Ford’s Revenue in 2Q16: Is Ford Betting on Fleet Sales?

In 2Q16, Ford’s revenue (F) came in at $39.5 billion. This was 6% higher than revenue in the corresponding quarter of the previous year. This was also much higher than analysts’ revenue estimate of $36.1 billion in 2Q16. Now, let’s take a closer look at what factors drove revenue higher.

In North America, the company reported 2Q16 revenue of $23.8 billion, which represents a marginal rise of 2.0% from the corresponding quarter of 2015.

These higher revenues were primarily driven by factors such as strong retail sales of F-series pickup trucks and fleet sales. During the quarter, demand for pickup trucks and utility vehicles remained strong in the US market.

In 2Q16, the revenues of other US automakers (XLY), including General Motors (GM) and Fiat Chrysler Automobiles (FCAU), also rose in North America. Note that Japanese automaker Toyota (TM) also maintains good exposure to the North American auto market.

Ford’s market share in North America remained flat while its market share in the US improved to 15.3% from 15.0% a year ago.

From South America, Ford’s revenues fell to $1.3 billion in 2Q16 from $1.5 billion in 2Q15. This represents a YoY (year-over-year) fall of 17%, while the company’s shipments to the region also fell by 15% during the quarter.

Ford attributed this fall to continued difficult economic conditions in countries including Brazil. According to the company, industry volume in Brazil was down by 22% YoY.

In the auto industry, fleet sales can be defined as wholesale vehicle sales to customers such as rental car companies, government departments, and private companies that use commercial vehicles. Note that fleet sales typically tend to yield lower margins than retail vehicle sales.

In the last few quarters, Ford has benefited greatly from higher fleet sales in North America. While this reflects optimism, it also suggests a shift in the company’s focus from retail sales to fleet sales.

Continue to the next part of this series to see how Ford’s revenues from its other key markets came in.