Stock Analyst Update

Ford's November Sales Depressed by Lower Car Model Sale

David Whiston, CFA, CPA, CFE

November U.S. auto sales to consumers and fleet customers declined by 0.5% year over year, with Automotive News placing the seasonally adjusted annualized selling rate, or SAAR, at 17.55 million. There were an equal number of selling days for both Novembers. This rate is down slightly from 17.65 million in November 2017 but still a healthy level in our view. The industry looks well set up for its annual holiday sales rush, and with Americans continuing to devour light-truck models and unemployment low, we see no reason to be apprehensive about December sales. We expect the shift to light trucks to continue into 2019 because the national average of gas prices (according to AAA) is down 11% in the past month and light trucks provide much better fuel economy than 10 years ago, while providing more storage space than cars. The industry's light-truck mix is about 70%.

 Ford's (F) November sales declined 6.9%, with retail channel down 6.8% and fleet down 7.1%. The fleet decline is due to a 33% fall in rental fleet sales (7.5% of Ford's November volume) due to timing differences of orders, which we are not concerned about. Commercial fleet sales grew 12%, which was one positive sign from Ford's results. The other key positive was the continued demand shift to light trucks leading to impressive penetration of Ford's two highest trim levels for the Lincoln Navigator and new Lincoln Nautilus. The reserve and Black Label trims for these vehicles totaled 88% and 79% of each vehicle's respective retail sales. Average transaction prices for the Nautilus were $47,200. Navigator sales rose 27%. Ford's F-Series truck posted record ATPs of $47,000, $1,800 more than the full-size pickup average, according to Ford. F-Series sales fell 0.9%, but at 72,102 they were above 70,000 units for the ninth straight month, a record. Light trucks were 82% of Ford's November volume and ATPs rose $1,600 year over year to $37,000.

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David Whiston, CFA, CPA, CFE does not own shares in any of the securities mentioned above. Find out about Morningstar's editorial policies.