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Executives

Erich Merkle - U.S. Sales Analyst

John Felice - VP, U.S. Marketing, Sales and Service

Emily Kolinski Morris - Senior Economist

Analysts

Brian Johnson - Barclays

John Murphy - Bank of America Merrill Lynch

Adam Jonas - Morgan Stanley

Rod Lache - Deutsche Bank

Colin Langan - UBS

Tom Krisher - Associated Press

Deepa Seetharaman - Reuters

Christina Rogers - Wall Street Journal

Keith Naughton - Bloomberg

Ford Motor Company (F) November 2013 U.S. Sales Conference Call December 3, 2013 10:00 AM ET

Operator

Good day ladies and gentlemen and welcome to the Ford Monthly Sales Conference Call. My name is Cilia and I’ll 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 conference over to your host for today Mr. Erich Merkle, U.S. Sales Analyst. Please proceed sir.

Erich Merkle

Thank you Cilia and good morning everyone. Welcome to Ford's November 2013 sales call. Based on our early morning read of November data, we estimate the month finished at approximately 1.25 million total vehicles translating into a solid mid 16 million vehicles SAAR for the month, of course including medium and heavy trucks. If this holds, November sales would be up approximately 7% over levels from a year ago.

Looking at the retail side, we estimate a SAAR in the high 30 million vehicle range which would comprise of about 84% of the industry for the month. November was fairly typical producing a strong sales lift towards the end of the month around the Thanksgiving holiday weekend. It should be noted the month continued to show a market that is experiencing a good deal of resilience particularly as we compare to October.

Taking a look at some of the segment level details, full sized pickups continue to perform representing about 12.5% of the industry in November this compares to 11.8% for November 2012 and is consistent with the October levels. Small cars showed some weakness to operating at approximately 20% of the industry for the month this is slightly lower than last year's 21% of the industry. The mid-sized car segment represented approximately 14.5% of the industry for the months which is a 1 point less than 2012.

Small utilities continued extending gains as the segment represents just over 15.5% of the industry for November, November’s percent of the industry is approximately 2 fold points higher than the 13.5% of industry reported last November. Small utilities are now operating at their highest levels ever accounting for approximately half of all utility vehicles sold in America. We believe again that this trend will continue as empty-nester baby boomers continue shifting towards smaller utility vehicles.

Now here provide you with some more perspective as what happen for the month of November is John Felice.

John Felice

Well thank you Erich and good morning everyone. Ford Motor Company sales totaled 190,449 vehicles in November providing a 7% increase over a year ago November levels. Ford retail sales were particularly strong again in November with 147,021 vehicles sold making the months our best November retail performance since 2004. And as you may remember last month in October we had a similar strong retail result, again our best since 2004.

We continue to see strong performance on the past year car side of the business with retail car sales experiencing their best November performance since 2002. Passenger cars have been instrumental in growing our retail coastal share this year. In fact Ford brand retail share gains on the coast are greater than any other domestic or Japanese brand in the industry since 2008 with a 2 percentage point gain in retail share in the coastal regions around the country.

The refreshed Fiesta continues to gain market share posting record November sales with 4,642 vehicles sold, Fiestas continues to reach on buyers primarily on the West Coast. Fiestas largest sales regions in the country or region in the country is Los Angeles where retail sales were up 20% this past month while markets such as Phoenix and San Francisco were up 71% and 33% respectively. And importantly, our competitive conquest rate continues to be very high at over 60% for Fiesta with our strongest competitive conquest coming from Toyota in the LA region.

We also had another strong month for Fusion with a 51% year-over-year increase with 22,839 vehicles sold, this represents Fusion’s best ever November in the first time the car has surpassed the 20,000 vehicle mark in the month of November. Our dealers are seeing strong growth for Fusion on the Coast, retail sales of Fusions were up 103% in the Los Angeles region 96% in San Francisco and 72% in Seattle. In the Orlando and Atlantic regions Fusion retail sales were up 68% and 44% respectively.

Again our largest competitive conquest brand is Toyota and it’s happening in Los Angeles which is one of our fastest growing regions in the country.

Turning to trucks as we close our 2013, F-Series is on pace to be America’s best selling pick up with the 37th straight years. In November F-Series marked the seventh straight month of sales above the 60,000 truck level with 65,501 vehicles sold. A 16% increase over November a year ago. Ford averaged one F-Series sale every 40 second in the month of November.

As we look across the various markets, F-Series outsold its closer competitor in every region in the country. In fact based on total vehicle registrations through September of this year Ford has outsold the second best selling pick up in the central region in the country by 56%, in the east by 64% and in the Southwest by 74%. In the west, F-Series has outsold its closest competitor by almost a 100%. This outcome of F-Series averaged transaction price of this year January through November are up approximately $500 over last year, averaging close to $38,000 per truck, the strongest in the industry through the calendar year 2013. We continue to build our dominant position with F-Series pick-ups.

Looking at Lincoln, sales rose a solid 17% November led by another strong month of MKZ performance. MKZ sales increased a 114% with 2,854 vehicles sold. We continue to be encouraged by the November sales results and the great feedback received during the New York reveal event featuring the MKZ small crossovers. We are very excited to get this new product to market, but we realize the reinvention of Lincoln brand is a journey to be measured over the course of the next several years.

That's a quick look at both Ford and Lincoln and now I’d like to turn things over to Emily for an update on our economic environment, Emily?

Emily Kolinski Morris

Great. Thank you John and good morning everyone. As we move toward your end, the incoming indicators have improved somewhat following the dislocations we observed earlier this fall. The November purchasing managers index rose to 57.3 with notable gains and the employment component and also in new orders offsetting the weak signal we saw in the October capital goods orders report. The November University of Michigan Consumer Sentiment Reading also improved nearly two-point from the prior months to 75.1, although there is still 10 points below the most recent peak in July of this year.

The gains were due primarily to an improved outlook among upper income households. Readings on vehicle buying conditions ease slightly from the prior month and negative references to government policies remained unfavorable although retreating from the record levels that we saw in October. This evolving consumer environment was reflected in holiday weekend retail sales estimates which were mixed with some additional difficulty and comparison due to the Thanksgiving Day openings. Weekend sales were estimated to decline slightly about 3% according to the National Retail Federation although early data from Cyber Monday sales indicate strong year over year growth in online purchases.

On the housing front these data continue to lag a bit due to shutdown effect, but seem to point to the maturing recovery. The pace of existing home sales growth declined for a second month in October, but remained up 6% compared with the year ago. We won't see data on new home sales for September until December 4th, when it will be released with the October data. But it appears that the tight supply is keeping prices high and maybe contributing to the moderation in sale.

Our home prices represented by the Case-Shiller Home Price Index rose by 13.3% in September as compared to a year ago which was a seventh consecutive month of double-digit price increases leaving average prices now at mid 2004 levels or about 20% below the 2006 peak. Leasings and home values are an important for us to support for household well. The most recent four week moving average of initial jobless claims is at 331,750 in the week of November 23 and weekly claims came down again by 10,000 to 316,000. The pace of job gains is about 1.7% over a year ago, feeling stable but modest and we'll get another read on this of course this Friday.

So, on net the data are consistent with the U.S. economy growing in a 1.5% to 2% range this year and on the industry, as Erich mentioned earlier, we estimate that November sales were in the mid 16 million unit range including medium and heavy trucks. Sleazing out some of the recent volatility and looking at these data on a six months moving average basis this monthly gain would contribute to a modest increase in the trajectory after having flattened out in the past few months.

So with that summary let me turn it back to Erich.

Erich Merkle

Thank you, Emily. We are going to go over a few housekeeping items at this point. So we will start off with our fleet data. So as we look at fleet as a percentage of our total sales and we look at the month of November fleet was 23% of our total sales, 13% for commercial, 4% for government and 6% for daily rental. Comparing to November of 2012 fleet was 24% of our total sales that would have been 14% for commercial, 4% for government and 6% for daily rental.

When we start looking at calendar year-to-date January through November fleet as a percentage of our total sales were 29% that would translate into 13% for commercial, 5% for government and 11% for daily rental. This compares to January through November last year of 30% for total, 14% for commercial, 5% for government and 11% for daily rental.

Taking a look at our stock situation, we start looking at gross stock inventory. For cars in the month of November we had 236,000 cars in stock, 268,000 trucks, 178,000 utilities, giving us a total of 682,000 vehicles in inventory for the month of November. This translates into a day supply of 89. Looking at October of 2013, the previous month cars were at 216,000, trucks were at 262,000, utilities at 166,000, giving us the total of 644,000 vehicles this translated into a day supply of 91. Looking at November of 2012, cars were at 142,000, trucks at 236,000 utilities at 139,000, giving us a total of 517,000 vehicles, that translated into a day supply of 73.

Taking a look at our production guidance for the first quarter of 2014, we are guiding to total North American vehicle production of 770,000 vehicles for the first quarter. Trucks are 275,000 our plans utilities 235,000 and cars at 260,000. For the first quarter of 2014 with 770,000 vehicles planned that would be a 2% decline from the first quarter of 2013.

So with that in mind Cilia now with the house keeping has taken care, let’s turn it over, we are going to start with the folks and the analyst community start taking questions. Thank you.

Question-and-Answer Session

Operator

Thank you. (Operator Instructions). The first question comes from the line of Brian Johnson from Barclays. Please proceed.

Brian Johnson - Barclays

Yes, good morning. I just want to explore, how you are thinking about your car strategy, referencing inventory versus production versus incentives. So I think a couple of questions. One, you seem to sort of booking the focus with very good Fiesta and Fusion results. Do you think the focus is just kind of stuck in the middle, can you reposition that vehicle anyway or is this month just an aberration between Focus and Fiesta? And then my second question just is in kind of a slower growing crowded car market, what's your strategy and what are you are seeing vis-à-vis competitors about incentives and commercial activities?

Erich Merkle

Okay. Well Brain, in terms of your first question, our mix is a little more weighted towards some of our newest products last month as you mentioned as both Fiesta and Fusion were up quite significantly. So overall though our passenger cars for the month of November were up and in fact, passenger cars were up 6% and they were also up 6% at retail, so it was a strong month for passenger cars overall.

And really when we start taking to look at Focus, we look at it from more of a -- we are one Ford and we are one global Ford and we look at it from a global perspective. And if you take a look at Focus, it’s been the bestselling vehicle nameplate globally now for the first six months of this year and it was the bestselling vehicle name plate all of last year in 2012.

John Felice

And Brian, to build on Eric’s comments, you also touched on the transaction price within the time span. Again, we’re absolutely focused on delivering the strong operating margin, you’ve see in here in the Americas. And when you look at the transaction prices, again, among those vehicle lines are very well positioned in our showroom and among the higher bands of transaction price across the small car range. So we feel really good on how we are positioned, and how we are hitting the market with this new product line up in cars.

Brian Johnson - Barclays

Okay. Are you seeing increase to add competitive activity there in incentives or free -- things not charging for things used to be costly oxidants like (inaudible) or active safety?

John Felice

Yeah. We are seeing that Brian, it's -- especially when you look at the dynamics and Erich touched on it earlier, what's happening in the industry, we've seen some weakness in the CD segment overall. If you look at the industry, inventory levels are up for all manufacturers. So we are seeing a strong competitive environment in the CD segment.

Brian Johnson - Barclays

Okay. Thanks.

John Felice

Okay.

Brian Johnson - Barclays

Okay. Thanks.

Erich Merkle

Thank you, Brian. Cilia, next caller please?

Operator

The next question comes from the line of John Murphy, Bank of America Merrill Lynch. Please proceed.

John Murphy - Bank of America Merrill Lynch

Good morning guys.

Erich Merkle

Good morning John.

John Murphy - Bank of America Merrill Lynch

Just one quick housekeeping question, Erich, you gave us the totals for the production for trucks used and cars in the first quarter. I was just wondering, could you just give us the year over year change for those three segments?

Erich Merkle

You bet. So if we take a look at year over year change for cars, down 4%, for utilities down 4%, trucks up 2%.

John Murphy - Bank of America Merrill Lynch

Okay. That's very helpful. Then just a second question as we look at Lincoln, your newer, I mean the newer products that are going better, what are we looking at for this year for or actually for 2014 for launches? Are we just looking at the MKC and then there will be more after that, I'm just trying to understand what the product launch schedule is for Lincoln?

Erich Merkle

Yeah. We're looking at the MKC as you know for next year. And that’s all we’ve announced at this point in time, at this juncture, John. We have, keep in mind, we do have plans for Lincoln. We're looking at how many vehicles, John?

John Felice

Four. Yeah, we’ll have four introductions over the next four years. But at this point, John, again what's been announced is the MKC which we're really looking forward to it entering the market and it looks the hardest segment in the luxury industry.

Erich Merkle

Yeah.

John Murphy - Bank of America Merrill Lynch

But there is an additional four over the next four years as well; is that correct?

John Felice

Yeah, including four with MKC, MKC in total, correct.

John Murphy - Bank of America Merrill Lynch

Got you. Then the second question, the E-Series is doing particularly well I am just curious what we are looking at for when that vehicle actually stops production and what you are thinking about positioning the transit vans to backfill there, what you are seeing from the competitive sectors? There are new competitors coming into the van segment as you guys are moving away from the E-Series to the transit vehicles, so I’m just trying to understand the thought process there and when that vehicle actually ends.

John Felice

Yeah, John, we haven’t formally announced the end date of E-Series production but obviously you are aware we are very excited next year about the announcement of our transformation of our van line up with Transit Connect and the new Transit.

But you are absolutely right; E-Series is performing well. It’s not surprising it was this past month it was up 21% on a year-over-year basis. And that’s not surprising with the improvement we have seen in the economy and the business environment as well as you get toward the year end period of time businesses often for tax purposes will step up and buy additional commercial vehicles. So we are planning a very smooth transition between E-Series given our dominant position in the full-size van category but again very excited about having the fuel efficient all new line up of Transit Connect and Transit to meet the needs of our customers into next year.

John Murphy - Bank of America Merrill Lynch

Okay. And then just lastly on fleet, is there anything big that would come in December as far as fleet deliveries as far as the timing perspective, are we looking at something that will be relatively steady state through December?

Erich Merkle

I mean it should be relatively steady John because take a look, generally speaking you will see a lot of commercial customers towards the end of the year as John just said. They will start making these decisions for tax purposes as we close out the year. So not just with things like E-Series but also F-Series and pickups, lot of trucks.

John Murphy - Bank of America Merrill Lynch

So seasonally, a bit stronger but nothing on a year-over-year basis that would through the numbers off in December?

Erich Merkle

We are not -- yeah, we are not talking about December just yet but where seasonally we would see that uptick like we would every year in December, correct?

John Murphy - Bank of America Merrill Lynch

Great. Thank you very much.

Erich Merkle

Okay, thank you John. Cilia, next caller please.

Operator

The next question comes from the line of Adam Jonas, Morgan Stanley. Please proceed.

Adam Jonas - Morgan Stanley

Hey, thanks everybody. First, a couple of questions on the production outlook. You usually produce more vehicles in 1Q and 4Q and at least you have each year since 2009. I was just curious if there is anything to point out in terms of inventory levels or launches that driving the flattish sequential outlook despite that in the normal trend?

Erich Merkle

Well, we’ve got two of those things. I mean basically you are looking at -- yes, you’ve got some -- we are looking to manage our inventory, manage supply with demand always, we are paying very close attention to that Adam. And yes, we have vehicle launches coming up next year. But so in terms of the production, we are monitoring that very closely for the first quarter, and we can always have the ability, if we choose to add some back if necessary. And you can see, if we have a nice November, we start seeing some strength in December again, a lot of that can change as we move forward, depending on what the sales environment looks like.

Adam Jonas - Morgan Stanley

Thanks, Erich. And maybe more specifically on the trucks up 2%, we do read into that that you are may be trying to build some inventory ahead of the changeover later next year or how do we think about potential changeover on a truck and the cadence there?

Erich Merkle

Yeah, I wouldn’t give it a lot of thought. I mean trucks are -- you look at trucks in their hot right now, there is -- John just mentioned our E-Series -- our E-series sales and we are also looking at some really strong F-Series sales number, so yeah.

John Felice

Yeah. I’d just add Adam to Erich’s point. We’ve seen a very strong and robust full-size pickup industry and segment and again posting our seventh consecutive month with 60,000 sale. This is just seasonal inventory, being prepared for the marketplace that we’re expecting.

Adam Jonas - Morgan Stanley

Thanks. Just one another question on 4Q production, you reiterate the 770, but we know you’ve been taking longer holiday shutdowns or planning longer holiday shutdowns to just inventory in the Fusion and the Focus in response of some aggression from some competitors. I just want to kind of confirm that your reiterated 4Q schedule includes, both extended holiday shutdowns for some lines?

Erich Merkle

That's correct, it does.

Adam Jonas - Morgan Stanley

Okay. And then on that point, any other color for -- as the month wound-up on what Toyota was doing in terms of their aggressive incentives on the Camry and across the Hybrid line up, did that accelerate, did that continue anything else you want to add there?

Erich Merkle

Yeah, Adam, I won’t single-out any competitor but I think what you will see or did see in the industry as November came to close is a very aggressive competitive environment. Most manufactures, not surprise, came in a very strong promotional activity in the final period of the month to support what was a strong close and the Thanksgiving period.

Adam Jonas - Morgan Stanley

Thanks very much.

Erich Merkle

Okay. Thank you, Adam. Cilia, we’re going to take another call from the analyst community please.

Operator

Thank you. The next question comes from the line of Rod Lache, Deutsche Bank. Please proceed.

Rod Lache - Deutsche Bank

Can you hear me?

Erich Merkle

Yeah. We can hear you.

Rod Lache - Deutsche Bank

So, I just had a question on -- just a follow up question on the Q1 production. You brought up, I mean in the second half of the year, when I think your annualize run rate of capacity you added was around 200,000 units, how do we think about that add in the context of the down production year-over-year on Q1? Were some of those additions maybe going a little too far or the year-over-year production declined in lines that you didn’t add capacity, just how should we think about the Q1 production in light of the capacity you actually put in place in the second half of 2013?

John Felice

Well, just a couple of thoughts; I think Erich touched on this, a couple of themes that had an impact on the first quarter planned production. As he mentioned, we are taking some facility down weeks in preparation for product changeover next year and are allowing for some downtime proactively to manage our inventory levels. Again, we remain very committed to matching supply to demand. And when you take both of those factors together, basically slight decline in first quarter production, because we do have a very active launch year next year with the strong product cadence. And again, we will have the ability to add back some of the capacity or production we've taken out again to better align supply with demand, if the market is there and we have the need.

Erich Merkle

Right. I think that last point that John just made is very important. We do have the ability to add back in but for rate now we are going to watch this market very carefully as we match supply with demand. Okay?

Rod Lache - Deutsche Bank

All right. Can I just sneak in one more? Erich, what did you see as far as pickup truck incentives in the month?

Erich Merkle

Yes, sure. When we take a look at pickup trucks -- just looking for it, give me just a moment here. We look at overall for full-size pickup truck segment -- okay, we're looking at -- there was about -- it was down little bit sequentially for the overall segment and down probably about $800 or about a $1,000 overall for the segment year-over-year.

Rod Lache - Deutsche Bank

Okay.

Erich Merkle

Year-over-year.

Rod Lache - Deutsche Bank

Thank you.

Erich Merkle

Okay. Thank you very much. Cilia, we're going to take one more call from the analyst community before we turn it over to the folks in the media. Thank you.

Operator

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

Colin Langan - UBS

Great. Thanks for taking my question. Could you give any color on overall incentives for both Ford and the industry in the month, you said that they were up in the 12 numbers or directional color?

John Felice

Sure, you bet. So if we take a look, so our incentives spend in November was competitive. It was unchanged from October and up about $600 compared to November of last year. However, keep in mind that our average transaction prices continue to increase and are up about $650 compared to year ago.

Year-to-date, our average transaction prices -- I think it’s another very important point from a business perspective are up approximately $700 this year January to November and that’s combined with a six-tenth point gain in market share.

So when we look at our average transaction prices and put that in context with the incentive spend, you will see that there really isn’t any other automaker that had, that has increased their average transaction prices by this amount and has really produced anything more than say a tenth of a point gain in share.

Colin Langan - UBS

And any color on the industry if you are up 600 year-over-year in November, the industry up a lot more?

John Felice

Sure. If you take a look at the industry, the industry was essentially flat from an incentive spend perspective sequentially and down about $100 compared to last year.

Colin Langan - UBS

Okay. And then any color, you talked about the strong exit, I heard it correct that the first half of the year was actually -- last half of the month was very weak. So, is that the case this is actually flat to down in the first half and then just an extremely strong exit because of the incentives at the end of the month, any sort of color on cadence?

John Felice

Yeah. Just a little color, Colin, I would say the industry was actually very robust throughout the month. It started out as you would expect in any month November at a pretty good clip, but we did to your point see a very strong level of activity around the Thanksgiving holiday and Black Friday events from many manufacturers. So it did pick up steam in the last few days of the month, but it was pretty good throughout the month.

Colin Langan - UBS

Okay. And then just last one. You said earlier that the retail sale was high $30 million; I mean how does that compared to last year trying to get a sense of how much…?

John Felice

Last year, you got it there? It was 12. Yeah year ago, it was in the high 12, 12.9, Colin. So, we are expecting it when all set and done a pretty significant increase in the retail industry. Again when you look we’ve had some ups and downs, I think we all recall October’s totals are was up a bit and October the 15.5, but you look at sequentially how this year is progressing the industry it’s been a very good story first quarter to 15.6, second quarter to 15.7, third quarter to 16.1 and again somewhere in the mid 16 to November when you look at that linear progression in business it’s been very solid.

Colin Langan - UBS

Okay. All right, thank you very much.

Erich Merkle

Thank you, Colin. Cilia, we are going to turn the call over to the folks in the media at this point.

Operator

Thank you. The next question comes from Tom Krisher, Associated Press. Please proceed.

Tom Krisher - Associated Press

-- gentlemen and Erich, welcome to (inaudible)

Erich Merkle

Thank you, Tom.

Tom Krisher - Associated Press

You are welcome. Earlier you mentioned that small SUVs were taking some big share gains and you expect that to continue, yet the Escape was flat down slightly, what’s going on with Escape?

John Felice

Yeah. Tom, this is John speaking. Well again, as we mentioned on last month and again on this call, the small SUV segment has been running very strong, above 15% to four months now. When you look at Escape performance this month, we are very pleased that was up just slightly almost even with a year ago, but that’s -- our retail sales were actually up 9% year-over-year, our fleet sales were down on a pretty significant basis. So, retail very strong, fleet sales just based on a cadence of deliveries, we’re down on a year-over-year basis.

Tom Krisher - Associated Press

Okay. That makes sense. And then the Fusion had a pretty good size increase, yet you are turning production at the same time. Does that mean that there will be some changes later on are you selling more Fusions in the fleet?

John Felice

Well, Tom again that comes back to the same that we’re always going to match, supply the demand. The good news is we’re very pleased with the Fusion performance with a record November. We saw both very strong retail performance, and again on the coastal regions.

One of the things that we do have to keep an eye on, which we mentioned a bit earlier is the CD segment in generally, while we've talked about the strength in the small SUVs, we have seen a continuous decline in the overall CD segment. And obviously as the segment or the pie gets smaller, we've got to make sure we stay very well position with inventory.

Tom Krisher - Associated Press

Very good. And then one last one real quick, is this a good time to get a deal on a small to midsized cars of the CD segment?

John Felice

If it’s a Ford, absolutely today.

Erich Merkle

We can work something out for you, Tom.

Tom Krisher - Associated Press

Okay. Thank you.

Erich Merkle

Okay. Thank you, Tom. Cilia, next caller please.

Operator

The next question comes from the line of Deepa Seetharaman, Reuters. Please proceed.

Deepa Seetharaman - Reuters

Thank you for taking the call. Erich, I was wondering if you could just clarify some things for me. If the industry incentives are down $100 compared to last year, where are you seeing these aggressive incentives in the last month? I mean is it predominantly in the CD segment or are there other segments? Yeah, just trying to understand how there could be two progressive incentives that contributed to a strong close, but then also have incentives down $100 compared to last year? Thanks.

Erich Merkle

Sure, sure. So, it really depends, it’s a bit of -- there is multiple segments within the industry. One is, if you start taking a look at CDs, the CD segment gets very much very aggressive. But when you look at other segments, we were seeing some declines actually in terms of incentive spend. So it's really just kind of a mixed bag, Deepa. So, there are some areas where you're seeing some real aggressive activity and other areas where you're seeing some pull back.

John Felice

The other piece I would add to that, the numbers we're sighting given the cadence of the available industry information were through mid November. And as we’ve discussed earlier, we saw a pretty significant incentive activity as the month progressed. So, I think when it’s all set and done and we look at the full month November incentive spend, we'll probably see some increase in overall industry spent.

Deepa Seetharaman - Reuters

Right. Thank you.

Erich Merkle

Okay. Thank you, Deepa. Cilia, next caller please.

Operator

The next question comes from the line of Christina Rogers, Wall Street Journal. Please proceed.

Christina Rogers - Wall Street Journal

Hi guys. Thanks for taking our questions. Just I want to go back, we were seeing or there are some reports out there that the Japanese have been pretty aggressive on their pricing. And I was just wondering how that's affecting you guys? And if you could talk a little bit about what you might be doing in response?

John Felice

Sure. I mean, yes certainly. If we take a look, there is definitely some aggressiveness out there as it depends on what segment you're looking at. But certainly we are going to see some aggressive incentive spend particularly as it relates to the CD or the midsized cars segment. And we're monitoring the situation very carefully. And we’re constantly looking to match supply with demand. But at the end of the day we have a real commitment to making sure that we have this thing what we always refer to as profitable growth.

So for instance, when you look at vehicle like the Fusion, the average transaction price for the Fusion is really at the top of that segment and is because of the vehicle has a lot of value out there in customers and we want to make sure that we keep those residual values strong and not degrade the brand.

Erich Merkle

I would add -- well go ahead, I am sorry.

Christina Rogers - Wall Street Journal

No, go ahead.

Erich Merkle

I will just add as we previously discussed we believe the exchange rates and values should be determined by the marketplace not governments. And we have started to see in the industry some top-line pricing actions on some of the vehicle lines such as hybrids and midsized sedans by some of the individual Japanese OEMs probably that could be related to the weakening yen. So we are going to monitor that situation again respond appropriate within the marketplace.

Christina Rogers - Wall Street Journal

Also I just want to go back to some of the aggressive promotions at the end of the month. Kind of looking forward, I mean what does that signal to you? It sounds like there is a lot of activity over Thanksgiving weekend in terms of the deals. Going forward into December and into the next year, I mean kind of how does that color your outlook?

Erich Merkle

Yeah. I think when you look at the overall incentive spend, well John pointed out earlier that from the reports that we have that takes us only to a certain point of November it looks like the industry is down about $100 year-over-year, but not likelihood for the month. It was probably consistent, maybe up just a bit. I think a lot is going to depend on what happens to sales as we move forward certainly we had a very good sales month here November. And that will certainly do a lot from an incentive perspective in terms of how the industry response to the demand impulse.

John Felice

Yeah. And we expect to see a similar cadence in December that’s just really the industry pattern. Typically about half of the industry business comes after the Christmas holiday. So it’s a very good week for the industry overall. And we expect that again continued strength into December would probably a very strong close to the year.

And you know really when you look at the back-end load for November and we will see another back-end load sales month in December, this isn’t really anything new, I wouldn’t say that this is something that we haven’t seen in the past, we see this every year.

Christina Rogers - Wall Street Journal

Okay. Thank you.

Erich Merkle

Okay. Thank you very much. Cilia, next caller please.

Operator

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

Keith Naughton - Bloomberg

Hi guys. John, you mentioned earlier that it looks like F series is -- can hit 37 straight years of [25] for you guys. You set that sort of price with the Mustang which I think went for a couple of decades as the sports car sales leader, I wonder if that -- it looks like it’s kind of lose now again this year, will you be able to recover that lead next year with the new car?

John Felice

We are going to -- as everyone knows and it’s really an exciting moment for us because here in just a few days we are going to be showing the all new Mustang. So we are going to again we are going to manage our business, we will be very happy, I mean it be great if we get that title, but we are not going to do whatever it takes to get there. So we are going to launch the car and we are going to let it speak for itself. We think that we are really excited about it. We think the market is going to be very excited about it as well.

Erich Merkle

Thank you, Keith. Cilia, we are going to take one more call from the media and then we are going to wrap things up here.

Operator

At this time, there are no other media questions in queue.

Erich Merkle

Okay. Well, very good, I appreciate everyone joining us for the November sales call. We will look forward to talking to everybody next month when we review December sales. And take care and have a great day. And Cilia, it’s a pleasure working with you. Thank you very much.

Operator

Thank you. Ladies and gentlemen that conclude today’s conference. Thank you for your participation. You may now disconnect. Have a great day.

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Source: Ford Motor's Management Presents at November 2013 U.S. Sales Conference (Transcript)
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