Ford (NYSE:F) said on Tuesday that its U.S. sales rose 15% in January, beating Wall Street estimates and giving Ford its best January sales performance in over a decade.
That increase is welcome news for Ford investors, who have patiently waited through months of sluggish sales as the Blue Oval launched several major new products.
But the most welcome news for investors will be this: Ford's gains were led by its most profitable products.
A big jump in pickup sales paces Ford's gains
It's a small oversimplification to say that "as F-Series sales go, so go Ford's profits." But it's no secret that the F-Series pickups (and to a lesser extent, Ford's SUVs) are the key drivers of profit in its North America region -- and in recent times, North America has carried the company.
That didn't go so well in 2014, as tight supplies of F-150 pickups hindered Ford's ability to generate sales gains -- and profits suffered. But if January is any indication, 2015 is already looking much better: F-Series sales rose 16.8% last month.
Ford CEO Mark Fields hinted last week that the F-Series would post its best January sales result since 2004, a record year. As you can see, that's just how it played out:
That gain did not come from big discounts. Ford sales analyst Erich Merkle said on Tuesday that average transaction prices for the F-150 were up about $2,100 versus year-ago numbers.
With strong pricing and continued market-leading sales volumes, the F-Series continues to be the key driver of Ford's North American profits. If Ford can sustain these sales and pricing gains through February and March, that bodes well for its first-quarter earnings.
But pickups weren't the only profitable products to post big gains for Ford in January.
SUVs, Lincolns, and Mustangs all performed well, too
Analysts have debated whether lower gas prices would boost sales of trucks and SUVs in the U.S. Merkle said Ford believes fuel prices won't be a significant driver of consumer preferences in the long run, but if Ford's results for January are any indication, lower gas prices certainly haven't hurt sales of its most profitable products.
Sales of Ford's Explorer rose 28.2% in January, giving the model its best January result since the heyday of last decade's SUV boom, 2005. The smaller Escape posted a 3.1% increase over a strong-year ago result for its best-ever January sales total.
The Lincoln luxury brand posted an 11% gain, as the MKC crossover -- a mechanical sibling of the Escape -- continued to sell well.
Ford's Transit van lines also had a good month, with a big jump in sales of the small Transit Connect contributing to an overall 23% retail gain for Ford's truck lineup.
Also of note in January was a huge jump in Mustang sales, which more than doubled year-ago results as the new convertible version began arriving at dealers. Merkle said Mustang retail sales gains came from every region of the country, with sales in the Los Angeles area jumping over 150%.
Ford isn't doing this with discounts
TrueCar estimates that Ford's overall average transaction price in January was $34,441, up 1.3% from a year ago, with incentive spending down sharply.
A good part of that is attributable to Ford's pickup sales surge. Ford is still selling a mix of 2014 and all-new 2015 models, as it continues to ramp up production of the new trucks. But the new 2015-model trucks that are reaching dealers are selling in just 12 days, on average. New F-150s in the top King Ranch and Platinum trim lines are selling in just nine to 10 days.
That's extremely good news. Top-end trucks such as the F-150 Platinum are among Ford's most profitable products anywhere in the world. It's another sign that after a challenging 2014, all indicators point in the direction of a much stronger 2015 for Ford's bottom line.