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August 4, 2009
Share ThisFord Motor Co. (F) has revealed an astounding 2% year-over-year sales gain for July when other major automakers have all reported declines. In fact, this sales gain was the company’s first since November 2007.
Ford believes the $1 billion cash incentive program known as Car Allowance Rebate System (CARS) or "Cash for Clunkers" recently launched by the U.S. Government drove demand for its fuel-efficient vehicles.
CARS was designed to encourage customers to replace their fuel-inefficient vehicles with efficient ones. Under the program, consumers would be able to trade in their old gas-guzzling cars and trucks for a value of up to $4,500.
Ford, Lincoln and Mercury dealers witnessed a 9% increase in retail sales to 118,197 vehicles during the month. Ford’s most fuel-efficient vehicles include cars such as Focus (35 mpg) and Fusion (24 mpg), besides Escape SUV (24 mpg). Sales for these models rose 44%, 66% and 94%, respectively.
Sales of two fuel-efficient vehicles – compact pickup Ford Ranger and mid-size crossover Ford Flex – were up 65%. Hybrid vehicle (Fusion, Milan, Escape and Mariner) sales increased more than four-fold to 5,353 units.
The worst seems to be over for Ford as the company has shown a remarkable improvement in sales and gain in market share from last month. In June, the company posted the least decline in sales (10.9%) compared to other automakers.
Ford has several new launches that should bring it to the next level. These include the Taurus 2010 sedan and the Transit Connect (a small and fuel-efficient purpose-built van), besides the EcoBoost powered Taurus SHO, Lincoln MKS, Ford Flex and all-new Lincoln MKT crossover vehicle. EcoBoost engine technology renders fuel economy of a six-cylinder engine and the performance of a V-8.
We recommend the shares of Ford as Neutral with a target price of $8.50.
Read the full analyst report on "F"
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