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Ford Motor Company Sales End 2015 With a Bang: 3 Investor Takeaways

By Daniel Miller - Jan 6, 2016 at 4:01PM

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While sales in China remain volatile, sales in the U.S. should give investors reason to be optimistic for the company's fourth-quarter results.

Ford's F-150 posted a strong December sales result. Image source: Ford Motor Company.

There's no question that the holiday season is a critical time for companies wishing to finish the year on a high note, as many companies rely on it for a sizable boost in revenue. While automakers such as Ford Motor Company (F 2.84%) don't rely on such sales as much as brick-and-mortar electronics or clothing retailers do, it was still worrisome when Ford axed it's "Friends and Neighbors" holiday sales program nearly a month early in favor of a new strategy. To some, that spelled a potentially disappointing end to the sales year.

Fortunately for Ford investors, Detroit's second-largest automaker brushed off the Friends and Neighbors flop and closed the book on 2015 with a bang, driven by America's best-selling truck.

F-Series is on fire, in a good way
In the 72 months since January 2010, the F-Series has topped 70,000 in U.S. sales in only six individual months. Of those six months, F-Series sales topped 72,000 only three times. That should help put into perspective how ridiculous it is that F-Series sales soared 14.6% beyond their second-toughest comparison in 72 months -- last December's 74,355 units -- to a staggering 85,211 units this December.

Investors would have to dig through more than a decade of sales to find the last month when F-Series sales topped 85,000. With a strong December sales performance in its pocket, and total U.S. sales topping 780,000 in 2015, the F-Series remains America's best-selling pickup for the 39th consecutive year, and the best-selling vehicle for the 34th consecutive year. That's good news considering the F-Series generates a huge portion of Ford's profits.

SUVs and crossovers are money
Looking at December U.S. sales results, Ford's utility segment -- which includes the Escape, Edge, Flex, Explorer, Police Interceptor and Expedition -- posted a 13.2% gain over last year. That narrowly edged out Ford's 13% gain in its truck segment, and was far ahead of its car segment, which posted a 4.7% decline.

Driving the utility segment gain were Ford's Escape, Edge, and Explorer. The Escape's sales rose 9.2% in December to nearly 28,000 units, and narrowly topped 2014's total sales by 0.1%. The Edge posted a 29.3% gain in December compared to last year, to reach more than 10,000 units sold, and posted a 14% sales gain in 2015 compared to the prior year. Last but not least, the Explorer posted sales of nearly 19,000 last month for a gain of 13.6% year over year, and an 18.5% gain for the full year compared to 2014.

On the bright side for investors, accelerated sales of SUVs and utilities -- which carry higher price tags and better margins -- should result in higher revenues and profits during Ford's fourth quarter. For instance, Ford's overall average transaction prices were up $2,160 year over year during a strong December, to reach an average of $35,700 per unit.

Lincoln is still lukewarm
While Lincoln still remains a large focus for executives at Ford, it remains a long-term strategy, and that's reflected in less-than-amazing sales results currently. Lincoln brand sales increased 12.1% last month compared to the prior year, and 7.1% in 2015 over 2014, to top 101,000 units. While last month's gains are a good sign for investors, the full-year statistic isn't an apples-to-apples comparison, since Lincoln's all-new 2015 MKC didn't have a full year of sales in 2014, only posting 13,077 units sold. Because 2015 was the new vehicle's first full year of sales, it posted an 88% gain to over 24,500 units.

On one hand, the 7% Lincoln brand sales gain during 2015 is still legit -- Ford introduced an entirely new vehicle for just this reason: to drive overall sales higher. On the flip side, if you back out the incremental sales fueled from the MKC, Lincoln brand sales were mostly flat for the full year, and the MKZ, MKS, MKX, and MKT all posted sales declines, while only the MKC and Navigator posted gains.

All of that aside, 2015 was still the first year that Lincoln brand sales topped 100,000 since 2008, and 2014 and 2015 were the first two years of consecutive sales gains since 1998 -- if nothing else, it's at least a step in the right direction.

Ultimately, December was a strong month for Ford, with total sales rising 8.4% to more than 239,000 units. Furthermore, with an excellent sales performance from its most profitable product, the F-Series truck, and a double-digit gain from its struggling Lincoln lineup, it was a great way to close the book on 2015 and give investors optimism heading into the company's fourth-quarter results. 

Daniel Miller owns shares of Ford. The Motley Fool recommends 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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