Why Ford Motor Company Is Being Crushed by General Motors and FCA

Before you go, we thought you'd like these...
Before you go close icon

It's sales day for the U.S. automotive industry and, as such, today will bring us a set of short-term winners and losers. When looking at September's sales data for Ford , General Motors , and Fiat Chrysler Automobiles , there are two clear winners and one automaker that was left behind. However, there is more than meets the eye with these numbers, so let's take a look.

General Motors' headquarters. Source: General Motors.

First up: General Motors
General Motors topped its Detroit automaker rivals, with more than 223,000 vehicles sold last month in the United States. That was a 19% increase in deliveries from September 2013. Better yet, General Motors' retail deliveries, which are typically more healthy sales numbers than those to the fleet and rental markets, rose 17%.

Strong sales of trucks and crossovers helped boost the automaker's average transaction price, or ATP, to roughly $34,600 -- the highest level in company history, according to J.D. Power estimates.

General Motors' most important vehicle, the Chevrolet Silverado, recorded its best retail sales month since 2008, and the company estimates it increased its share of the retail market by roughly 5 percentage points, or 500 basis points. However, the majority of that gain can be placed on timing, as Ford is intentionally slowing sales of its F-Series to manage inventory while it switches to the all-new 2015 F-150.

All in all, September was a very strong month for Detroit's largest automaker. Following the same successful trend was Detroit's smallest automaker -- that is, if you still consider it a Detroit automaker -- Fiat Chrysler Automobiles, or FCA.

SUV sales are fueling FCA. Image source: Fiat Chrysler Automobiles.

Next in line: FCA
While FCA trailed Ford in total sales volume -- we'll come back to the Blue Oval in a second -- it had a highly successful September compared to its previous year's result. Like GM, the automaker recorded a 19% gain in deliveries, to nearly 170,000 units. It will go down in the books as FCA's best September sales in nearly a decade.

The heart of the automaker remains in Detroit, with Chrysler Group vehicles and brands driving overall sales higher. Six Chrysler Group vehicles recorded their best September sales ever. Jeep brand sales surged 47% year over year, with the Wrangler, Compass, and Patriot logging their best-ever September sales performance.

Not to be outdone, Ram truck sales drove 30% higher from September of last year, and the truck chalked up its 53rd consecutive month of year-over-year sales gains. As the company continues to thrive in a market in which SUV and crossover sales are on the rise, look for Jeep to continue pushing sales higher.

That brings us to our third Detroit automaker, which appears to have struggled in September -- but that isn't the whole story.

Look for the 2015 Mustang's sales to rise, and soon. Image source: Ford Motor Company.

Last but not least: Ford
Glancing at Ford's September sales, it's not a pretty sight. That's especially true when you compare Ford's 3% decline in sales to GM's and FCA's 19% gains. Sure, investors would like to see a much better sales performance, but it has long been known that 2014 would be an investment year for the Blue Oval.

This year the automaker is launching 16 new models in the United States alone, which requires a complicated juggling act of maintaining specific amounts of inventory to keep pricing strong, which sometimes comes with a slower sales pace.

However, this slower sales pace won't be around much longer as the newer models arrive in full supply. Ford announced that it only has roughly 4,400 models of the 2014 Mustang, about half a month's worth of inventory. As last year's Mustang models fade out, and the new 2015 model rolls in, expect sales to pick up and reverse September's 28% sales decline.

The story is similar for many of Ford's newer vehicles, and that isn't the only factor working against the company.

Investors and onlookers must keep in mind that Ford's management aims to improve residual values of its vehicles this year, amid an accelerated year of refreshing its lineup. One way to do this is to minimize sales to fleets and rental companies -- something Ford has successfully done.

While Ford's retail sales only increased 2% year over year this month, consider that its daily rental sales were down 40%. Furthermore, Ford's total fleet sales declined 14%. Declines of that nature had a drastic effect on Ford's total September sales figure, despite the sales mix being healthier from a financial perspective.

Investors should take Ford's sales declines with a grain of salt, and rather look forward to surging 2015 sales driven by its new models. While Ford is currently being crushed in monthly sales gains, that story will be nonexistent next year.

Top dividend stocks for the next decade
The smartest investors know that dividend stocks simply crush their non-dividend-paying counterparts over the long term. That's beyond dispute. They also know that a well-constructed dividend portfolio creates wealth steadily, while still allowing you to sleep like a baby. Knowing how valuable such a portfolio might be, our top analysts put together a report on a group of high-yielding stocks that should be in any income investor's portfolio. To see our free report on these stocks, just click here.

The article Why Ford Motor Company Is Being Crushed by General Motors and FCA originally appeared on Fool.com.

Daniel Miller owns shares of Ford and General Motors. The Motley Fool recommends Ford and General Motors. The Motley Fool owns shares of Ford. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 - 2014 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Read Full Story

People are Reading