the end of October, Ford had sold 623,309 F-Series pickups in 2013: up nearly 20% year over year. That's an average pace of more than 60,000 per month! Ford even managed to exceed the 70,000 unit mark back in May, for the first time since early 2007.
As strong as Ford's F-Series sales numbers have been so far, Ford is likely to post even better results in November and especially December. With top competitor General Motors (NYSE:GM) focused on boosting average transaction prices for its new pickups, Ford dealers will be able to offer a great value proposition to truck buyers in the next few months, boosting sales.
Out with the old
While it is nearly the end of the year, Ford dealers are only just starting to clear their inventory of 2013 Ford F-150s. On Ford's recent sales call, Ford U.S. sales analyst Erich Merkle noted that nearly all F-150 sales in October were 2013 models. Dealers have just started receiving 2014 Ford F-150s, and the mix between the 2013 and 2014 model years will be weighted toward the older models until early next year.
As auto dealers start to receive deliveries of new products, they are increasingly likely to offer discounts on top of the manufacturer incentives in order to clear out old inventory. With the new F-150s starting to hit dealer lots, truck buyers are likely to find good deals on 2013 Ford F-150 pickups in the next few months.
By contrast, Chevy and GMC dealers are not as likely to offer good deals this fall, because they do not have many 2013 models left. GM has been careful to keep 2013 model year pickup inventory in check, because it did not want to overshadow its redesigned 2014 Silverado and Sierra trucks.
In fact, GM announced last week that 76% of the light-duty pickups it sold last month were 2014 models. The percentage of 2013 models will continue to drop over the next few months.
Strong industry trends
Ford's October sales results were particularly impressive because some car and truck buyers held off on purchases during the government shutdown in the first half of October. Despite losing some sales in the first half of the month, F-Series sales grew 12.9% year over year to 63,803. This marked the sixth straight month that Ford sold more than 60,000 F-Series trucks in the U.S.
The last two months of the year are seasonally strong for truck sales. Last year, Ford sold 56,299 F-Series trucks in November, and 68,787 in December. With strong momentum and plenty of 2013 F-150 inventory, Ford could post even more impressive numbers this year. Based on recent trends, Ford has a good chance to keep its 60,000 F-Series sales streak alive through the end of the year, and December sales are likely to sail well beyond the 70,000 unit mark.
Firing on all cylinders
While GM has redesigned its pickup trucks in a bid to catch Ford for the pickup sales crown, so far it hasn't gained any ground. Last month, GM sold 59,163 full-size pickups (counting both the Chevy Silverado and GMC Sierra), compared to Ford's 63,803. In other words, F-Series trucks -- led by the 2013 Ford F-150 -- have maintained a comfortable sales lead over the competition.
Ford's industry leading pickup market share is one of the main reasons why it has a higher North American profit margin than GM. If anything, Ford will add to its market share lead in the next few months as its dealers will be focused on selling down 2013 models, whereas GM dealers are looking to boost transaction prices. This should give Ford strong sales momentum heading into 2014.