Ford August Sales Held Back by Reduction in Rental Deliveries

Ford posted a 3.8% uptick in U.S. sales in August on a daily selling rate basis, a performance tempered by a concerted effort to reduce daily rental fleet sales and manage F-Series inventory during a model changeover.

Overall fleet sales in August were down 6% from year-ago, while daily rental deliveries plummeted 36% from like-2013. Commercial and government fleet sales rose 4% and 9%, respectively.

“Our pullback in fleet sales is focused on the rental business in order to improve residuals and fuel retail demand on hot products,” John Felice, vice president-U.S. Marketing, Sales and Service, says on a conference call with journalists and analysts. “And we’re carefully managing inventory of F-Series as we work through the changeover.”

Ford late last month shuttered its Dearborn, MI, truck plant to swap out equipment to accommodate production of the all-new aluminum-intensive ’15 F-150 pickup. Felice says the F-Series has a 111 days’ supply, which is “exactly where we want to be.”

F-Series sales in August were down 1.8% compared with year-ago to 63,776. Despite the sales decline, average transaction prices remained strong at more than $41,000 per unit, about $2,800 more than year-ago.

“What we’ve seen this year in fullsize pickups is strong pricing,” Felice says. “It’s a combination of (customers) wanting more content and discipline on our part as we go through the changeover.”

Overall, Ford’s ATPs were down $450 from like-2013, but remain $1,000 higher than the rest of the industry.

“The overall industry is about $30,000, and we’re close to $31,000,” says Erich Merkle, Ford’s top U.S. sales analyst.

Pricing for utilities and pickups has been strong, but car ATPs have declined as rivals ramp up incentives in competitive segments.

“In terms of passenger cars, we’re seeing some pricing decline,” Merkle says. “For this month it’s flat, so we’re trying to hold our head above water.”

The decline in car ATPs also is the result of a consumer shift toward utility vehicles, particularly small utilities.

Felice says Baby Boomers increasingly are leaving the car segment for utilities, noting the trend is likely to continue.

“We’re seeing a lot of cross-shop of the CD (car) segment and small utilities,” he says. “It will taper off at some point, but it seems more systemic than just a blip.”

Most Ford cars turned in solid results in August, with the Focus up 12.3%; Fusion rising23.8%; and Mustang increasing 3.9%.

In the utility segment, the Escape posted a 12.5% increase, while Explorer jumped 28.6% vs. year-ago. However, Edge sales plummeted 21.5% to just 8,724 units, while Flex deliveries sank 23.7% compared with like-2013.

Lincoln sales were down across the board. Most troubling was a 19.3% decline by the flagship MKZ sedan, a model that has carried the beleaguered luxury marque in recent months.

“On a year-to-date basis, we’re on a strong run with MKZ, up 24%,” Felice says.  “Fleet was down significantly in August. Retail was also down, but less.”

Felice says some of the MKZ decline was due to a changeover from the ’14 to ’15 model, which caused inventory shortages in some markets.  Lincoln is on a long-term journey to success, he says, pointing to the 1,760 August deliveries of the all-new MKC CUV as a reason for optimism.

“In September we will have good (MKC) stock levels and will be rolling out a national (marketing) campaign,” Felice says. “Our dealers are excited about the strong response to the MKC.”

Ford ended August with 586,000 light vehicles in inventory, including 124,000 utilities, 307,000 trucks and 155,000 cars, equating to 69 days’ supply overall.

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