Ford's FEB Auto Sales Down, With an Explanation

Ford just released -13% year over year auto sales but the good news is that truck sales were only down 8.8% of that and the RETAIL sales were only down 8%.  The reason it is ‘good’ is really that it is less bad since the trucks and SUV’s are their major focus and are where Ford plans to generate its profits.

Rental sales were down 30%, but this is supposed to go away entirely and that noted as roughly half of the decline. Demand for new mid-size sedans was noted as strong: Ford Fusion up 46%, Mercury Milan up 22%, and Lincoln MKZ up 21%.  New crossover vehicle Ford Edge up 43% compared with January and Lincoln MKX up 38 percent.

February inventories were 175,000 units lower than a year ago. In the first quarter 2007, the company plans to produce 740,000 vehicles (200,000 cars & 540,000 trucks), unchanged from the previously announced plan.  Ford plans to produce 770,000 vehicles (220,000 cars & 550,000 trucks). In the second quarter 2006, the company produced 897,000 vehicles (328,000 cars & 569,000 trucks). Over 60% of the year-to-year decline in second quarter reduction reflects discontinued products and the company’s planned reduction in sales to daily rental companies.

Shares of Ford (F) have not really changed since the release.  Shares are down $0.04 on the day at $7.87, but they have been as low as $7.65.  In a down market or in a whipping market traders appear unwilling to make any major auto gambles on a monthly auto reading not being quite as weak as they thought.

Jon C. Ogg
March 1, 2007

Jon Ogg can be reached at [email protected]; he does not own securities in the companies he covers.