Production of Ford Motor Company's (NYSE:F) 2015 F-150 pickup truck has begun. Investors and truck drivers alike are looking forward to the release, as the new features and improved fuel efficiency are hoped to lead to higher sales.
The truck, which has shed some 700 pounds from last year's model, is expected to boost its fuel efficiency, possibly to the range of "at least" 27 mpg-28 mpg on the highway, according to CNBC. EPA-tested results will be released later this month, and the Fool's own John Rosevear does a great job analyzing "How Ford's New F-150 Will Win the Fuel-Economy Crown."
Aside from increased fuel efficiency, the new pickup also features park assist for pesky parallel parking, lane assist, adaptive cruise control, and blind-spot alert systems. These are all attractive features, but it doesn't end there with the new F-150. In fact, the truck has over 100 new patents, a record for Ford.
Top features for the 2015 F-150
While self-parallel-parking a pickup truck is no small feat, some other features caught my eye as well. For instance, the convenience of hooking up a trailer can not be overlooked.
To start with, the vehicle has a nice backup camera. Not that a backup camera is revolutionary in and of itself, but it's certainly nice not to have to get out of the truck two or three (or more!) times to see if it's lined up with the trailer. However, the camera is part of a much more elaborate system.
Ford's putting cameras on each side of the truck. With all of its angles, the vehicle is able to forge a 360-degree view, aiding drivers in tight maneuvers or difficult positions. The front camera even has its own little washing function to keep it spic and span (see below).
And while a backup cam will aid in the trailer hookup, so will the towing module. Once hooked up to the truck, the vehicle will show which lights on the trailer aren't functioning. That way, the driver doesn't need to leave the car to check each light.
Towing a trailer just got a whole lot easier.
Ford also implemented a system called "curve control," which can sense when the vehicle is taking a corner too fast. The company cites that this type of driving scenario is responsible for 50,000 accidents per year in the U.S. "Too many accidents stem from drivers misjudging their speed going into curves and freeway off- and on-ramps," said Sue Cischke, Ford group vice president of Sustainability, Environment and Safety Engineering.
The curve control system can slow the truck down by 10 mph in just one second by reducing engine torque and applying four-wheel braking.
This great four-minute video from Car and Driver shows off some of the other awesome features in the vehicle:
The truck looks great -- but what does it mean for Ford?
While the new F-150 seems amazing, it has had some drawbacks for Ford in the short term. For one thing, the vehicle took a toll on the assembly line. Because the vehicle's body is made of aluminum, the assembly process has changed.
This means that many of the assembly lines had to be shut down in order to make the changes. The result was 13 weeks of downtime. Ford had to make as many 2014 F-150s as it could beforehand, trying to gauge the proper supply-and-demand needs for the next several months. As a result, as fellow Fool John Rosevear has detailed, "The New Aluminum 2015 F-150 Will Cost Ford 90,000 Sales." That's no drop in the bucket, considering the F-150 is the company's top-selling, most profitable vehicle.
Another drawback is that the 2015 F-150 won't hit full production until the second quarter of 2015. So while the vehicle is beginning production now, investors are unlikely to see the full impact it will have on the company's sales and profits until potentially the third quarter of 2015.
I'm not too worried about the truck being ill-received. The vehicle has garnered strong reviews from the likes of Kelley Blue Book and Car and Driver. Truck drivers are very loyal, but they can be swayed. I believe Ford drivers will love this truck, assuming the aluminum is as durable as the company says it is.
The big question is whether Ford can lure drivers away from General Motors' (NYSE:GM) Chevrolet Silverado and GMC Sierra, and Fiat's (NYSE:FCAU) Dodge Ram. The Silverado and Sierra just received a redesign for 2014 and GM doesn't plan to use aluminum until 2018, when it plans to launch the next generation of its full-size pickup trucks.
This leaves Ford with a sizable competitive advantage, especially in regard to fuel efficiency, for several years to come. On its own, maybe the new features would only tempt some GM truck drivers. But when combined with its expected strong fuel efficiency, Ford could begin to steal further market share.
When it comes to the Dodge Ram, stealing market share could be more difficult. That's because the Ram already gets 28 mpg on the highway with the vehicle's diesel engine. The hope here is that drivers who don't want the added cost of diesel fuel will be swayed by the new features in the F-150. Only time will tell whether drivers will convert.
The biggest risk for the F-150 is tied to production. If the company has some sort of hangup in supplies (such as aluminum) or input pricing, or if it struggles to meet full production demand, then Ford could feel pressure on the bottom line. This year, management expects pre-tax profits to ring in around $6 billion. Still good, but a far cry from the $8.6 billion in pre-tax profit it saw in 2013.
This year's $6 billion estimate already includes the effects associated with producing the F-150. It's hard to say what a significant production issue in the future would do to the company's net income, but let's put it this way: It wouldn't be pretty.
And while slower production and potentially missed sales may weigh on the company in the short to intermediate term, I think Ford's long-term scenario is very attractive. That's because despite the potential production hangups associated with the new F-150, the high-quality nature of the vehicle should win over drivers. The company's most successful vehicle is undertaking a huge makeover, and it should pay off for many years to come.
Bret Kenwell owns shares of Ford. The Motley Fool recommends 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.
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