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Morningstar | Ford Ends 2018 With Good Month for Lincoln, Will Now Only Report Sales Quarterly

Automakers reported strong December U.S. light vehicle sales on Jan. 3. December sales rose 2.2% year over year to 1.64 million and the seasonally adjusted annualized selling rate was 17.72 million, the highest SAAR of 2018. Full-year 2018 sales grew 0.6% to 17.33 million but we calculate a 0.2% increase after accounting for an extra 2018 selling day. These are healthy numbers to us, but we don't expect 2019 sales to be as high as 2018 because we expect more consumers to opt for used vehicles and leasing penetration to decline. With gas cheap and new crossovers and pickups coming out, such as the return of the Ford Ranger midsize truck in the first quarter, GM's new generation heavy duty models in the second half of 2019, and GM's new generation light duty trucks still ramping up penetration, we expect continued strong light truck penetration for the industry, which is already at about 70% of new vehicles sold each month.

Ford's December sales fell by 8.8% year over year with retail channel down 4.8% and fleet down 19.5%. The fleet decline is from a 41.5% fall in rental business on order timing differences, so we are not alarmed by the change. Rental was 7.6% of total December sales, down 430 basis points from December 2017 and full-year rental mix declined by 60 basis points to 10.5%. December truck and SUV volumes fell by 3.8% and 4.4%, respectively, while car models fell 27.8%, notably a 67.4% decline for the Focus compact. The Escape crossover fell 23% and Explorer declined by 22.8% but the F-Series pickup only declined by 1.8% and still sold 87,772 units. Full-year F-Series was 909,330, up 1.4%, and still outsold GM's Silverado and Sierra combined sales of 805,135. Lincoln posted double-digit December growth for all light truck offerings which helped the brand's total sales rise 8.5% in December. For 2019, we expect Ford to see a nice boost from the Ranger followed by new generations of the Explorer in late second quarter and the Escape in third quarter.

Also noteworthy is that Ford announced it is going to report sales on a quarterly basis, likely in response to GM going this route in April 2018. Ford will keep reporting monthly data to various industry data houses and we agree with GM and Ford that quarterly data reporting avoids most of the volatility of things such as timing of rental fleet orders. We also think too much media attention is given to monthly sales, so we prefer the quarterly format.