Editor’s Note: Ford U.S. Sales Analyst Erich Merkle will be writing a regular column designed to provide employees with an insightful look behind the numbers posted in the company’s monthly U.S. sales report.
Ford’s U.S. sales for the month of June were down 6 percent from last year, and I’d like to shed some light on some of the reasons behind that decline.
Let’s start by taking a close look at what’s going on right now with our F-Series trucks. As you know, F-Series is a vital product for Ford as it represents approximately 30 percent of the company’s overall sales. So when F-Series sales are down, it impacts our monthly sales figures in a pretty significant way.
June sales of F-Series trucks dropped 11 percent from last year, however, that is largely by our own design. Unlike many of our competitors who are offering up strong incentives, we are in a position where we must maximize production and manage inventories this year. Our goal is to increase our inventory levels to ensure that we will have enough trucks to sell when we take our plants down starting later this year to transition to the all-new 2015 Ford F-150. At full capacity, the only way to expand our inventory is to pull back a bit on incentive spending. Last month we had the lowest incentive spend of all of the major full-size pickup truck manufacturers, while outselling both GM and Ram.
We continue to pull back on our daily rental business this year, which was off 8 percent in June and 15 percent through the first half of the year, versus the same period last year. We’re not eliminating daily rentals. We’re just managing the business to continue profitable growth as it has become more expensive to compete in the daily rental segment.
Our continued reductions in daily rentals along with planned lower F-Series volumes place downward pressure on total sales.
June also had some high points.
The Ford Fusion had its best June ever. The vehicle performed particularly well in the Western region of the country, where sales were up 24 percent. Many automakers tend to underestimate the importance of great design. Granted, Fusion has many appealing features from a technology, quality and fuel economy perspective. But there is nothing that’ll bring the bees out more than honey, and Fusion is attracting a lot of new customers in an incredibly competitive segment with a really captivating design.
The Transit Connect also performed very well in June. Overall sales increased 29 percent with retail sales up 55 percent from last year. The Transit Connect Wagon is emerging as an ideal vehicle for Millennials, many of whom are now just beginning to form families. They want a high utility product at a great value with great fuel efficiency, and the Transit Connect Wagon is there to capture this wave as it starts to mature. There are approximately 85 to 90 million Millennials that will be forming new households and having children in the next two decades, which will significantly change their need for a vehicle and the type of vehicle that they select. A family with two young children, with perhaps one on the way, has very few vehicle options to choose from. The Transit Connect Wagon becomes a natural choice for these emerging families.
Looking forward . . . the Bank of America-Merrill Lynch 2014 Car Wars Report projects that Ford will have the freshest product cadence in the industry over the next five years. We will feel the hard work this year, as we set out to launch the greatest number of new products in our company’s history. It won’t be easy as we move forward, particularly since our competitors’ product cadence has improved since the Recession. Let’s work together, stay focused and execute all of our product launches flawlessly for our customers.