Executives
George Pipas - Ford Sales Analyst
James D. Farley - Group Vice President - Marketing and Communications and US Marketing, Sales and Service
Emily Kolinski Morris - Ford Senior US Economist
Ken Czubay – Vice President of US Sales & Marketing
Analysts
Rod Lache – Deutsche Bank Securities
John Murphy – Merrill Lynch
Analyst for Christopher Ceraso - Credit Suisse
Journalist
Bryce Hoffman - The Detroit News
Brent Snavely – Detroit Free Press
Nick Bunkley – New York Times
[Keith Knowlton] – Bloomberg News
Amy Wilson – Automotive News
Jeff Bennett – Dow Jones News Wire
Ford Motor Company (F) March Sales Call April 1, 2009 1:00 PM ET
Operator
Good day Ladies and Gentlemen, and welcome to the Ford monthly sales conference call. My name is Katina and I will be your coordinator for today. At this time all participants are in a listen-only mode. We will conduct a question and answer session towards the end of this presentation. (Operator Instructions) As a reminder, this conference is being recorded for replay purposes.
I would now like to turn the presentation over to our host for today’s call, Mr. George Pipas, Ford Sales Analyst.
George Pipas
Welcome to our March conference call. First I’d like to introduce the participants. Today along with me, Jim Farley, Ford Group Vice President of Marketing and Communications joins us today at the end of the quarter. As you all know Ken Czubay, has been with Emily Kolinski Morris, our Senior US Economist and I on the two previous months. I don’t know if we’ll have this cadence every quarter but it gives you a chance to hear from different people and provide some different points of view about what’s going on.
In any case, let’s just get to the March recap now. Total industry sales in the month of March are about 800,000 units. That would be down 40% to 45%, probably closer to 40% than 45% but anyway somewhere in that range, the industry is down not to dissimilar from February. Another thing that’s not too dissimilar from February is the annualized sales rate. We believe that the March annualized sales rate in the mid $9 million range for total vehicles and the low $9 million range for light vehicles which is where it was in February.
As you know by now Ford, Lincoln and Mercury sales were down 41% so our decline in total sales was in line with the industry. We think that most manufacturers are going to report a decline in that range. For us though, the biggest positive in the March sales report is the retail performance. Our retail sales were down 36% compared with the year ago. While the decline is large by some historical standard, it could well be the lowest decline in retail sales among the major manufacturers.
As a result, our retail share in March is the highest retail share for any month since well, at least going back to December, 2006 and maybe beyond but at least that far so, over two years ago. It caps a period covering two quarters, the fourth quarter of ’08 and the first quarter of ’09 in which our retail share has increased versus the same period a year ago. It is also worth noting, that our year-to-year increase in retail share was increased without significant changes to incentive spending.
Compared with last March, our retail incentives were essentially flat as best we can call them plus or minus $100 while industry spending compared with last March was up $500 to $600. Now, that varied a lot by manufacturer, some were closer to $200 or $300, others were pushing $1,000 or more increases compared to a year ago.
Another little note about the month of March that I think you might find interesting relates to our mix of vehicles. At the retail level, this month a year ago, March 2008, 56% of our retail sales were cars and crossovers and we were remarking at the time about how unusual, how we had shifted from a car company that was really a truck and SUV company back in 2004. Back then 70% of our volume was truck and SUV and we were pretty amazed that in such a short period of time it had shifted until the point that cars and car based crossovers were over 50%.
Well, this month it’s 61%, a five point shift even though gas prices are over $1 lower than where they were a year ago people are still moving towards the car segment and the car and crossover segment which we view is right in our sweet spot this year because in addition to the new Fusion, Milan and Lincoln MKZ and hybrid versions of the first two of those name plates as you all well know, this is a big car year for Ford and the news just gets bigger next year when we introduce our Fiesta and our Focus.
So, in any case, first quarter recap, we’re now three months in to the year, first quarter industry sales totaled about $2.2 million, down about 40% compared with a year ago first quarter. We estimate the first quarter SAR at 9.6 million for total vehicles, that’s about a million units less than the fourth quarter and we were up over $15 million in the first quarter of 2008. Ford’s first quarter sales totaled $312 as you can see on our tables, down 43%. Within that retail was down 37% and fleet was down 55% compared with a year ago.
Now, I’d like to turn it over to Emily Kolinski Morris, Ford’s Senior US Economist.
Emily Kolinski Morris
I think I can say that we have been seeing some encouraging signs in recent weeks that the pace of economic decline could be moderating. These signs would include improvements in monthly housing indicators for February, a string of gains in the manufacturing purchase managers index and some stabilization in consumer confidence according to the U of M survey.
Based on past performance, these indicators would point to some improvement in the vehicle sales pace in roughly three months time. In that regard, today’s third consecutive monthly gain in the PMI was a positive continuation of this trend despite the signals of another severely negative job report that we’re likely to see this Friday. We recognize that changes in economic indicators are likely to be ambiguous in the early stage of a recovery and mixed signals may still be a precursor to more consistently positive ones.
Consumers are responding with mixed signals of their own with regard to the purchases of new vehicles and other large ticket items. The University of Michigan confidence survey reports that the consumer assessment of vehicle buying conditions have actually improved since the turn of the year to levels last seen in October of 2007 when the vehicle sales pace was running at 16.2 million units. However, low overall confidence levels and concerns about job and income prospects have been leaving many potential vehicle buyers on the sidelines.
In today’s environment moreover, traditional indicators can capture only part of the story of a sales pace so far below estimates of trend sales and prior post war downturn. Credit conditions, auto industry restructuring risks and consumer psychology all seem likely to have some part in generating an industry sales outcome that is worse than any model based on historical performance would have predicted.
Offsetting the severe conditions in this cycle, we also have an unprecedented policy response including most recently the announcement of quantitative easing measures by the Federal Reserve and additional demand stimulus measures such as the growing support for an automotive fleet modernization program. While these measures give rise to some optimism in our planning, we remain alert to the risk that remain in the cycle. As such, we continue to plan our production conservatively and with room for adjustment to changes in either direction on the economic landscape.
James D. Farley
I was very pleased with the encouraging progress that we’re making on our plan. Our March sales were a very successful balanced performance. When you look at the complete market equation between share volume, mix and incentives and really the highlight for us has been the new products. We had Fusion and Milan and MKZ plus the hybrids in March, the new F150 is really hitting its stride and the new products like Flex and MKS continue to do well.
Frankly, one of the real important keys to our success in March and our share performance is as George mentioned, Ford Motor Credit. Stability that offers our dealers and our customers’ access to credit has really become more and more of an issue as the year has gone on. The other element I’d like to compliment with George’s comments is on fleet. There’s been quite a transformation at Ford and our fleet sales and although our Fleet business is down 50% year-over-year, we saw some very encouraging news in March especially from state and local, federal and also commercial customers. We had a very, very strong super duty month with some of our fleet customers. Really now rental is a very small part of our fleet mix overall which fleet was 31% of the total.
Just moving on to the market, the only other issue I’d like to bring up is [inaudible]. We’re seeing a very different trend than we’ve had in the past where medium sized vehicles, crossovers and mid size cars are really the strength in the market. Very small vehicles and very large vehicles are not as strong. That’s something we’ve seen in the last few months.
On the retail share side, I’m just very proud of the team that we’ve literally been at that 13% share level now for five months going on six months. We’ll see how the numbers shake out but that is very encouraging for our team that month in and month out, especially given our incentive picture, we’ve been able to perform at that level and really it’s been the strength of the new product and the sell down associated with that product that has really gotten the team and our dealers where we are in terms of share.
The market is very challenging but, the things that we can control at Ford we’ve had a lot of success and I would say the real market change for us and where we are really starting to differ from a lot of our competitors is really in the incentive area. Just compared to the fourth quarter our incentives are down over $1,000 and some of our competitors are substantially up and as George said year-over-year the change versus the competitors is even more marked. That again, is tied to the strength of our new products like F series who bring to the market better product and customers are willing to pay for that so we’re getting more traffic we don’t have to close everyone with aggressive incentives.
The other encouraging news for us is our series mix. The types of F series now are very different than what we sold last year. Now, for example, our super cab mix, our four door pickup trucks are almost five to 10 points higher than we forecasted with the launch and that’s been very encouraging for us because the heart and soul of the new F series is capability but we’re seeing mix in rate opportunities that customers are really buying aspirational type trucks and of course with the capability we’ve designed.
The credit market is very interesting. We’re seeing a lot more cash buyers. The other issues we are seeing which is very interesting is a lack of correlation between lease capacity and market share. Those manufactures of high lease capacity don’t necessarily mean that they have higher share. In fact, many of the bigger share losers in a retail market are brands with very high retail. I think it comes back to the product. Our product is new and I think that’s really what’s driving the market right now.
I’d just like to touch on the inventory. We’re in really good shape on inventory, 85 gross day supply, down almost 30,000 units from the fourth quarter. We continue to build according to our demand which is obviously a signature part of our four point plan as a company and we really have a great balanced inventory situation. We finished our April production wholesale and we’re busy on May and everything looks great. The dealers are really anxious to get the product especially after a really good sales month.
The used market is very interesting. The volume is flat but the prices have really rebounded far beyond everyone’s expectation and used car prices are very strong and I think that’s a really important leading indicator in our business in terms of the strength kind of returning to the market or at least leveling off. We did see some interesting trends during the month, March we saw the last week particularly strong. I would say the trajectory of the month in total is really more towards the mid to high $8 million range SAR and all of a sudden the last five to six days came along and the industry really finished on a high note relatively speaking compared to history.
But, it was really a strengthening month and I have to say since the beginning of January where we saw a lot of manufacturers carry over their yearend incentives, is really the first time I’ve seen the US market show some strength week-over-week. To Emily’s point I think that is just really about consumer confidence. With that George, I’ll finish up my comments.
George Pipas
Just to add to what Jim said about inventory and production, both of the figures for the end of March are included in the sales release but let me give you the car/truck split because I know people have expressed an interest in that and let’s get that housekeeping item done. At the end of March, we had 408,000 cars and trucks in stock. I just want to remind you that that includes units that are in inventory from our plants, the actual ground stock is about two weeks of production less than that. The level of cars in that 408 number is 151, the level is 257.
Last year at the end of March we had 562,000 cars and trucks in stock. As Jim mentioned, that 408 is down a little over 30,000 units from the beginning of the quarter. On the production side of things you’ll notice that we have updated you. We don’t usually do that because the variances is a little smaller as we head to the end of the quarter but I had just last month provided guidance of 375,000 units for the first quarter. We ended up at 349, 87,000 cars and 262,000 trucks so that will line up real closely with the levels that you’ll see when we announce our first quarter results at some point in the future, I’m talking about the financial results.
Our second quarter forecast plan will be updated when we do-do our financial results call. We want to see how April is going to track. Jim mentioned that there’s still a large amount of uncertainty, Emily emphasized this as well, the near term it will be interesting to see how this unfolds. I think two people could disagree whether recent events could slow things down or whether the recent events – you know, Jim mentioned that March closed strong and we certainly are excited about our offer to consumers, the Ford Advantage Plan and what that potential has.
At the same time as I mentioned several times before, we are going to plan to the current level of sales. There’s no point in trying to get ahead of ourselves, we’ve been successful trying to keep inventories down and the improvement that’s lead to resale values and helping us to keep incentives in check, so for the time being, we’ve taken this month of March opportunity to trim inventories further and we’ll keep you posted. It’s literally almost a day-by-day process now watching out what’s going on in what use to be a monthly process.
With that, let’s get started with the Q&A session and hear from our participants.
Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from Rod Lache – Deutsche Bank Securities.
Rod Lache – Deutsche Bank Securities
I had two questions, first maybe you can give us some color on the cost of the advantage program, how is that just relative to your incentive spending? Secondly, just from the President’s speech a couple of days ago I think a lot of people, particularly those that don’t follow the auto industry that closely could take away two things, one is that GM and Chrysler have 30 to 60 days and secondly that they’re working on a [scrappage] or incentive program. Any thoughts on how that might affect sales as you’re looking out in to April and May?
James D. Farley
Great question, the Advantage Program, we have zero APR for many of our vehicles and a range of terms from 60 to 72 months, even 36. That’s consistent with our current spend which as we talked about Rod is far down from last year, basically flat from last year but far down from where we’ve been in certainly much lower than the Koreans and some of our other competitors. So, that’s not really a big change in terms of cost, incentive wise it should be kind of where we’ve been bouncing around.
The Advantage Program is very modest cost because when the actuaries really calculate the number of people who are actually going to lose their job in the next 12 months, etc., etc., the cost to us of that product is very modest, in the hundreds of dollars, it’s per vehicle so it’s very modest.
On the fleet modernization program obviously, there’s two pieces of legislation on the table today, one that follows a German [scrappage] program almost to the letter. Another one the [Stabinaugh] Bill who really is more like the one that was in the original stimulus package. Obviously with the task force and the President’s endorsement we think it’s a really important element of the three legged stole of getting the industry back. There’s only so much you can do with restructuring, you’ve got to get customers back in the show room.
As far as the benefit, there’s been a lot of forecasts. Obviously the US market is very different than Germany, Italy and France. I would speculate that the benefit to the industry would be somewhere between 500,000 and 1 million units depending on the time frame and the amount of money that you get for your scraped vehicle. So, Rod until the details get worked out it’s somewhere between 500,000 and 1 million units of benefit.
Rod Lache – Deutsche Bank Securities
But Jim, just on the near term impact, do you think that people would be delaying purchases until the additional funds come out? Do you think that just this uncertainty over this 30 to 60 day process for your domestic competitors is that something that will be a factor in the market or not really?
James D. Farley
Well, first things first, on the fleet modernization program that’s why I think the President mentioned that any incentive would be retro so he kind of covered that uncertainty in the customer’s mind. In terms of an industry event, whatever that wind’s up looking like all of us have all sorts of different research on what customer’s are going to react to and I can’t really comment on that in terms of what’s going to happen with customers.
We have been encouraged by our new vehicles, the reception and also the kind of people that are coming in to our show rooms now are a little different than they have been in the fourth quarter. We’re seeing a slight uptick in the number of non Ford trades at Ford dealerships and it’s kind of an interesting trend that we’re watching carefully. I think it bodes well for Ford because we have the stability. We’re in such a different place and we’re launching so much new product that I think net-net of some very unusual situation. I think the impact on the industry is very, very much unknown.
Operator
Your next question comes from John Murphy – Merrill Lynch.
John Murphy – Merrill Lynch
Just two questions, Jim follow up there on sort of your comment there on conquest sales, I was just wondering which vehicles you’re seeing the best conquest rates and really where you are making those conquests from? Are they coming largely from GM and Chrysler or are you actually seeing some of that come from the transplants or the imports? Second, George on fleet sales I mean clearly there’s been this sort of natural depression in the first quarter and you talked about a return coming sometime in the spring. I’m just wondering what the timing of that was and if you still expect that kind of snap back in fleet sales?
James D. Farley
John, really simply, the uptick in non Ford trades seem to be actually equally split between domestic and transplant. The vehicles certainly the highlight, the poster child of our month was Fusion. Fusion’s retail sales were actually up in an industry that was down 40%. I can’t imagine any mainstream vehicle right now is in sell down with the new one arriving that can say that they were up in this market in pure volume, retail volume. I think that was a big reason one of the beneficiaries of just this new emerging trend of this new customers that certainly haven’t been in a Ford dealership in a while.
George Pipas
As far as the fleet sale picture is concerned, compared with earlier in the year John, the uptick has started. The fleet mix for the total industry was about 15% in January, it moved to about 18%, now it looks like it’s kind of in the 19% to 20%. Year in and year out 20% is a real good proxy for where fleet sales will be with daily rental being roughly 60% of that. To Jim’s point I might say that this whole fleet transformation that he was talking about, he indicated that 31% of our fleet sales in March were fleet, 11% were daily rental. So, we’re seeing relatively speaking, everything is relative in this kind of environment isn’t it, that it’s the commercial and government.
I think the comeback in the whole market will probably pretty closely follow the recovery in the retail market. I mean, after all the fleet customers is confronted by the same issues regarding weak business conditions, weak travel conditions if you’re a daily rental company and in some cases credit availability. So, I think probably the second half we can see a stronger picture.
Operator
Your next question comes from Analyst for Christopher Ceraso - Credit Suisse.
Analyst for Christopher Ceraso - Credit Suisse
I’m wondering if you can speak a little bit to how sales trended during the month and in particularly how Ford’s market share might have trended during the month? Was there a difference between your share of retail during the first half versus your share of retail during the second half or toward the very end of the month?
George Pipas
If you look at first half second half the first half was even stronger. Let me just to give you some indication here of where we think we ended up, somewhere north of 13.5%, we’ve been traveling at the rate of about 13% over the five months that stretched from October, November, December, January and then as you well know it slipped in February, that’s the only month out of the last six where we were actually down at retail share. Then, this month it started actually at a level closer to 14% but probably finished for the full month somewhere north of 13.5%. As I said in my commentary earlier we hadn’t seen a retail share that high for any month since some time in ’06.
James D. Farley
The only comment I’d like to make is that some manufacturers are relying on stair step incentives and they tend to pay off much more aggressive so the gross profit for the dealers tend to shrink during the month and obviously our incentives are not structured that way, ours are more retail oriented, consumer facing incentives versus the stair step system that is really incentivized for the dealer in terms of dealer cash. I think that’s one of the dynamics we’re seeing in the markets is a lot of experimentation on incentives.
George Pipas
Katina, what I’d like to do is we’re at the bottom of the hour so let’s move over to the journalist at this point and we’ll circle back to the analyst if we have some time.
Operator
Your next question comes from Bryce Hoffman - The Detroit News.
Bryce Hoffman - The Detroit News
A couple of questions, first off I wonder if you think Jim and George whether there will be any significant impact on your competitors and therefore on you from the government guaranteeing the warranties at GM and Chrysler?
James D. Farley
From a consumer standpoint Bryce, until some dramatic thing happens with one of the competitors, I can’t predict what they’re customers will do but we have absolutely no reason to believe our customers have any hesitation about us honoring our own warranty. I mean, we’re in such a different situation than they are so for us it’s not an issue. How their customers will react to it well I guess that’s why they did what they did.
Bryce Hoffman - The Detroit News
Also, are you at all concerned Jim about some of your competitors using tax payer money for incentives?
James D. Farley
Well, aside from kind of the emotional on the surface I think Bryce really February and March are the perfect 60 day period of showing what happens. I think both for our competitors and us it’s a perfect proxy of the virtuous circle versus a different type of business model. High incentives always lead to deteriorating resale value and we sale ALG in some case take 5% or more resale value reduction in key core brands and I can tell you that Ford’s in a different position there.
With our moderated incentives, yes in February we may have lost some share but we’re not losing customers to other brands. In fact, the opposite is happening and we’re creating this virtuous circle now with relatively speaking low days supply, 85 day supply ground stock relative to our competitors, effortless and normal wholesale operations with moderated incentives which really pays back the customer in terms of resale value. I think it’s a long term bet versus a short term bet. Ford’s plan has always been consistent about looking at the long term.
Operator
Your next question comes from Brent Snavely – Detroit Free Press.
Brent Snavely – Detroit Free Press
I was wondering with the announcement of Ford Advantage yesterday can you tell me anything about the timing of that? Why is this the right time or best time now for that and why didn’t you maybe react a little bit earlier to do something that’s somewhat similar to the Hyundai Assurance Program?
George Pipas
With regard to the Hyundai program I guess I don’t have a comment on our distance between their program and our program. I think one of the things for us is obviously it addresses a concern. It is clear now that consumers sitting on the sideline because of the concerns about employment. That’s a major issue. As Jim may have alluded to I can’t remember whether it was a conversation we were having before the call started or during his presentation, there were customers that came in last week and were looking at products and just couldn’t pull the trigger and last night we got reports from our field offices around the company that customers had come back in after the announcement to find out what this is about and closed a deal with this protection.
I think that’s one element and the other element is it allows us another opportunity to tell the Ford story because it’s a little harder story to tell when they’re sitting on the couch. Now, our Ford dealers are doing such a great job of telling their story in the communities with something called a dealer editorial program and they know the Ford quality story and Ford fuel economy story and the fuel safety story and these products that are hitting the show room. So, for us it just seems like our story is solid, our position in the industry is getting well known and so now is the time to go and see if we can’t introduce our selves to some new faces.
James D. Farley
Brent just so you know there’s actually quite a bit of difference between these different programs between Auto Nation and us and other competitors. I’d really encourage you on behalf of the customers to really look at the details. At a customer level, our payments up to $700 we cover for 12 months that’s up to $8,400 for a customer who happens to lose their job. When we did research after others had launched a similar program on the surface, customers said I don’t want to turn back in my car, I need my car when I’m looking for another job and so we really benchmarked and tied in their programs and we have a very different, at the consumer level a very different implementation.
Operator
Your next question comes from Nick Bunkley – New York Times.
Nick Bunkley – New York Times
Can you just talk a little bit more about the pace of how you saw sales going throughout the month and maybe even bring in sort of the end of February there basically since those plans were filed over your competitors, just anything that shows how consumers out there may be reacting to the news coming out of GM and Chrysler and how it’s translating at all to what your dealers are seeing?
George Pipas
You see, with the announcement on Sunday I don’t think that there’s really much that you could say in terms of customer reaction so I really, unless Jim has something to add, I don’t know that I could attribute it to that. But, we did see in the last let’s say week things start to pick up. Like Jim said, I think that had much to do with layers of incentive programs and wholesale incentives in particular that drove dealer business, things like dealer stair step programs, wholesale incentives and certificates that were implemented mid month to close the business a little bit stronger. But, I don’t know that anything happened like yesterday that you could say, “That was because the President spoke on Monday morning.”
James D. Farley
One trend that we’ve seen is C&W have done a really interesting study where they saw that for some of those brands shopping had actually gone down by 12% and ours had gone up by 12% and we’re starting to see that a little in the trade information. But, who knows, it may be a one month trend but we did see some change in consumer buyer on the dealership floor and frankly for the fleet area we have seen a little bit of the shift to non Ford customers in addition to the normal customers we get.
Operator
Your next question comes from [Keith Knowlton] – Bloomberg News.
[Keith Knowlton] – Bloomberg News
I’m wondering if you can tell us a little bit [inaudible] retail share gain, is it coming mostly from the F150 and if you gained any share in crossovers or cars, small cars?
James D. Farley
Great question, I probably should have mentioned it, it’s my fault. Our share gains were really across the board and they weren’t based on segmentation changes either. For example, pickup trucks had gotten stronger, in fact, pickup trucks had gotten weaker in the first quarter and yet we continue to gain share. The reason is because we have a very well balanced portfolio now in crossovers as George said.
One of the things that is exciting for me is to see the Fusion success and the Escape success and the F series success all simultaneously. The reason why I think that’s important is because those are the three core segments and in each segment we’re either at the top or best in class for fuel economy. Those happen to be the three segments where we’ve seen the lowest declines year-over-year. In fact, in Fusion this month a retail growth in total sales. So, really our share performance has really been across the board for not just crossovers and not just pickup trucks as well as in car. Frankly, Fusion probably played the biggest role in our share increase in March than any other vehicle.
George Pipas
Without naming specifics Keith, I just thought it was interesting and I think it’s too early to draw a definitive kind of statement and as I said, I won’t mention names but it was pretty interesting to see what products were being traded for the Fusion hybrid when it arrived in the last week. Some people have said – we’ve had questions in the last 30 days, I’m sure Jim has had some where people express concerns about selling hybrids in to this market when gas is $2 a gallon. I really think that this fuel economy story on this particular product offered by fuel offers us a great opportunity to tap in to customers that have never been to a Ford show room.
Operator
Your next question comes from Amy Wilson – Automotive News.
Amy Wilson – Automotive News
I have to apologize because I missed the first couple of minutes of the call so I didn’t hear what you said about the SAR for the month so if you can just kind of reiterate what you think the SAR was for the month? I hate to mention the words bottoming out but do you think that we’re at a point now where Spring has come and you have the new vehicles and these payment protection programs are in place that we may actually see an uptick in that selling rate.
George Pipas
I’ll let Emily handle the second part of your question but Amy, when we started our meeting at least, we may have more information now but basically the SAR looks a lot like it was in February. I don’t know, it’s hard to say I’m going to let Emily comment on where the bottom is in this market not that she’s going to give the definitive answer either knowing her but at least March is very similar to February in terms of the SAR.
Emily Kolinski Morris
From February to March we did see some flattening out in the SAR Amy. I spoke at the outset a little bit about some of the leading economic indicators in housing, in the manufacturing purchase manager’s index and some sort of flattening out at least in consumer confidence that we’ve seen in the past couple of months. Those indicators would suggest that in perhaps three months time we would begin to see some recovery in vehicle sales based on how these indicators have led prior cycles.
You have to layer on top of that of course the factors that we’ve been talking about throughout the call the industry restructuring risks that might have an influence on consumer psychology and consumer’s overall perception of the economic environment so we will likely see some continued volatility but those are encouraging signs that if we’re not at the bottom we may be getting close.
Amy Wilson – Automotive News
But it’s premature to say that we think that we’re over the bottom because it sounds like the next three months though will tell the tale of that?
Emily Kolinski Morris
With those risks there could be lower numbers in the next three months but we think we’re getting close to turning the corner.
Amy Wilson – Automotive News
Then I just also wanted to clarify on the retail sales for the Fusion did you say they were actually up for the month on the retail side?
George Pipas
Yes, they were.
Amy Wilson – Automotive News
What was the percentage breakdown about how much retail was up and how much the fleet was down because overall it was down 20%?
George Pipas
Well, as a matter of fact, I don’t know that we had one Ford vehicle were fleet was up because the overall was down what 50%. In the case of Fusion, fleet was down 81% and retail was up 9% for a net 20% decline.
Operator
Your next question comes from Jeff Bennett – Dow Jones News Wire.
Jeff Bennett – Dow Jones News Wire
Jim I just wanted to get a sense from you, you know where the market is and kind of where it’s going so throughout this year then what’s the plan to kind of keep things going? You had mentioned before it’s kind of going back a little local but is it just continuing to roll out more incentives to meet the customer’s feelings or what do you think?
James D. Farley
Well, for us at Ford it’s a very, very simple story. We are busy rolling out our new products. We just got down with F150, and Fusion, and Milan and MKZ. We’re just starting deliveries of the new Mustang, we have the Taurus and the Transit Connect a brand new product we don’t even sell today coming early this summer, we have the Eco Boost versions for many of our vehicles.
So, the Ford story it isn’t about incentives at Ford Motor Company, it’s about new product. In fact, our incentives as I said fourth quarter to first quarter are down more than $1,000 and year-over-year they’re flat in almost every other volume manufacturer on average their incentives are way up from last year. Our story is very simple, we’re offering customers our new products that we’ve been working on for years.
Jeff Bennett – Dow Jones News Wire
Just lastly, I noticed that you’re cutting production of some of your F150s, I know it was kind of planned out that way but it seems like there are two stories here, you’re saying, “Oh Ford F150s are doing well, yet we’re cutting production.” So what’s going on there?
George Pipas
That’s a simple one Jeff, that’s a good question but it’s a simple answer. When we’re talking about how well it’s doing, the kind of prices it’s getting and the equipment levels, it’s relative to its performance in the segment. We’ve gained retail share in that category every month since it was introduced but admittedly the overall sales picture for the industry as well as for this segment has been weak and I think the down time that we have incurred in the system and will continue to incur when sales rates are in the 9 million level it shows our dedication to just go one day at a time with this great product, don’t get a head of yourself because we do not want to get over stocked and fall in to the trap that other people have is the bottom line.
James D. Farley
Just to be concrete to follow on George’s comment, in the fourth quarter there were many months where the full size truck segment was 14% or 15% of the industry. We’ve been running at 11%, 12% in the first quarter so the percentage of the people that are out there, there are much fewer of them buying full size trucks and our shares way up of that smaller market and the reason is because we’re not in sell down. All of us were in sell down in the fourth quarter and that really drove the segment up.
George Pipas
Katina it’s quarter till the hour so we’re going to wrap up. I look forward to talking to everybody between now and next month on an ad hoc basis but until then have a good day.
Operator
Thank you ladies and gentlemen. This concludes your presentation. You may now disconnect.
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