Ford's Focus Finally Finds Favor
Nothing wrong with Ford's (NYS: F) latest sales numbers. The Blue Oval reported a solid 14% year-over-year U.S. sales gain in February, beating most analysts' estimates by a wide margin, as the company's fuel-efficient options had a particularly strong showing.
Even better, following a month in which concerns were raised about Ford's outsize fleet sales, is the news that these gains were the best kind: Ford's retail sales were up 19% on the month.
Best of all was the fact that Ford's recent focus on fuel economy across its range appears to be paying off big.
Strong results in a strong month
Lots of automakers saw strong gains in February, helped by a number of factors. Unseasonably warm weather encouraged browsers, and a falling unemployment rate -- and a rising stock market -- probably helped consumer confidence. Those factors likely offset the impact of rising gas prices, which were up about 14% on the year through Wednesday.
In the past, periods of rising gas prices have benefited Toyota (NYS: TM) and Honda (NYS: HMC) at the expense of Ford and General Motors (NYS: GM) , as the Detroit automakers' former reliance on trucks and SUVs put them at a distinct disadvantage when fuel got costly.
Ford still sells a lot of trucks, of course, but those trucks have recently gotten religion on the fuel-economy front, and that appears to have helped the Blue Oval a great deal. Ford reported that sales of its F-series pickups were up 26% in February, with fuel-efficient V6 options accounting for 57% of retail sales of the F-150.
Those sales include the V6 version of Ford's acclaimed EcoBoost series engines, which use innovative turbo designs to offer big-engine power numbers with improved fuel economy. EcoBoost has proven to be a popular option for Ford truck buyers, who get capabilities comparable to the V8-powered trucks with significantly better mileage.
Even better, though, was a sign that Ford is finally able to take the fight to its longtime Japanese rivals.
A big boost for a slow-selling model
Analysts, including your humble Fool, have expressed concern about the slow sales of Ford's Focus compact. It's a very good car, at or near the top of most critics' rankings, perhaps the best-ever American compact -- but it hasn't been selling all that well, even as less well-regarded entries like the Honda Civic have posted big sales gains.
That may be changing: Focus sales were up a whopping 114.6% in February, making it the model's best-selling February in over a decade, its second solid month in a row. Ford said the Focus contributed 40% to its overall sales growth in February, more than any other vehicle.
But digging deeper into the numbers, it's possible that those sales came at the expense of other Ford models, to some extent. Sales of the larger Fusion and Taurus were both down, unsurprisingly in a month when gas prices rose -- but sales of Focus' smaller sibling, the Fiesta, were also off 12%. These declines don't come close to accounting for all of the Focus' sales increase, of course, but it's possible they represent a significant portion.
That's not all bad, though: In the past, Ford might have lost those sales to Toyota or Honda.
What remains to be seen
So has the Focus finally taken off? That's hard to say. We'll need to see what the coming months bring -- and we'll need to learn how much of the Focus' increase was due to fleet sales, a number that could be worrisome if it's significant.
But it's clear that Ford's focus (so to speak) on fuel efficiency is paying off. The fact that the company was able to capture such a solid sales increase in a month when gas prices were rising is testament to CEO Alan Mulally's end-to-end product strategy, and appears to reinforce what analysts have been saying about the competitiveness of Ford's products. Can the Blue Oval keep this momentum going? We'll find out.
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At the time this article was published Fool contributor John Rosevear owns shares of Ford and General Motors. The Motley Fool owns shares of Ford.Motley Fool newsletter serviceshave recommended buying shares of Ford and General Motors, as well as creating a synthetic long position in Ford. Try any of our Foolish newsletter servicesfree for 30 days. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.
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