Recently reported sales figures for March of Ford Motor Co. (F) bring in good news for investors. Ford reported around 6% increase in its vehicle sales as compared to the previous year. This was mainly supported by utilities sales which were up by 19.7% and truck sales which saw an increase of 10%. Its total car sales were around 5% higher on yearly basis, mainly supported by the new model variants of Fusion (up 10%) and the Fiesta (up 7.3%). These figures were the best monthly results for Ford since May, 2007. This could further help the company to post good cumulative sales for great quarter results.
Another factor which is an add-on to a good quarter results is its hybrid vehicles. Ford has sold more than 21000 hybrid vehicles in the first quarter of 2013. This is the first time that the company surpassed the figure of 20000 in any quarter. This sales performance has helped the company to achieve around 16% market share in electric cars and hybrids, which is significantly up from just 4% last year. These record sales were mainly driven by the progress made by its models C-Max hybrids and Fusion hybrids. The better designs, higher fuel economy and impressive technology are attracting more customers towards Ford.
With this performance, the company has marked its presence in one of the most profitable markets, hybrids. This is mainly because with hybrid cars, the opportunity to realize profit on optional packages increases significantly. Same is the case with Ford, as Fusion hybrid buyers are choosing the safety options, touch package, parking assist systems and much more at around twice the rate of traditional Fusion buyers. This will surely add up to Ford's bottom line in the future, along with the improved share of hybrid cars in the total revenue.
The company also disclosed that in its key hybrid markets, majority of its new customers are the ones who are switching from other brands. This gives Ford a huge opportunity to catch up with the hybrid market leader, Toyota Motor Corporation TM. Ford competes with Toyota's top selling hybrid model Prius, which had sales of more than 55,000 units in this year's first quarter. This was in addition to the sales of a few other hybrid models of Toyota. This clearly shows that Ford still has a long way to go to achieve a position similar to Toyota. On the other hand, Toyota is right on track with its ongoing plan to launch hybrid versions for its various models. Recently, the company launched 2013 models for Camry and Avalon, after reworking on efficiency and power. It is targeting at more than 20 new hybrid models to be launched globally by 2015. This move will further strengthen Toyota's position in this market.
Ford, along with its joint ventures in China, sold around 80,000 units in March, 2013. This was a whopping 65% increase from the last year. The company is aiming to keep up this momentum and targeting at 40%of its total revenue from China in the next few years. With this aim, Ford launched its model Kuga at the Guangzhou auto show in China with deliveries already started in January this year. Following this, recently, Ford Ecosport SUV and Ford Explore SUV were also introduced in the Chinese market. All these models are targeting at the mini-SUV market in China, which is dominated by Chinese auto-makers. Ford will not have much of the competition under this segment and, therefore can grab a higher market share. Furthermore, to fight with the German car-makers in China, Ford will launch its line of vehicles under its luxury brand Lincoln in 2014. The company's share in the luxury segment is almost non-existent in the region. I believe this move is in the right direction to capture the growing number of luxury buyers.
Ford in its expansion plans in China, will face a tough fight from General Motors Company (GM), which is leading the Chinese market among all the foreign players. The company reported sales of more than 290,000 units in March, 2013. The growth in sales was about 13% for March and about 9% for the first quarter of 2013. With this, General Motors reached an all time-high for its sales figures in China. The company is planning to further increase its revenue share from the region. It aims at increasing its sales by around 75% in the next three years. General Motors is currently looking for ventures in the region to enable it to hit on its target. Also, it is focusing on extending its luxury brand Cadillac and sports utility line of vehicles, and might bring the Chevrolet Corvette into China. I believe, Ford is still a long shot in China, but can surely compete with the top players with its handful of popular vehicles.
The stock's opportunity
The stock of Ford is trading at around 34% higher in the last six months. The investors seem quite confident about the company's operations while it recovers from the macro pressures existing in the past. The two factors discussed above i.e. Hybrid cars and the Chinese market can provide the much needed support to Ford to pull back its strings. I feel the investors can enjoy a smooth ride in this process, as there is much scope for growth. I recommend a buy for this stock, as a long-term investment.