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Morningstar | Ford's October Sales Continue Trend of Strong SUVs and Weak Car Deliveries

October U.S. auto sales remained at healthy levels despite a hurricane in the Florida panhandle. Total sales, excluding Audi who has not yet reported, rose 0.6% year over year to 1.35 million. October 2018 had one extra selling day than last year and we calculate sales fell by 3.2% adjusting for the extra day. The industry, although not growing at robust rates anymore, remains in our view at healthy levels in the low 17 million range. We are also encouraged to hear Ford say it estimates industry incentives per unit declined by $190 a unit year over year. Although less discounting hurts volume, we think it's ultimately better for profitability and for protecting a brand's residual values. Good residual values help automakers write attractive lease offers, which in turn fuels new vehicle sales.

Ford's total sales declined 3.9% year over year, with retail channel sales down 4.9% and fleet channel down 1.2%. As has been the case throughout 2018, the company's SUVs did well while cars suffered as Americans shun them for light trucks and because Ford will be exiting traditional sedan segments soon. SUVs rose 6.7%, cars fell 17.1%, and trucks fell 4.9% however, we calculate that SUVs fell by 0.2% excluding the EcoSport subcompact crossover that entered the market this year. We look forward to next year when Ford should get a boost from the new generation Escape and Explorer crossovers, Lincoln Aviator crossover, as well as the reintroduction of the Ranger midsize pickup. F-Series sales declined by 7.3% but remain strong at over 70,000 units for the eighth straight month and pricing is great at $47,300 a truck. Lincoln's bright spot remains the Navigator which posted a 70% sales increase and pricing up over $30,000 from the prior generation SUV. Lincoln's overall sales, however, fell by 15%, which is why the brand needs more crossovers like the Aviator.