Ford Expects Steady Sales Through Year’s End
The auto maker does not expect a double-dip recession but prepares for all contingencies, says its top U.S. sales analyst.
DEARBORN, MI – Ford’s top U.S. sales analyst says vehicle sales should remain steady throughout the remainder of the year, despite a sluggish economy and a stock market that is “pricing in a recession.”
Ford expects U.S. light-vehicle deliveries in 2011 to number about 12.5 million units, a slight drop from what the auto maker predicted early in the year.
Fiesta helping Ford lessen dependence on pickups, SUVs.
Economic uncertainty is being compounded by a skittish stock market, which is acting as if the U.S. is facing a double-dip recession – an unlikely scenario, although one Ford is prepared for, says George Pipas.
“A double-dip is a ‘scenario,’ but it’s not our plan,” Pipas says today in a meeting with journalists. “We expect economic growth over the next several quarters.”
Despite the economy, Pipas says sales should maintain their current pace because of the scrappage rate.
“Historically the scrappage rate is 6%, but even at 5% it’s a 12 (million) -13 million-unit industry,” he says, noting there are about 250 million registered light vehicles in the U.S. “Replacement demand established the floor for the level of auto sales.”
Pipas says Ford now can operate profitably in a 12.5 million market after shuttering factories, shedding unprofitable brands such as Mercury and Volvo and reducing its workforce.
In recent years Ford has launched a number of well-received small cars, such as the Focus and Fiesta, and lessened its reliance on pickups and SUVs.
While the move has increased the auto maker’s market share in states where historically it has performed poorly, such as California, it has had the opposite effect in its traditional regions of strength, Pipas says.
“If you look at our retail share by region, we’re up on both coasts and flat in the Southeast, but down in the Midwest,” he says. “We’re less dependent on trucks and the Midwest.”
Despite the drop in Ford’s Midwest share, Pipas says it remains Ford’s largest market.
He says sales were stymied due to depleted inventories following the March 11 Japanese earthquake, which caused industrywide supplier problems, and the rise in gasoline prices that increased the demand for fuel-efficient vehicles.
Pipas expects inventories to reach near-normal levels in the fourth quarter, but says a return to heavy incentives is unlikely once more units reach dealership lots.
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