Are Ford’s Falling Retail and Fleet Sales a Reason for Concern?
In August 2016, Ford reported a ~8% YoY (year-over-year) decline in its home market total sales. The company only managed to sell ~14,000 units.
Sept. 9 2016, Updated 8:04 a.m. ET
August US auto sales
In August 2016, Ford Motor (F) reported a ~8% YoY (year-over-year) decline in its home market total sales. The company only managed to sell about 14,000 units during the month, and this was due to a decline in both retail and fleet sales.
Let’s take a closer look at Ford’s August numbers and find out how falling vehicle sales could affect the company going forward.
Ford’s retail and fleet sales fall
In August 2016, Ford’s fleet sales fell by 10% YoY to just under 46,000 units, while its retail vehicle sales fell by 8% YoY to nearly 169,000 units for the month. With a 6% decline in its F-Series sales to ~67,000 units, the company’s overall pickup truck sales were down by 2% YoY in August.
Notably, for automakers, full-size pickup trucks typically yield higher margins than small cars. In Ford’s case, lower August truck sales could be an obstacle as the company fights to protect its margins.
Among other mainstream automakers, General Motors (GM), Fiat Chrysler Automobiles (FCAU), and Toyota Motor (TM) still have a strong presence in the US truck and utility vehicle segment.
ATPs and autonomous vehicles
In August, Ford’s ATP (average transaction price, or the average selling price of vehicles sold by an automaker) increased by $1,200 per vehicle. According to the company, the increase in ATP was much better than the industry average.
In the meantime, by 2021, Ford plans to begin the mass-production of SAE Level 4 autonomous vehicles for ride-sharing services in line with its Smart Mobility business plan. This type of vehicle may not require any human monitoring, and the machine should be able to respond to various situations, even if a human driver ignores requests to intervene.
Understanding fleet sales
In the auto industry, fleet sales can be defined as wholesale vehicle sales to customers such as rental car companies, government departments, and other private companies that use commercial vehicles. Fleet sales help automakers (VLUE) increase their revenues and market shares.
However, Fleet vehicle sales typically tend to have lower margins than retail vehicle sales have, and so it’s important for automakers to maintain the right balance between retail and fleet sales to protect both market share and profitability.
Read on to the next part to learn more about General Motors’ August sales.