Behind the Numbers with Erich Merkle: July 2017

If you simply look at the headlines, July seems to have been a rough month for Ford, with U.S. sales down 7.5 percent compared to last year.  Without any explanation it appears disconcerting, but after taking a closer look at the numbers I think you’ll see that we performed better than July’s headlines would indicate. 

What contributed to the 7.5 percent decline? Almost all of the decline can be attributed to a drop in fleet sales of 26 percent.  If you regularly read this column you know that fleet orders can be a bit “lumpy” from month to month. Half of the fleet loss can be attributed to order timing, which we expect to improve as we move through the remaining months of the year. Transit was responsible for the other half of the decline in fleet sales. Transit sales were down dramatically due to a recall that we had issued at the end of June which created a hold on dealer lots, meaning we couldn’t sell Transits until the recall issues were addressed and repairs were made. While certainly not a welcomed event, we know the extent of the sales decline in July is temporary, particularly as the vans are now ready for sale in August. 

Talking a look at the retail side of the ledger, our sales were down just 1 percent. What’s to cheer about, Erich? The industry at retail was down approximately 6 percent. In an industry that has plateaued and is beginning to pull back, a 1 percent decline can be a wonderful thing in that we captured a greater share of the retail market in July.

As with prior months, the standouts in July from a sales perspective were our Ford brand SUVs and F-Series trucks. Our momentum right now is strong with both.   

Sales of our Ford SUVs were up 3 percent in July, with a total of 65,558 vehicles sold, with retail sales up 9 percent.  Through July, we sold a record 472,022 SUVs.  Our success was also broad-based as we had SUV sales jumping in every region of the country, led by the Explorer.  Explorer retail sales were up 20 percent in July and 13 percent overall with a total of 18,763 vehicles sold.  If you look across the country Explorer sales were up 21 percent in the Northeast, 20 percent in the Southeast, 28 percent in the Great Lakes, 21 percent in the Central region of the country and 18 percent in the West. Accomplishing sales gains in every region of the country is no easy task.   

Rounding out our SUV portfolio. . . Escape sales were up 6 percent with 27,716 vehicles sold, and Edge had a record July with sales also up 6 percent and 11,156 vehicles sold.  We really flexed some SUV sales muscle in July, with a high-series mix representing almost 30 percent of our retail SUV sales. 

F-Series continues to build on its momentum with Super Duty and we will soon begin reporting sales of the new 2018 F-150. Overall, we sold 69,467 F-Series trucks in July, a 6 percent gain over last year.  At retail, F-Series sales were also up 6 percent. 

Our high-series Lariat, King Ranch, and Platinum models continue to be in high demand with Super Duty customers, representing 53 percent of our retail Super Duty sales in July. The continued robust demand for these vehicles drove average transaction prices on Super Duty to $55,000 per truck, which was $4,600 higher than a year ago. To give a little context on Super Duty transaction pricing, let’s compare it for a moment to a few luxury vehicle makers. I am sure you know their names. Mercedes Benz average transaction pricing was approximately $52,000 per vehicle last month, while BMW and Audi both saw transaction prices of $47,000 per vehicle. Super Duty market share and sales are up, along with transaction prices.  And the sales gains, like SUVs, are very broad-based, coming from all over the country.  Super Duty sales were up 13 percent in the West, 18 percent in the Southeast, 10 percent in the Northeast and 11 percent in the Great Lakes.  And we experienced our strongest expansion last month in the country’s largest pickup market in the country, the Central region, with sales up 20 percent. 

The July sales figures for our SUVs and pickups were not an easy accomplishment, particularly when we are operating in an environment where overall retail sales were likely down about 6 percent for the month.   

People always ask me what’s going on with Ford cars.  The segment is still under a great deal of stress right now, as customers continue to shift out of cars and into SUVs and trucks.  In July, our car sales were down 19 percent overall and 10 percent at retail.  However, our retail sales were not down as much as the overall passenger car segment last month. This just illustrates how difficult the passenger car segment is right now, which isn’t likely to change much anytime soon.    

Looking forward, we will begin to gain some tailwind from fleet sales as we close out the year, simply because the year-over-year comparisons will become easier, given last year’s cadence.  A key takeaway is the momentum that is being built with F-Series and SUVs, which we will add to later this year with the 2018 F-150 and Expedition and next year with the EcoSport.  They are key new products for us that will be critical to our success.

Have a great month and I look forward to talking to you next time about August sales results.   

View More
Go to top