Ford US Sales Down By 20%

Anthony Fontanelle
February 6, 2007

The Ford Motor Co.'s U.S. sales dropped by 20 percent last month compared with that of January 2006. Said decline was blamed mostly on a big drop in sales to daily rental car companies. However, the automaker said its turnaround plan is on track. Dearborn-based Ford sold 190,574 vehicles last year.

General Motors Corp. sales also fell. However, sales by the Toyota Motor Corp. and Honda Motor Co. rose. While the decline in fleet sales hurts overall sales numbers, GM and Ford said they are trying to concentrate on sales to more profitable retail customers as part of their North American turnaround efforts.

It was earlier reported that Ford is expecting weakness in new home construction to hurt full-size pickup sales through the first half of the year. Its sales include Ford, Lincoln and Mercury brands, as well as Jaguar, Land Rover and Volvo. Jaguar sales fell 13 per cent, Land Rover sales fell 11.7 per cent and Volvo sales fell 7 percent.

George Pipas, Ford's top sales analyst, said the company's retail sales should be about flat compared to the first month of last year. He even adds, “Retail sales will be boosted in January by the new Edge crossover and rising sales of the Ford Fusion, Mercury Milan and Lincoln MKZ mid-sized sedans. Retail sales are holding up really well compared to January of last year." The new lineup is equipped with the most sophisticated auto parts that include EBC Active Brakes Direct, efficient airbags and the best engines in the industry.

Pipas added, “Ford sold about 2.7 million Ford, Lincoln and Mercury vehicles in the U.S. last year, and about 900,000 of those were to fleet buyers. About half the fleet sales went to low-profit rental companies, and the rest were profitable sales to commercial and government fleets.”

The drop in fleet sales is part of the strategy of the automaker to wean from what is presumed as an unprofitable business that weakens the value of vehicles sold to consumers. "Our aim is to stabilize our retail market share," referring to cars and trucks sold directly to consumers, said Mark Fields, president of Ford's Americas.

“Fleet sales should drop this year by 20 percent overall for the year, due largely to Ford ceasing production of the Taurus sedan,” Pipas said. Ford sold about 175,000 Tauruses last year, mostly to fleet buyers. But fleet reductions also came in many current products.

"That's great," said Bradley Rubin, an analyst with BNP Paribas. "We would much rather see double-digit decreases in overall sales instead of continuing the money-losing daily rental business. It's killing your residual values."

Fields said, "The ultimate arbiter of the health of a brand is residuals. This already says that we're on plan."

Ford is predicting that pickup truck sales, where it leads the market, would be about 2.3 million units, almost the same as last year. The F-series pickup truck is Ford's bread-and-butter vehicle and the largest selling vehicle in the U.S., but its sales were off almost 12 percent last year.

Source: Amazines.com