Please ensure Javascript is enabled for purposes of website accessibility

Why Are Ford Focus Sales Down?

By John Rosevear – Jan 4, 2014 at 10:00AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Many Fords are selling well. But the Focus and Fiesta saw sales drop big in December. What's happening?

Critics have raved about Ford's Focus. It's a best-seller in many parts of the world. But here in the U.S., sales have been dropping. Photo credit: Ford Motor Co.

Ford (F 0.36%) had lots to shout about when it released its year-end sales numbers on Friday.

F-Series pickup sales were up big, as were sales of the Escape SUV. The Fusion gained ground on Toyota (TM 1.06%) and Honda (HMC 1.33%). The Ford brand outsold the Toyota brand for the third year in a row.

It's all good news. But as I dug a little deeper into the numbers, I discovered that a surprising trend is starting to emerge: Ford's small cars are getting clobbered

Fiesta and Focus sales dropped hard last month
Ford's compact Focus and subcompact Fiesta have been bright spots for the Blue Oval all over the world. They're both among Europe's biggest sellers, and the Focus has become one of the best-selling cars in China's huge (and still booming) auto market.

But both models are facing tough sledding at home. The Fiesta did well for much of 2013, but things recently took an abrupt turn: Sales were down 20% in December. 

Focus sales were down 31% on the month. And they've been soft all year: Sales of the Focus fell 4.6% last year.

What's that about?

Ford says that small cars as a category have been weak recently. The company points to stable gas prices, the advent of winter conditions in many parts of the U.S., and to the strong sales increases posted by other models in its lineup.

When I first saw the sales declines for the Focus and Fiesta, I thought there might be another factor hurting Ford's small-car sales: competitive pressure. But with a couple of minor exceptions, Ford's key small-car competitors had a tough time in December, too. 

Ford's rivals had a tough time, too
Toyota (TM 1.06%) has been pushing its all-new Corolla compact hard. But despite Toyota's best efforts, the Corolla had a tough time in December: Sales were down 8.6%. Sales of Toyota's Prius hybrid were down over 21%, confirming the trend.

Ford's crosstown rival General Motors (GM 0.87%) has posted good sales with its well-regarded Chevy Cruze compact. But not in December: Cruze sales fell 14.5%. The smaller Chevy Sonic is a direct rival to Ford's Fiesta. It fared even worse: Sales were down 26%.

Likewise, Honda (HMC 1.33%) had a good year in the U.S. in 2013. Sales of its redesigned Accord were strong all year long. But like its rivals, the Focus and the Corolla, Honda's compact Civic lost ground in December: Sales were down 12.4%. 

Honda's subcompact Fit bucked the trend: Sales rose 25.5% in December. But Honda still sold fewer than 5,000 of its little hatchbacks.

Nissan's (NSANY 0.14%) Sentra compact posted a big gain -- 39% -- but with just over 10,000 sold in December, that gain wasn't anywhere near enough to account for the declines of its larger-selling rivals.

So what are compact-car shoppers buying instead?
As near as I can tell, here's the answer: compact SUVs.

As Focus sales have dropped, Escape sales have been rising. Photo credit: Ford Motor Co.

Ford Escape sales were up 21.5% in December. Honda CR-V sales were up 11.8%. Toyota RAV4 sales were up a huge 46.1%.

That's an interesting shift. It might be a seasonal fluke: Winter came early to some parts of the U.S. Or it might be the beginning of a larger trend. Maybe stable gas prices have made buyers more willing to choose a somewhat less-efficient ride.

But getting back to Ford, the Focus and Fiesta have been bright spots over the last couple of years, helping the Blue Oval gain ground against its Japanese rivals. If small-car sales are coming under pressure, that could lead the company to rethink its strategy. 

What do you think? Is this just a snow-season fluke, or are buyers shifting away from small cars and back toward SUVs? Scroll down to leave a comment and let me know.

Fool contributor John Rosevear owns shares of Ford and General Motors. You can connect with him on Twitter at @jrosevear. The Motley Fool recommends Ford and General Motors. The Motley Fool owns shares of Ford. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Ford Stock Quote
Ford
F
$14.08 (0.36%) $0.05
Toyota Motor Stock Quote
Toyota Motor
TM
$148.27 (1.06%) $1.56
General Motors Stock Quote
General Motors
GM
$40.46 (0.87%) $0.35
Honda Motor Stock Quote
Honda Motor
HMC
$24.43 (1.33%) $0.32
Nissan Motor Stock Quote
Nissan Motor
NSANY
$7.28 (0.14%) $0.01

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
356%
 
S&P 500 Returns
118%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 11/28/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.