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Executives

Erich Merkle - Sales Analyst, Ford

Ken Czubay - VP, U.S. Marketing, Sales & Service

Jenny Lin - Senior U.S. Economist, Ford

Analysts

John Murphy - Bank of America

Chris Ceraso - Credit Suisse

Aditya Oberoi - Goldman Sachs

James Albertine - Stifel Nicolaus

Colin Langan - UBS

Brian Johnson - Barclays

Brent Snavely - Detroit Free Press

Mike Ramsey – The Wall Street Journal

Dee-Ann Durbin - Associated Press

Keith Naughton - Bloomberg

Ford Motor Company (F) U.S. Sales Conference Call December 3, 2012 10:00 AM ET

Operator

Good day, ladies and gentlemen, and welcome to the Ford Monthly Sales Call. My name is Jessenia and I will be your operator for today. At this time all participants are in listen-only mode. Later we will conduct a question-and-answer session. (Operator Instructions) As a reminder, this conference is being recorded for replay purposes.

I would now like to turn the call over to your host for today Mr. Erich Merkle, U.S. Sales Analyst. Please proceed sir.

Erich Merkle

Thank you, Jessenia and good morning everyone and thank you for joining us today on Ford’s November 2012 sales call. Based on early results from this morning, we anticipate that November SAR including medium and heavy trucks closed the month in the low to mid-15 million range. This would translate into approximately 1.12 million to 1.13 million vehicles, again including medium and heavy trucks, providing the industry with a November year-over-year increase of approximately 9% to 11%.

Industry retail sales representing an estimated 84% of November’s sales mix grew in November, with the retail SAR for the month running in the high 12 million vehicle range. We estimate that replacement demand from Hurricane Sandy accounted for an additional roughly 20,000 to 30,000 vehicles in November industry wide. Calendar year-to-date through November, the industry is running at about 14.7 million total vehicles and remains on pace with our guidance.

Some of the segment observations that we've made this month; small cars continued their unseasonably strong performance into November, with the segment accounting for approximately 22% of industry’s sales. There also was a significant increase in small and mid-sized utilities, as they benefited from seasonal tail winds and replacement demand in the east. Small utilities moved to almost 14% of industry in November compared to in the high 12% range in October.

Mid-size utilities moved to approximately 12% of industry in November, which was up one percentage point from October. Ford had its best November F series month since 2005 with sales up 18%. The overall full size pickup segment pulled back slightly to 11% of the industry compared to 13% in October.

Now to give us more insight on what’s being happening in Ford dealer showrooms across the nation, I would like to introduce Ken Czubay.

Ken Czubay

Thank you, Eric and hello everyone. Sales at Ford in November totaled 177,673 vehicles, a 6% increase compared to last year. We saw real strength in our retail sales which grew 12% versus year ago levels. We saw tremendous gains coming from our passenger cars as well as from utilities and trucks. As was the case last month, both fuel efficient small cars and pickups showed great strength in growth on our dealer lots across the nation in November.

Let’s take a closer look first at cars. Ford sales of small cars including Focus, C-MAX Hybrid and Energi Plug-in Hybrid and Fiesta accelerated in November. We saw a 76% gain over last year and provided us with our best November small car performance since 2000. In California, our largest market for C-MAX Hybrid, Focus and Fiesta we saw a small car increase of a 105% over last year. C-MAX Hybrid contributed to approximately 50% of our retail sales growth in California last month.

Also of note, in its second four month of sales, our C-MAX Hybrid lineup sold 4,848 vehicles across the country of 52% increased over October number. In November C-MAX Hybrid and Energi Plug-in Hybrid sales delivered more than 40% of our smaller car growth nationally, helping Ford delivered its best single month of electrified vehicle sales ever.

Our competitive Conquest rate for C-MAX Hybrid is running over 60%, with Toyota Prius as our top Conquest vehicle. C-MAX Hybrid and the all new Fusion were our fast turning vehicle on dealer lots in November, with new gas engine fusions and dealer lots in average of 12 days and Fusion Hybrids on lots for just seven days.

We have spoken often about the mix of our business changing, including a changing balance between cars, utilities and trucks. Today Ford sales of small cars mid-sized Sedans and small utilities, what we have started calling the super segment of vehicles is now consistently running above F-series sales.

Great progress on our plan to grow on a small car utility line-ups, while building on our truck leadership. On the utility front Explorer continued it’s strong performance with its best retail sales number since its redesigned in December of 2010 two years ago. Explorer retail sales were up almost 30% over last year, thanks largely to the newest Explorer Sport.

Interestingly Explorer Sport is turning at a rate faster than many of our specialty vehicles, including the Mustang GT500s and Raptors, which continue to sell very well. Now on the truck side, we saw tremendous results not only was Sport up 18% with 56,299 vehicles sold, last month marked our best November since 2005, seven years ago when the full sized pick up truck segment was running at 58% higher than today.

November was the 16th consecutive month of year-over-year sales increases for our trucks and our four straight month above the 50,000 pick up sales mark for America’s best selling vehicle. November marks another important milestone for F series as we have sold over 250,000 F series pickups equipped with EcoBoost. Globally, the EcoBoost line of engines has now surpassed the half million mark and growing. That's the look at Ford.

Now, I would like to turn the call over to Jenny Lin to get an update on the latest economic developments. Jenny?

Jenny Lin

Thank you, Ken. Since our last monthly sales call in early November, economic indicators are pointing toward modest economic growth with (inaudible) over bigger housing recovery ahead. Manufacturing sector is extending at a slower rate. (inaudible) orders declined earlier in the year now appears to be stabilizing.

Consumer confidence is stable at five-year high. Housing sector is improving although labor market is mending only gradually and after tax income and consumer spending growth remain modest. And net our outlook for the US economy calls for growth in the 2% range this year.

Here are some of the details. Today's [two] November manufacturing sector Purchasing Managers Index released just a few minutes ago, sent us a signal that manufacturing sector remains sluggish. Although, orders and production is still improving but only six out of the 18 industries surveyed are reporting growth.

Although core capital goods orders continue to show year-on-year decline, monthly changes have turned positive. This is consistent with the reading suggested by the PMI and signals that capital spending contraction may soon end.

Turning to the consumer sector, the University of Michigan consumer sentiment reading it was stable at 82.7 in November with buying plan for consumer durables remain favorable. Housing sector related data continue to suggest ongoing housing sector recovery. Home crisis indicated by (inaudible) 20 metro area prices continue to move up rising 0.4% in September from prior months and up 3% over a year ago.

New home sales are up 21% in the 12 months through October and year-on-year October housing starts are up 28.5% over a year ago. Labor market is mending gradually. In October the economy created 171,000 jobs, up 1.4% from a year ago and this Friday data for November will be released.

October real after tax personal income was up 1.2% from a year ago with consumer spending growing at 1.3%. Both came in weaker even after taking into account for work disruption due to Hurricane Sandy. Continued labor market slash is limiting the growth pace in real after tax income and consumer spending.

On net, our outlook for the U.S. economy remains in the 2% range for 2012. To recap, as Erich mentioned earlier, November total industry sales were estimated in the low to mid 15 million units severance including medium and heavy duty trucks. Our full year call for the industry sales is unchanged at about 14.7 million units.

With that summary, let me turn it back to Erich. Erich?

Erich Merkle

Thank you, Jenny and I would like to take everyone through few housekeeping items here. When we take a look at our fleet for the month of November, our fleet our total fleet for November 2012 was 24% of our total sales.

Commercial represented 14% of our total sales, government represented 4%, rental represented 6% of our total sales. This compares to November of 2011 when our total fleet was 28% of our total sales, commercial represented 18% of our total sales, government represented 4% and daily rental represented 6%.

When we look at calendar year-to-date November of 2012, our total fleets was 30% of our total sale. Commercial was 14% of our total sales, government was 5% while daily rental was 11% of our total sales January through November of this year.

Looking and comparing this to 2011 January through November year-to-date, total fleet was 32% of our total sales. Commercial was 14%, government was 6% and daily rental was 12%. Taking a look at our growth stock situation for the month of November, we had 142,000 cars worth of growth stock in November, 236,000 trucks, 139,000 utilities giving us a total of 517,000 vehicles translating into 73 days supply. This compares to the previous month of October with 136,000 cars; 238,000 trucks; 133,000 utilities giving us a total of 507,000 vehicles in October of 2012 translating into 81 days supply.

Compared to November of 2011 last year, we had 156,000 cars, 198,000 trucks; 133,000 utilities giving us total growth stock inventory of 187,000 vehicles which translated into 73 days supply. In terms of our external production our forecast guidance, we are at 750,000 for the first quarter of this year that breaks down to 256,000 trucks; 232,000 utilities and 262,000 cars.

With that, [Jessenia] we would like to turn it over and takes a few callers. Can we start with the folks from the analyst community group?

Question-and-Answer Session

Operator

(Operator Instructions) and your first question comes from the line of John Murphy from Bank of America.

John Murphy - Bank of America

First question on the snapback from Sandy; Erich you said all realized in November, do you expect to see more of a payback or catch up I should say in December and January as we head into early next year.

Erich Merkle

Yes we expect the replacement demand to lead into December and it will take us through into the first half of next year is what we are anticipating.

John Murphy - Bank of America

So it sounds like what we've seen so far is really just a catch up of the delay purchase is not the replacement demand, is that correct.

Erich Merkle

I think that would be accurate John I think most of it is the catch up of the loss from the beginning of the year. Replacement demand still has yet to, we are getting a little of it, but it will continue to be with us in December we feel the first half of next year.

John Murphy - Bank of America

Second question; you mentioned there's some relative weakness in general in the large pickups, 11% of total versus 13% in October, which is bucking the seasonal pattern that you would have expected this [current] year, just curious in general which end markets you are seeing as weak there and the F-series is relatively strong versus it’s competition and really what's going on in the competitive set there because it sounds like you are taking a lot of market share in a relatively weak market.

Ken Czubay

That's a good question, I think its best answered by the strength of the car in utility segment rather than necessarily the weakness in trucks. We don't have the data from our competitors, but as we pointed out we had a very strong month once again over 50,000. I think I'm going to have to raise my benchmark for a really good month. It used be 50, I'm going to have to make it 55 now, but the Ford trucks are really doing well fueled by the EcoBoost, the demand for high fuel efficiency and we are seeing just strong demand as Jenny pointed out, fueled a little bit by the resurrection of the housing market.

I think the other thing we are going to see to supplement Erich’s answer on the northeast question is the infrastructure starts to rebuild, we are going to see some of that money being drawn into purchase of commercial vehicles, either the super duty or the regular F150. So we expect there to be replacement. We expect there to be deferred and we expect there to be an influence of economic activity in the northeast. All-in-all it bodes really well for Ford and we've got the trucks to suit their needs.

John Murphy - Bank of America

And just lastly real quick, you guys are talking about production up 11% in North America in the first quarter of next year. If I sort of draw a linear relationship with that with the SAR in the first quarter, it would look like you would be talking about a mid-$15 million unit SAR. Is that what you guys are building too for the first quarter?

Erich Merkle

We are not giving any guidance for next year at this point John; we will give that actually in January. But yes you are correct we are looking at an 11% increase in our production in the first quarter.

John Murphy - Bank of America

And given where inventory is now you wouldn't expect to have the need to build inventory in the first quarter is that correct?

Erich Merkle

We are managing our inventory and its rate where we need it to be at this time of the year.

Ken Czubay

John what I would say to that is, there's always a seasonal build up of inventory in Q1, as we prepare for the sales increases in Q2. So that doesn't surprise us. That's part of our plan. We always build that way to fill the order and consumer needs in Q2.

Operator

The next question comes from the line of Chris Ceraso from Credit Suisse. Please proceed.

Chris Ceraso - Credit Suisse

Two questions, we saw this morning there was an announcement about a recall on the 1.6 liter in the Escape and the Fusion. Can you give us a little color on what the issue is and what’s the fix and is it something that’s already gone into production that the vehicles’ rolling off the line today already have the correction?

Ken Czubay

Well, let me breakout your question Chris. We did announce a proactive recall on the vehicles late Friday. We have been notifying our dealers of that action late Friday and over the weekend. We are working on the fix for the vehicles, it’s because of an overheating situation which can result under certain circumstances to engine compartment fire, but we’ve had very few of those. We have asked the consumers to bring the vehicles back to their dealership where we will provide them with alternative transportation.

Chris Ceraso - Credit Suisse

Okay. Any details on specifically what it is or the component is it a faulty component or a different design issue or what’s causing the overheating?

Ken Czubay

No, at this time that hasn’t been determined we will keep the consumers and our dealers advised as it develops.

Chris Ceraso - Credit Suisse

Okay. And then just a quick follow up on the Ranger, can you give us an idea of where former Ranger buyers are going, how many of them are staying within Ford versus leaving, how many of them are buying F-series and may be what are the types of vehicles within Ford that they are buying?

Erich Merkle

Yes, if you take a look at Ranger our retention is about 40% to 50% and it’s the net range Chris. And when you take a look about half of those customers are going to F-series and then you have other customers that are going in other vehicles within our only vehicle portfolio where customers are going, but most of them, the majority of them are F-series.

Operator

Your next question comes from the line of Aditya Oberoi from Goldman Sachs. Please proceed.

Aditya Oberoi - Goldman Sachs

Just wanted to go back to the impact from sandy. Have you guys ready to quantify how much of the sales got benefited from sandy? Like, ex-sandy how much would have been the SAR?

Jenny Lin

Hey, this is Jenny here. I think we estimated that industry wide, its probably around 20,000 to 30,000 so far as the effect of sandy, this is an estimates of the absolute volume for the industry about 20,000 to 30,000 units.

Aditya Oberoi - Goldman Sachs

That's very helpful actually. And switching gears are little bit on incentives. Can you provide some colors on how were the incentive tracking both sequentially and year-on-year?

Erich Merkle

Yeah, certainly if we take a look at the incentive spend for the industry. Overall, when we look at our incentive spend, overall our incentive spend in November, it was essentially unchanged compared to October, and down about $300 compared to last year. Overall the industry has been fairly flat overall since the incentive spend; we haven't seen anything significantly higher or significantly lower in terms of the overall industry, everyone is pretty much in line.

Aditya Oberoi - Goldman Sachs

That's helpful, and finally on inventory again, can you provide a breakdown between 2012 and 2013 modeling inventory how much percentage is what?

Erich Merkle

Yes, our 2012 to 2013 both sales and inventory about 75% is the ’13 with the remainder of course being the 2012.

Operator

The next question comes from the line of James Albertine from Stifel Nicolaus.

James Albertine - Stifel Nicolaus

I wanted to build on an earlier question with respect to the recall activity. I know its early with respect to the recall you announced late Friday to sort of make any broader assessments but this is I think the third maybe even the fourth recall if I'm correct, of the newer kind of Ford Fusion, I'm sorry of the Ford Escape vehicle that you had here in the last several months and given the percentage of which your conquesting I'm sure as your C-MAX as an indication from other brands you know what are you hearing from dealers and what are you hearing from customers that you upsold into the new product and that are now having to bring vehicles back in some cases two or even three times?

Ken Czubay

What we are hearing from customers is first up they are very appreciative of our proactive actions that we've taken on Escape. They know that our number one concern is safety and quality and they are appreciative that we are acting very quickly. We are after their best interest on that. They really like the vehicle. They enjoy all the aspects of improved fuel economy of design. We offer other engines in the Escape and on the Fusion, so at this point we haven't seen any derogatory showroom traffic on the vehicle or comments, I mean it’s been basically very favorable on how we've handled these issues where we are assuring them of top quality and safety.

James Albertine - Stifel Nicolaus

I appreciate that color. And then just as a reminder in previous months you had sort of broken out to some extent the mix between the higher end models Titanium as it were and sort of the SEL and sort of the lower more entry level models, can you provide that as well for November?

Erich Merkle

Sure SEL and Titanium are running just a little bit over 50%, a little bit over half.

James Albertine - Stifel Nicolaus

And to clarify the recall from Friday was only on the SE models, is that correct?

Erich Merkle

No it would any vehicle that would have a 1.6 liter.

Ken Czubay

SE and SEL.

Erich Merkle

Correct.

Operator

The next question comes from the line of Colin Langan from UBS.

Colin Langan - UBS

Can I just follow-up on the 20,000 to 30,000 Sandy benefit is that vehicles that are replaced or is that some of the pent-up demand and then also do you have a number for the maybe estimate of what the total vehicles that might need to be replaced over the next I guess two quarters?

Jenny Lin

Yes, hi Colin this is Jenny. Out of the 20,000 and 30,000 vehicles that I gave you I think that is hard to tease out how much of that is sort of catch up and then how much of the replacement demand. I would imagine at this point most of them are catch up sales from the last one in October. And the replacement demand is harder to come by the estimates I mean. We expect that to continue into 2013.

Colin Langan - UBS

And is there an estimate for the total number that you think we knockdown. I think ranges from 200…

Jenny Lin

No, at this time it is too early to tell.

Colin Langan - UBS

Okay. And then any color on the Fusion I mean is that coming more months to look at and full availability and also on the C-MAX it seems like a very, very strong month I mean there is only reason to think that that rate will come down a bit, is there some sort of pent-up demand in the first couple of months or is this a good rate going forward?

Ken Czubay

Colin, this is Ken. C-MAX is doing just a terrific job. Our dealers across the country are telling us that consumers are coming in and droves for the vehicle. I mean they are buying them right off the convoy truck. It’s a car with great fuel efficiency, it’s a car with great performance, it’s larger than our major competitor and it’s priced right on the market.

So, we expect consumer demand to be very sustained down that. We are very, very pleased with the progress we have made in the first two months.

Relative to Fusion, we are restocking, it’s on plan, our dealers’ inventories and I would expect we will make significant progress on that early indications on the Fusion and the Fusion Hybrid have been excellent. I know you have seen the car on TV and people are raving about the design and raving about the fuel economy.

Colin Langan - UBS

Okay.

Erich Merkle

Also Colin, both of these vehicles are the fastest [turning] vehicles on our dealer lots right now, both C-MAX and Fusion and if you wanted to just look at dealer stock for Fusion. Last year at this time we had 34,000 Fusion’s on dealer lots and at November of this year we had 16,000 so we had a little less than half of what we had at this point last year in dealer stock, but we are going to continue to work on that and fill the channel.

Erich Merkle

[Jessenia] could we take one more call from the analyst community and then and then we will turn it over to the folks in the media.

Operator

Your next question comes from the line of Brian Johnson from Barclays. Please proceed.

Brian Johnson - Barclays

I was at the LA Auto Show and congratulations on the C-MAX Hybrid its really getting some up hand stream right way you wanted to, but I want to talk about the other end of the market which is pick up trucks. Can you give us some sense of couple of things, how you just think about customer segmentation in that segment and in particular how would you divide the buyers between hardcore brand loyalist and then buyers who are willing to look at three to five choices and see what the best kind of price and within the kind of people on wait list, who is driven by price and who is driven by product features and with that in mind, how did the very different results we saw this month between you and Dodge up double-digits and GM down in Chevrolet double-digits play out?

Ken Czubay

Well, this is Ken. I think you have to wait talk to some of our competitors on that on their performance. What we are finding on the Ford showroom is that first of, the age of the truck inventory, we have been talking about this for the last few months. The age of the overall inventory in units and operation and consumer stands has exceeded 10 years. On average it’s higher for pick up trucks, so we are finding a lot of age replacement demand coming in.

At Ford we are also finding a considerable amount of commercial consumers turning to Ford because of the great strides we have made in fuel economy with the EcoBoost engine on the F-150s and of course our legendary performance in fuel economy on the higher, the super duty models. We are finding a considerable number of Conquest; I don't have that number, but our dealers are telling us people are coming in and trading our competitors’ vehicles for theirs and its just overall it’s the value proposition that the F-series has made over the last 30 plus years; number one selling truck and number one selling vehicle in America.

So we are very excited about the prospects as we go into 2013 with the improved housing market, and we are also, as I mentioned, anticipating improved business in the Northeast where its not only going to be replacement but infrastructure business.

Brian Johnson - Barclays

And so would you say there is a loyalist segment still or how big is the jump on the market.

Ken Czubay

There's always substantial loyalty especially with pickups. My grand daddy bought one. My daddy bought one and I'm always going to buy a Ford pickup.

Erich Merkle

Yeah, and also a lot of its too Brian, and what we are finding now is that pickup buyers is need based. So if you are buying a pickup today, you have a specific need for that whether you work in a construction industry or whether you work in agriculture or whether perhaps you are towing a horse trailer and you just can't do with anything else but a Super Duty. It’s more of a need base purchase today.

Brian Johnson - Barclays

And would it be fair to say that need based or commercial purchasers are more featured focused, priced focused or brand focused.

Erich Merkle

It could be anything.

Ken Czubay

Our viewers are telling us it’s the total value proposition led these days by fuel economy. Even though the price of fuel has gone down last month and sequentially, it is still the number one consideration on all people’s minds and it’s still the number consideration on pickup trucks.

Erich Merkle

Jessinia could we turn the call turn the call over to now to the focus on media. We would be happy to take their call.

Operator

The next question comes from the line of Brent Snavely from the Detroit Free Press. Please proceed.

Brent Snavely - Detroit Free Press

So I wanted to follow-up briefly on Escape. I had the number in front of me. I don't have it now, but Escape sales declined in November relatively new vehicle, great design but as you talked about earlier, couple of recalls with it. Are the recalls impacting sales at all for Escape?

Erich Merkle

No, the recall did not impact sales at all in November. In fact when you look at November of 2011 that was a record November for Escape. So November of 2012 was the second best November ever. And keep in mind that November of 2011 was up 46% from November of 2010. So November 2011 is likely going to be a very difficult comp for some time to come. That was a really strong Escape month.

Ken Czubay

Overall sales were down about 900 vehicles, but retail sales were up 7% so there's still a very strong demand at retail.

Brent Snavely - Detroit Free Press

And do you have any concerns at this point that with the couple of recalls on Escape that its image in the future will be tarnished as a troubled launch or a troubled vehicle.

Ken Czubay

I think the biggest message that we are getting across the consumers is Ford’s incredible pro-activity and our concern for their safety, and we are taking all measures to make that as smooth as we can going forward relative to providing them with replacement vehicles and keeping them well informed on the issues. So, we are always going to be at the forefront of addressing any potential issue that comes up.

Erich Merkle

Next caller, please.

Operator

The next question comes from the line of Mike Ramsey from The Wall Street Journal. Please proceed.

Mike Ramsey - The Wall Street Journal

The question I have is kind of a simplistic one, which is, was this a good month for the industry and why, can you explain may be beyond for Ford specifically, but could you go beyond and say overall the industry is looking stronger and stronger in the auto industry and could you kind of explain that a little bit anyone?

Jenny Lin

Yes, we do think that this is an industry that’s growing stronger even without the bending effect. The underlying fundamentals are improving, you can see that you got housing sector gradually improving, I think that plays a role here and also the consumer sentiments are improving as well. So these are positive factors that are currently supporting the industry. And then don’t forget that because of the age of the vehicles on the road that we still have a lot of a replacement demands just because that we have a very aged vehicle fleet on the road.

Mike Ramsey - The Wall Street Journal

Okay.

Ken Czubay

I would add, I thought it was a good month for the industry and a darn good month for Ford. In addition to the comments Jenny just left you with, I think its very interesting in view of all conversation on what's going on in Washington, the clock is kind to ticking that its indicative of strong consumer sentiment that it’s a good time to purchase a car, and you fuel that with historically low interest rates, strong performance from Ford credits supporting our dealers in the total value proposition of greatly enhanced fuel economy with our Ford entries, people are coming in and saying, I have got an order vehicle, I am faced with a high maintenance bill and we are turning that into, we can give you a car of tremendous value, it vastly improve fuel economy, low interest rates. People are saying, now is the right time to buy a car utility and especially a Ford truck.

Mike Ramsey - The Wall Street Journal

And also I guess throwing there expensive used cars right, I mean like used cars are not cheap and so you kind of have that driving?

Ken Czubay

Yes, it works both ways. It allows our dealers to give a high traded allowance and also for those that are thinking of buying a more current model used car, hack value proposition on the new Ford is especially enticing.

Erich Merkle

Okay, thank you, Mike. Can we have the next caller, please?

Operator

Your next question will come from the line of Dee-Ann Durbin from the Associated Press. Please Proceed.

Dee-Ann Durbin - Associated Press

I wondered Erich if you have a number on days [return] for C-MAX?

Erich Merkle

Days to turn?

Dee-Ann Durbin - Associated Press

Yeah.

Erich Merkle

Yes, they would be I don't have it handy with me but its running at the same rate as Fusion. So it’s moving very quickly.

Dee-Ann Durbin - Associated Press

And just generally, I mean is it ahead of where you expected it to be? I'm rather struck by how quickly it ramps up in the marketplace.

Erich Merkle

Yes, it’s doing very well for us in the marketplace and actually the end where it’s turning the quickest is actually in California, particularly in Southern California. So it’s doing exactly what we want it to do.

Ken Czubay

I think the like I said a few moments ago Diane, the number one the day’s supply is very low relatively speaking and what the orders are telling us is people are still looking at fuel efficiency. They are intrigued with the new entry of C-MAX. And it’s a bigger entry. It’s well styled, more powerful and its class leading in fuel economy. So, it’s quite an intriguing proposition to the consumers who are looking to trade in other hybrids.

Erich Merkle

And also Diane if you want to just take a look the C-MAX and Fusion right now it’s a horse race in terms of their term and you know the Fusion is about 12 days on dealer lot right now. The C-MAX is turning at about that same rate.

Dee-Ann Durbin - Associated Press

Okay.

Erich Merkle

So very quick and like I said Southern California is the fastest turning market in the country right now for C-MAX.

Dee-Ann Durbin - Associated Press

Okay. And you mentioned, just quickly you mentioned the fiscal cliff in your comments a moment ago and I just wondered, do you have sort of a backup plan, are you expecting a real severe drop off if in sales, if Congress and the President [can’t] get it together. What's the plan?

Jenny Lin

Hi Dee-Ann, this is Jenny. Yes, we think that is the biggest uncertainty out here, out there over the next couple of months. We are watching it very carefully as to how the final packages and final agreement from the Congress administration which (inaudible) so yes we do have a plan but we are watching it very carefully as the situation remained very fluid.

Ken Czubay

Dee-Ann what I would add to that is I think its on the front page of every newspaper but when you take the other side of the equation the ageing of the fleet, you know the ageing of the average vehicle and inventory, the value proposition as I mentioned of higher fuel efficiency and low interest rates, on balance it may make headlines but the overall spirit of consumers that are going on the showroom right now in our survey show that business is still going to be quite good.

Operator

The next question comes from the line of Keith Naughton from Bloomberg. Please proceed.

Keith Naughton - Bloomberg

I was wondering if you guys could detail your incentive spend on F series, the trend line on it versus October and a year ago and in comparison to your key competitors at GM, Chrysler and Toyota?

Erich Merkle

Well, here if you look at what we were doing on F series, our full size pick up truck incentive spend was up slightly compared to October a very small but really it was less than a 100 bucks. So, down about $100 when compared to year ago level, so when you compare year-over-year we were down a bit on a pick up truck incentive spend. As far as our competitors, we really, it’s probably a question you should ask them we just don’t want to…

Keith Naughton - Bloomberg

You don’t know whether you are trending above or below them?

Erich Merkle

We were trending at really the overall pick up trucks segment, whole sized pick up truck segment.

Keith Naughton - Bloomberg

And just finally on this point is November an unusual month to have such a large gain for F-Series, it’s coming after your traditional promotional months of September and October.

Ken Czubay

Well Keith this is Ken and I would just say it’s just as indicative of the strength of the F-Series in the marketplace. As I mentioned, there is older fleet of trucks in the marketplace and when consumers are coming in, we obviously have very, very high loyalty to Ford but in addition to that we are seeing high levels of Conquest business. It’s the value proposition with EcoBoost and resale value and everything else associated with the F-Series. So, we were very pleased I have got to raise the benchmark to 35,000 from 50,000 for a real good month for us. So, we are going to continue that trend.

Erich Merkle

Jessenia, I appreciate your help on our call today. And with that we are going to wrap things up. I appreciate everyone joining us and we will look forward to chatting with everyone in the New Year in 2013 imagine that for December sales call. Thank you very much everyone.

Operator

Thank you very much. This concludes today's conference. Thank you for your participation. You may now disconnect. Have a great day.

Question-and-Answer Session

[No Q&A session for this event]

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