Ford’s February sales
Ford Motor Company (F) sold about 208,440 vehicle units in the US in February 2017. This reflects a YoY (year-over-year) decline of about 4%. During its 4Q16 earnings event in January, Ford highlighted potential risks that it could face during fiscal 2017 due to softening US auto sales.
Please read Ford’s 4Q16 Earnings: Another Disappointment? to learn more about its 2016 results and 2017 outlook.
February US retail sales
In February 2017, Ford’s US sales to retail customers dropped 3% YoY to 134,576 vehicle units. In January 2017, the company’s retail sales stood strong at 120,400, about 6% higher than its retail sales in January 2016. For the last few quarters, Ford has been trying to reduce its fleet sales and focus more on retail 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 (VCR) increase their revenues and market share.
Retail sales and margins
Retail vehicle sales typically tend to have higher margins than fleet vehicle sales. To maintain good profitability, it’s important for automakers such as Ford, General Motors (GM), Fiat Chrysler (FCAU), and Toyota (TM) to focus more on retail sales. In our view, the recent decline of Ford’s retail sales could hurt the company’s 1Q17 margins.
In the next part, we’ll take a look at another key factor that plays a critical part in boosting Ford’s margins and profitability.