Ford Motor Company (NYSE:F) said on Wednesday that its U.S. sales fell 3% in September, as a planned reduction in sales to rental-car fleets offsets good results for the Fusion sedan and Ford's Lincoln luxury brand.
Ford's result was slightly worse than the 2.4% drop projected by analysts polled by Bloomberg. And it was far behind the 19% increases posted by Ford's old Detroit rivals, General Motors (NYSE:GM) and Fiat Chrysler (NASDAQOTH:FIATY).
But it was broadly in line with expectations, and the result reinforces a message we've been hearing from Ford executives for months: 2014 is a bumpy year for the Blue Oval.
Ford's sales are lagging for two good reasons
Ford's U.S. sales gains have trailed those of key rivals for months, with Ford often posting declines in months -- like September -- when the overall market was solidly up.
But Ford executives point out that there are two big reasons for the Blue Oval's apparent lack of success. First, the company is deliberately reducing its sales to rental-car fleets, preferring to allocate tight production to more profitable retail sales. Ford's sales to rental-car companies were down 40% in September compared to a year ago.
That reduction hit some models harder than others: Overall sales of Ford's compact Focus were down 8% in September, but U.S. sales chief John Felice noted that retail sales of the Focus were up an impressive 17%. Likewise, the Escape SUV was down 3.9% overall, but up 8% at retail.
Second, Ford is working through a complicated changeover to its all-new 2015 F-150 pickup. One of the two factories that makes the F-150 was closed at the end of August to begin its changeover; with supplies constrained, Ford has reduced its incentives, which has served as a brake on sales.
The F-Series pickups are Ford's best-sellers in the U.S., so any reduction in sales has an outsize impact on Ford's overall totals -- and on its market share. Sales of the F-Series were down about 1% in September, but rivals were able to make huge gains: Chrysler's Ram pickup line posted a 30% sales increase, while GM's Chevy Silverado was up a massive 54% thanks to aggressive promotion by GM at the dealer level.
But the Fusion and Lincoln MKC are doing well
Meanwhile, Ford is having big success with another of its strong sellers, the midsize Fusion sedan. Overall sales were up almost 9%, and retail sales grew by 11% year over year.
That's a stronger performance than you might think. Midsize sedans -- as well as smaller cars -- have been a challenging segment recently, as buyer preferences have shifted toward small and midsize sport-utility vehicles -- and as Honda has put a lot of promotional muscle behind its Accord sedan. Sales of GM's Chevy Malibu were up just 4.8% last month, while sales of GM's midsize crossovers were collectively up 31% -- and while Chrysler's new 200 sedan posted a 15% increase, its Jeep SUV brand was up 47%.
Ford's efforts to revive its Lincoln luxury brand are also showing some signs of success. Lincoln's retail sales rose 21% in September, as its newest entry -- the compact MKC sport-utility -- gained traction. Felice said on Wednesday that the MKC's "days to turn," a measure of how long vehicles spend on dealer lots waiting to be sold, was just 15 days. That's very short, suggesting that Lincoln dealers are selling MKCs almost as quickly as they can get them.
The upshot: Ford is holding its ground through a complicated transition
We have known since last December that 2014 would be a bumpy year for Ford. The changeover of its pickup factories is unusually complicated, because of the vastly different tooling and procedures needed to build the all-new aluminum-bodied truck.
Meanwhile, other new models are just arriving. All-new 2015 Mustangs are just now beginning to arrive at dealers -- Felice said that the first retail sale happened at the end of September -- while supplies of the outgoing 2014 model are nearly exhausted. That will leave Mustang sales looking thin while dealers build up their inventories over the next couple of months.
The same thing will be starting to happen shortly with the F-150, but on a much larger scale. All-new 2015 F-150s should start arriving at dealers by the end of the year, but they'll be sold alongside 2014s for a few months as Ford ramps up inventory.
Ford is doing well, all things considered. But the company's U.S. sales may continue to lag the market until well into 2015, as it works through the transition to its new pickups.
Meanwhile, don't be surprised if GM and Chrysler continue to make hay at the Blue Oval's expense.
John Rosevear owns shares of Ford and General Motors. The Motley Fool recommends Ford and General Motors and owns shares of Ford. Try any of our Foolish newsletter services free for 30 days. 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.