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Morningstar | Ford's July Sales Get a Boost From Fleet, Navigator, and Trucks, but Car Weakness Continues

Automakers reported U.S. light-vehicle deliveries for July that saw one less selling day than July 2017 as well as one less weekend. Ford also said it saw more of the traditionally strong July 4 seasonal demand come in the weekend before the holiday, which was in June, than in the days after July 4. Total sales declined by 3.7% year over year to 1.36 million, but we calculate a 0.4% rise adjusting for one less selling day. Automotive News put the seasonally adjusted annualized selling rate at 16.73 million compared with 16.78 million in July 2017. We continue to expect industry U.S. light-vehicle sales for all of 2018 finishing at 16.6 million-16.8 million as rising interest rates and most importantly a higher supply of vehicles coming off-lease than in recent years move some consumers back into the used channel. The next few months will be choppy as incentive spending may be topping out and the industry will have abnormal comparable effects due to 2017 hurricanes. August 2018 may see a good year-over-year rise due to Harvey in late August 2017, but September and October will likely have tough comparables this year.

Ford's July sales fell 3.1% versus July 2017. A 25.7% rise in fleet sales could not wholly offset a 10.4% fall in retail channel volume. Consumers' continued love of light truck models, as well as Ford's plans to exit most of its U.S. car business, were evident with the company's car models down 27.7% while trucks rose 10.2% and SUVs fell 1.5%. SUVs suffered from the old Escape down over 25% but Explorer rose 7.9% and is seeing good demand for its more premium trim packages. The vehicle also gets a new-generation model next year. F-Series continues to thrive with pricing up about $1,500 a unit to $46,500 and July sales up 2.1% to nearly 71,000. Lincoln continues to be all about the Navigator. The brand's sales fell 11%, but Navigator sales rose 63% with retail channel sales up 65% and its pricing is up nearly $30,000 to a company record $84,300 a unit.