Most Ford Motor Company (NYSE:F) investors have been ready to flip the calendar over to 2015, because this year has been a bumpy ride, for sure. Aside from the stock price fluctuations, and there were a couple of significant drops, Ford waved goodbye to a tremendous CEO and is expected to record a couple of billion dollars less in pre-tax results for the full year.
Ford's bumpy year wasn't unexpected, and 2015 looks to be much more pleasant for shareholders. Here's one of the many factors for investors to keep tabs on as Ford enters the new year.
One of the biggest questions facing Ford next year has to do with its market share in its two most important markets: the U.S. and China. Let's take a closer look at both.
Here in Ford's bread-and-butter market, the U.S., the automaker has lost more market share than any other major automaker in 2014.
There are two major reasons behind this decline. First, as Ford retools the first of two plants producing the F-Series truck to begin producing the aluminum-bodied 2015 F-150, the automaker lost production and potential sales of roughly 90,000 units. Since 2011, Ford has increased sales of its F-Series by roughly 14% annually, but year to date, its sales are down 1.4% compared to last year. That compares unfavorably to the Silverado, Sierra, and Ram, which have posted respective sales gains of 8%, 13%, and 23%, comparing the same time periods.
Ford's 2015 F-150 has been called revolutionary and offers consumers a more fuel-efficient, yet fully capable, full-size truck, and the product will need to record strong sales in 2015 to help regain lost market share.
In addition to slowing sales of the F-150 amid a very important transition, Ford is continuing to pull back its focus on rental fleet sales -- the least favorable of fleet sales, typically accompanied by thin margins.
To get an idea of how this has affected Ford's market share, consider that the automaker's rental business is down 16%, or about 40,000 units, through November, according to Ford. That's the equivalent of about 1.8% of Ford's sales this year (Lincoln not included). That loss of units, despite being a positive impact on residual vehicle values and operating margins, helps explain Ford's 1.2% sales decline through November and resulting market share loss.
Another region where market share will remain a major focus is in the world's largest, and one of the fastest-growing automotive markets: China.
Better late than never
While Ford was years late entering the Chinese market, its $5 billion bet made in 2012 to expand its production capacity and sales resulted in significant progress in the company catching up to the competition.
By all accounts, Ford's double-digit gains should continue through 2015, and it will need to remain that way if Ford is to achieve its market share goal of 6% by the end of 2015. Here's a look at the progress through the third quarter.
In addition to whether Ford's can achieve its goal of 6% market share in China next year, there is another story line to keep an eye on. Can the folks at the Blue Oval surpass Nissan to become the third-best-selling foreign automaker in China as soon as next year?
Through October, Ford has continued to narrow the sales gap between the two automakers, with Nissan edging out Ford with 983,527 units sold versus 906,613 units. However, Ford's sales continue to move higher at a faster rate, while Nissan's sales are expected to stay flat. Through October, Nissan's sales in China are up a meager 3.5% compared to Ford's 22% gain -- if this continues, Ford and its investors will have a small victory to cheer about as it surpasses Nissan in China.
Ultimately, when it comes to Ford's 2015, investors can expect easier monthly sales comparisons in the U.S. market, and thus more flashy gains, but the focus should remain on the company regaining its lost 90 basis points of U.S. market share. While the story is different overseas, Ford needs to continue building its sales performances at a healthy clip if it is to reach its 6% goal -- achieving both will be critical for a successful 2015.
Daniel Miller 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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