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Ford Motor Company (NYSE:F)

May 2014 U.S. Sales Conference Call

June 3, 2014 10:00 ET

Executives

Erich Merkle - U.S. Sales Analyst

John Felice - Vice President, U.S. Marketing, Sales and Service

Emily Kolinski Morris - Senior Economist

Analysts

Colin Langan - UBS

Liz Suzuki - Bank of America

Brian Johnson - Barclays

Pat Archambault - Goldman Sachs

Itay Michaeli - Citigroup

Rebecca Ruiz - New York Times

David Zoia - WardsAuto

Phil LeBeau - CNBC

Jennifer Keiper - FOX News Radio

Operator

Ladies and gentlemen good morning and thank you all for joining the Ford Monthly Sales Call. My name is Ryan. I will be the operator in today’s event. And at this time, all participants are in listen-only mode. Later, we will be opening the lines to facilitate questions and answers. (Operator Instructions) And as a reminder, we are recording the call for replay.

And now, I will pass it over to Mr. Erich Merkle, U.S. Sales Analysis. Please proceed.

Erich Merkle - U.S. Sales Analyst

Thank you, Ryan. Welcome to Ford’s May 2014 sales call and good morning everyone. Upon early review of industry data, we estimate that May will come in, in the high 16 million to 17 million total vehicle SAAR including medium and heavy trucks. This would result in a range of approximately 1.6 million to maybe about 1.63 million total vehicles, which is about a 9% to 10% increase over May of last year. The retail SAAR appears to be coming in right around mid to high 13 million vehicle mark, representing about 80% of the total industry last month. This would be an approximate increase of 10% to 11% relative to a year ago. Adjusted for seasonality, May looks to be stronger than April at the macro level and more in line with March.

If we look at some of the segment details, full-size pickups last month appear to be on par with April, but a bit softer relative to year ago levels. At approximately 11.5%, full-size pickups are off from last year’s 12% of industry. However, when looking at the increases in average transaction prices for the full-size pickup truck segment, we are able to get a more complete picture of the segment’s strength. Average transaction prices are up more than $3,000 from a year ago, which makes the segment much stronger than the sales rate would suggest.

Small utilities continued to dominate at the expense of small and midsize cars representing approximately 16.6% of the industry in May compared to just 14.6% last year. Small cars showed some seasonal strength at 21.6% of industry. And this would compare with about 22.5% last year. Midsize sedans were flat at 16.1% of the industry relative to year ago levels and on a sequential basis. That gives you kind of a quick overview of top line of the industry.

So, with that in mind, I am going to turn things over to John and he is going to provide you some additional color on what we saw in the month of May. John?

John Felice - Vice President, U.S. Marketing, Sales and Service

Well, thank you Erich, and good morning, everyone. Ford Motor Company sales totaled 254,084 vehicles in May, which is up 3% compared to year ago levels. Overall, fleet was down 2% and this is consistent with our plan for the year at reduced rental fleet volume, which was down 9% this month in May.

Ford F-Series delivered a strong month with 68,520 vehicles sold. Year-over-year, sales were down 4% as planned as we work to manage our inventories due to the all-new F-150 launch. Our plan entails maximizing current F-150 production, along with building additional F-Series stock as we move through the summer and fall months ahead of changeover. Even with slightly lower F-Series volume, our total retail sales in May were up 6% on the strength of Ford Fusion, Escape and Explorer as well as Lincoln’s MKC. This gave us our best May retail sales performance since 2004.

Taking a quick look at performance of individual models, Fusion beat its most recent monthly sales record set this prior March of this year as it’s sales totaled 33,881 vehicles for the month of May representing a 15% increase year-over-year versus a year ago. Retail sales for Fusions were up in every region of the country contributing to this record and saw the largest increases again in the West with our best monthly sales results ever, a 44% increase. This helps provide a record overall retail sales for Fusions with gains this month of 27%. Our dealers in California are seeing Fusion success firsthand, which is the largest car market in the country. California outperformed all of the areas with Fusion retail sales increasing 50%.

Escape also had its best monthly sales performance breaking through the 30,000 vehicle mark for the first time with 31,896 vehicles sold. This represents a 10% increase over year ago volume. Explorer followed through on a strong April performance again posting its best monthly sales since July of 2005 with 20,346 vehicles sold. This represents the first time the new Explorer has exceeded the 20,000 units vehicle mark in a month.

New York, our largest market area for Explorer posted a 27% increase in retail. California dealers reported the largest retail increase for Explorer, a gain of 35%. In New York and California, Explorer is bringing new customers to Ford with competitive conquest rates operating at the very high level, 55%. Explorer and Escape helped us to achieve our best utility monthly sales performance since July of 2005.

With our biggest launch year in Ford’s history, part of goal this year is to transform our commercial business which started with Transit Connect. Transit Connect was up 14% last month with 4,222 vehicles sold with the retail up 54%. This is our best sales performance ever for the all new Transit Connect. Our dealers are extremely pleased with the reception they are getting on – from retail buyers on Transit Connect and they are also very excited about taking delivery of the all new Transit van which should be arriving in our showrooms soon.

Taking a closer look at Lincoln, Lincoln sales increased 21% in May. Our dealers are seeing continued momentum with Lincoln MKZ. Its sales were up 6% for a record performance in May. At retail MKZ sales were up 13% with the largest gains coming from our Western region were up 33%. We actually booked our first MKZ sales during the final week of May, but the launch is now starting to ramp up. As I talk to Lincoln dealers around the country, they tell me they are seeing a lot of momentum with Z relative to the luxury competitors and with our all new MKZ arriving at dealer lots daily and also soon coming the Navigator would be hitting showrooms soon.

We have a lot of work to do in work ahead with Lincoln, but the excitement level around MKZ momentum and the arrival of the all new MKZ utility vehicle is very encouraging for all of us and our dealers. That’s a quick look at Ford and Lincoln, and now I would like to turn things to Emily for a quick update on the economic front. Emily?

Emily Kolinski Morris - Senior Economist

Great. Thanks so much John. The incoming U.S. indicators are consistent with a substantial rebound in growth for the current quarter as stated downwardly revised first quarter real GDP growth rate of negative 1%. Manufacturing activity remains robust. Recent readings on housing have improved slightly and the labor market continues its gradual recovery. These incoming indicators coupled with a supportive policy backdrop should provide positive momentum for the economy in the current quarter and into the second half.

So let’s look briefly at some of the details of the recent releases. The May Purchasing Managers Index was up 0.5 point to 55.4 with strength in readings on production and new orders. Some survey respondents did not tightening of supplies and raw materials pricing however. The University of Michigan Consumer Sentiment readings declined slightly in May but remains in line with the year-to-date average. Notably consumers’ expectations of economic activity were slightly above the year-to-date average, while income expectations remained relatively subdued.

Assessments of vehicle buying conditions declined slightly as it is on pricing and interest rates were somewhat less favorable. Consistent with the lackluster income expectations, real personal disposable income was up just 0.20% in April. While still challenging labor market conditions have continued to improve modestly. The four week moving average of jobless claims at most recent weeks were at 311,500 which was their lowest level since 2007 and is well below the 350,000 benchmark that’s generally consistent with favorable job creation condition. And that of course was evidenced by the 288,000 jobs created in April with the May report on jobs to be released at the end of this week.

Housing data for April has also resumed more modest growth trajectory after very weak readings on housing indicators in the first quarter. Housing starts returned above 1 million units in April, a 13% improvement from the prior month and about 26% above the year ago level, with the game led by multi-family construction. Home sales remained somewhat soft however with April new home sales up 6% from the prior months, but down 4% over a year ago, while existing home sales were up 1% from the prior months and down 7% on a year-over-year basis. The National Homebuilders Survey remained in its recent range falling back 1.46 in May. Although builders did express some optimism about improving conditions as consumer confidence in incomes are expected to recover later this year. So, that’s the highlights on the economic front.

In terms of the industry sales projections, our view for the year remains in the range of 16 million to 17 million units for total industry sales, including medium and heavy trucks. And as Erich mentioned earlier, the May industry sales estimates in the high 16 million to possibly 17 million unit range again including medium and heavy trucks would be the third consecutive months that sales have been above the recent six months moving average kind of sales, which still sits at around 16.1 million units.

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

Erich Merkle - U.S. Sales Analyst

Thank you, Emily. And we will take you through a few housekeeping items right now for a moment and we are going to start off with taking a look at our fleet business. When we take a look at May, fleet as a percentage of our total sales represented 31%, 13% of that was from commercial, 6% was government and 12% was daily rental. This compares to last year May of 2013 when 33% of our total sales were made up of fleet, 14% was commercial, 5% was government, and 14% was daily rental.

Shifting over to calendar year-to-date and we look at year-to-date, our fleet as a percent of our total sales is at 31%. It’s 14% for commercial, 5% for government, and 12% for daily rental. Taking a look at May year-to-date in 2013, 32% was the percent fleet of our total, 14% was for commercial, 4% was government, and 14% was rental.

Moving over to our growth stocks, when we take a look at May 2014 cars, we had 193,000 cars in inventory, 298,000 trucks, 143,000 utilities giving us a total for the month of 634,000 and translating into a day supply of 65. This compares to April 2014 when we had 213,000 cars, 287,000 trucks, 160,000 utilities giving us a total of 660,000 vehicles. That translated into 81 days supply. Comparing it to May of 2013 a year ago, cars were at 163,000, trucks were at 258,000, utilities were at 137,000 giving us a total at that time of 558,000 vehicles, which translated into 59 days supply.

So, with the housekeeping items out of the way, Ryan, we are going to start opening up the line to the analysts’ community first and we are open to taking our first caller.

Question-and-Answer Session

Operator

Okay. (Operator Instructions) And our first question comes through from Colin Langan with UBS.

Colin Langan - UBS

Great, thanks for taking my questions. Any color on the full-size pickup segment, I think you mentioned that you actually expected F-150 to be down, it seems like your competitors did a little bit better, is there any color on incentives in this segment and how we should think about that product through the rest of the year if you anticipated the decline this month?

John Felice

Sure, thanks Colin. Good morning. It’s John. What we saw as Erich mentioned in his opening comments, the full-size pickup was down just slightly from a year ago was in the mid 11% of industry range, so a very solid performance overall. Transaction prices as referenced have been very strong in the full-size pickup segment. So, I’d sum up the full-size pickup segment as robust. Specifically to forward-looking our performance, we are very pleased with the overall performance this month. We are up 68,000 unit sales. It was a very solid pickup month, up a strong comp a year ago. We did over 70,000 last year. And as you know importantly when we look at the overall performance with that strong performance on a volume basis within the segment we had the lowest incentive spend and highest transaction prices in both unders, overs and total truck. So again what we are really focusing on is managing our business for profitability over the long haul as we have managed the F-150 transition. So we are well positioned with inventory, are well positioned with our profitability and performance and our plan is very solid.

Colin Langan - UBS

And on that you mentioned the lowest incentive spend, any color on your incentives in pickups and the overall – maybe your incentives overall versus the industry as well?

Erich Merkle

Yes, sure Colin. When you start taking a look at our incentive spend around pickups, we are as John mentioned we have the lowest incentive spend in some of the highest ATPs in the segment, but our incentive spend is lower than our other – of the three major competitors we are lower than the three major competitors. So as we look at the incentive spend for F series, incentives declined approximately $570 versus May of last year with incentives at approximately $4,000 per truck for the month May. This compared with April 2014 with F series incentives increasing about $200 in May compared to April, so they went up a little bit sequentially, but they are down pretty significantly year-over-year. And our average transaction prices on our trucks were about $40,000 per truck. As we take a look at the overall incentive spending for the segment as a whole full-sized pickup truck incentive spend for the segment was up about $140 in May compared with April and it was down about $470 over a year ago. So that kind of – that should give you some good color in terms of how the industry is going.

John Felice

Yes, Colin this is John again just to clarify too. I made an earlier comment on transaction prices, ours being the highest in the segment as well as the lowest incentive spend that again is referencing the three large volume players that would be Ford, Chevy and (Ram) I just want to make that clarification.

Colin Langan - UBS

Okay. And any color on the pace of sales to the month, it seems like this all came in a bit stronger than expected was the Memorial Day weekend a big factor in that?

Erich Merkle

Yes, I will break it down into three distinct categories Colin. The first third of the month is strong, the second third of the month is strong and the third part of the month even stronger. It was a very good month for the industry. It started very solidly as we came into the month of May. We did – we had a very good for us and the industry a strong Memorial Day weekend around activity, traffic and volume, but then the last weekend of the month was also good traffic, lot of interest in new vehicles and a lot of sales. May was a bit unique and that we had five weekends in the month of May. So the month setup very well for an overall industry performance and obviously as we take a look at June it’s going to look a little bit different. This all factors will probably be in similar ranges but the volume may be down to even to next year because of the way the weekends fall in the calendar year this year.

Colin Langan - UBS

Okay. It’s very helpful. Thank you very much.

John Felice

Thank you, Colin. Ryan next caller please.

Operator

Next question comes though from John Murphy with Bank of America.

Liz Suzuki - Bank of America

Good morning. This is Liz Suzuki on for John. I just have one question regarding inventories, if Ford ultimately makes a decision to cut production schedule a little bit, when would that decision need to be made and would it likely come in the form of extending this summer shutdown period?

John Felice

Yes, Liz I am not sure if I am absolutely with you on the question, but what we are doing obviously as we move forward is balancing production with mixed demand going forward. And where we are in terms of the overall inventory levels, we feel very good on where we are in inventories right now. We – I think we are in the mid-60 days supply, Erich I think was referenced earlier heading into the summer months. So we are not in a position right now to be cutting production. We are very balanced on where we are today.

Liz Suzuki - Bank of America

Great. Thank you. And on the F-150 you mentioned you will be building stock starting in the summer through the fall ahead of the launch of the model year 15th, but there were some comments about 90,000 units of production will be lost from retooling the factories so what’s the timing of that production loss?

John Felice

Well, we haven’t announced Liz, specific timing, but we have announced this year we will have 13 weeks of downtime associated with the changeover to the new F-150. So what we are doing as we have been planning this for a long time as we have been building our inventories to help us get through this transition period not only at Dearborn Assembly but into this year and into next year as we go to Kansas City and the changeover there. So it’s all part of managing this changeover and ensuring we have adequate availability to meet market demand.

Liz Suzuki - Bank of America

Okay, thank you.

Erich Merkle

Ryan, next caller please.

Operator

Next question comes from Brian Johnson with Barclays.

Brian Johnson - Barclays

Yes, good morning. You mentioned overall that you are seeing some seasonally strong sales in small cars didn’t seem to spillover to Focus, a little bit in Fiesta. I guess a couple of questions. One, what’s going on and my usual question between the Fiesta, Focus and Fusion? And two, you see very strong Escape sales, do you have data that would say that perhaps consumers who might have considered a Focus or a Fusion are actually tilting towards the very fuel efficient Escape and if so how does that kind of affect your thinking over not just a month-to-month, but the roles of the SUVs versus sedans in your portfolio?

John Felice

Well, thanks Brian. I will give you a few thoughts on that. So, Fiesta actually had a very good month. We are up 8% on a year-over-year basis and the fresh new has been very well received in the market. So, we are encouraged on how the products. And we have seen that trend as you introduced fresh new products into the marketplace, you get good response. Specifically, on Focus, again as you noticed in our discussion, we were down 15% on year-over-year that can easily be explained linking to our earlier discussion on rental bond, we were down 35% in fleet. We are just marginally down retail about 1%. As Erich referenced, there has been pressure on the C segment this year and I will come back to that in just a moment. So, when you look at our share performance within the C segment, it’s actually been relatively stable in the month of May with the year-to-date results as well as where we were a year ago, so we are pleased with the Focus’ performance.

Coming back to your follow-on question on what’s happening in the broader small car segment, I think you are absolutely right, Brian. We have seen again small utilities are up 2% on a year-over-year basis in terms of segmentation of the industry. I think you attributed some of that new product entry when you think of things like the fuel economy you can get with the EcoBoost 1.6-liter Escape more consumers brings that into more consumers’ shopping list as well as you are likely seeing some C or small car customers shopping the C sedan segment, because as we have seen this year, the merchandising activity has been fairly aggressive. And some competitors have been pretty strong in terms of incentive spend allowing C customers to consider moving up.

Brian Johnson - Barclays

Okay. So, those two things together put the squeeze on the C. And when you say small SUVs, where does that get you on the issue of – should there be something a step smaller than the Escape in the U.S. market?

John Felice

Well, we haven’t made any announcements, Brian, but we are always looking at our portfolio to bring world-class products to market.

Brian Johnson - Barclays

Okay, thanks.

Erich Merkle

Thank you, Brian. Ryan, next caller please.

Operator

Certainly, sir. Next we have Pat Archambault with Goldman Sachs.

Pat Archambault - Goldman Sachs

Thank you. Good morning. Just two quick ones from my end. First, back to the F-Series, I know that you had been planning on putting in place a few measures to try and increase the supply of F-Series and eek out a little bit more production to minimize the constraints from the changeover? How is that going, would be my first question? And then second follow-up I have just a housekeeping one, so I might understand that the seasonal adjusters that have been put out by the BEA for this month actually don’t really factor in five weekends, so the sort of high-teens SAAR maybe a little bit overstated. Is that kind of the correct interpretation? Thanks.

John Felice

Thanks, Patrick. I will take the first one on F-150. Obviously, again planning for such a big changeover is something we have been focused on for long time and that begun really with the addition of the third shift to Kansas City late last year allowing us to actually take advantage of building more inventory. And we are getting – while we have no we are getting great support working with our suppliers and manufacturing to maximize the production of F-150 through this period. So, again, with all those things brought in line, we are right on plan of where we want to be in terms of heading into this changeover, which again is not only getting to the end of this year with the changeover to assembly, but also next year in the Kansas City. And with Emily on the second part?

Emily Kolinski Morris

Yes. On the SAAR factors, Patrick, that’s correct. The BEA factors recognized the number of selling days, but they are not going to distinguish between a Friday and a Monday and a Tuesday. So, there might be a little bit of an effect there. I think the other point that we are making with that comment though is that to keep it in mind as you compare the May results to June.

Pat Archambault - Goldman Sachs

Sure. No, yes that might make a big difference. I guess, sorry if I can just do one follow-up on the F-Series, switching topics back and forth here so if you have got great support for suppliers that does imply that there is an ability to sort of produce more of the heritage models than what was originally sort of on plan, is that correct?

John Felice

No, I mean actually Patrick we have been and we continue to review opportunities with our supplier and manufacturing. Right now, we are fully loaded. We are going to produce everything that we can on the current F-150.

Pat Archambault - Goldman Sachs

Alright, I will leave it at that. Thanks guys.

John Felice

Thank you.

Erich Merkle

Thank you. We are going to take one more caller from the analyst community Ryan and we are going to turn it over to folks in the media.

Operator

Alright, it sounds good. Our next question comes through from Itay Michaeli with Citigroup.

Itay Michaeli - Citigroup

Great. Thanks. Good morning. So just two quick ones for me, one did you have the estimate of total industry ATPs the year-over-year gain there and also what the year-over-year ATP was on the F-150 I think you mentioned 40,000 was the after transaction price just curious what the year-over-year there was?

Erich Merkle

Sure, you bet. So let me take a look. So the ATP you are looking for the industry, Itay?

Itay Michaeli - Citigroup

Yes.

Erich Merkle

Okay. So for the industry the ATP sequentially was down about $160 sequentially for the industry and up about $1,200 year-over-year for the industry. Okay and as it relates to F-series, if we take a look at – and so I am just going to – give me just a moment. Yes, it would be up year-over-year it’s going to be a little over $2,000 about $2,100.

Itay Michaeli - Citigroup

Great. Let me address a follow-on to those, but thanks for that data. So the ATPs industry wide are actually improving in the last couple of months as the retails are also seems to be improving just curious on what, how you are interpreting that in terms of your overall medium term view for pent up demand in general, I mean is this sort of incrementally encouraging that we are seeing I think two consecutive months of pretty strong industry ATPs as our retail SAAR is improving I think there is something else that’s kind of going on in those numbers?

Erich Merkle

And I think a couple of things I will share maybe have Emily comment also Patrick obviously again we are very encouraged what we have seen in a robust industry thus far this year especially after other (indiscernible) started in January and February. I will break through maybe a couple of buckets. One would be we are seeing strong transaction price in full size pickup and some of that topically over and overall we are seeing that the cars be a little moderate in terms of pricing environment because the competitive environment has been a bit more aggressive especially in the C, D segment in terms of spending by some competitors. So overall it’s been very solid. Truck is very, very solid in terms of overall pricing, may be a little less so on cars.

Itay Michaeli - Citigroup

That’s very helpful.

Emily Kolinski Morris

Itay this is Emily just to add a little bit. I think that’s a good observation regarding the prices and the retail started increasing. And it would suggest that the demand is becoming a little bit more elastic, in other words we are getting away from sort of the pent up replacement demand that is required, that’s forced because of the vehicles aging and we are getting into a little bit more discretionary purchases on the part of consumers. So it would be consistent with that kind of a favorable trend in the industry.

Itay Michaeli - Citigroup

Absolutely, that’s very helpful. Thanks to you all

John Felice

Thank you.

Erich Merkle

Thank you, Itay. Ryan we are going to open it up to the folks in the media right now and take our first call from them.

Operator

(Operator Instructions) And I have nobody in queue so far.

Erich Merkle

Okay. Well, we are going to – if we have no other questions we will – I am sorry you said Ryan.

Operator

We do have just a couple of stragglers coming in now just if you want to go and take those.

Erich Merkle

Sure.

Operator

Okay. So first one comes through from Rebecca Ruiz, New York Times.

Rebecca Ruiz - New York Times

Hi, thanks all. I have a question for you about your favorite subject of recalls, not just by General Motors but throughout the industry, Ford as you all know has year-to-date recalled more cars than it did all of last year and I am just wondering how in your view that’s affected sales this month?

John Felice

Well, Rebecca good morning. This is John. I would say there has been a lot of recall activity in this industry this year, but I think from a Ford perspective what we are always going to do is what’s right for to the customer first and foremost. And when in terms of the impact on the overall industry or more importantly Ford sales, again as we discussed today, the industry is very robust. I look at our performance this month we are very pleased with the overall performance with record performance in Fusion, Escape and other product lines. So, yes, I think again you are seeing elevated sensitivity in the industry, but at the same time, hasn’t seem to come through to any impact in overall sales performance.

Erich Merkle

Great, thank you. Next call please.

Operator

Next, we have David Zoia with WardsAuto.

David Zoia - WardsAuto

Hi, there. I just wondered if you could give any color so far I know it’s early on the MKC in terms of availability, are you out there with mostly high-end models and is there any say about the traffic so far?

John Felice

Yes, David, hi, this is John. I will be very brief, because given the fact we are just starting to arrive in dealership, it’s a bit too early to get a read in terms of the market demand in insurance themselves, but I will tell you again as I referenced in my opening remarks, in terms of the dealer response, the initial customer response and some of the inquiries and traffic we have seen through this pre-launch period, we are very encouraged about the MKC heading today in showrooms and also obviously one of the hottest segments in premium utility. So, maybe next month, we can share a little more texture, but so far we are very pleased.

Erich Merkle

Okay, great. Thank you, David. Ryan, do we have anymore callers on the line?

Operator

We have a few more coming through here. Next, we have Phil LeBeau with CNBC.

Phil LeBeau - CNBC

Hey, guys. Quick question. The average transaction price, what did you have for the question earlier was for the industry I know you gave the numbers up and down, but you didn’t give the dollar amounts for the industry or for the F-Series?

Erich Merkle

The dollar amount for the F-Series is about $40,000 as transaction price. And if we look at the industry, it was in May $30,000 for the entire industry.

John Felice

Right.

Phil LeBeau - CNBC

And incentives, where are you guys seeing the industry head right now the average incentives?

Erich Merkle

Yes, on the incentive front, Phil, it’s pretty even with year ago, it’s about $80 up and compared to – sequentially compared to April it’s up about $100.

Phil LeBeau - CNBC

And totaling at what amount on average?

Erich Merkle

Totaling at $2,900.

John Felice

Phil, this is John. You are looking at the industry spend a lot there is ups and downs in individual segment. It has been pretty stable this year in the $2,800 to $2,900 spending level. So, we haven’t seen any significant trends up or down over a longer time horizon say four to five months.

Phil LeBeau - CNBC

Great, thanks guys.

John Felice

Thanks, Phil.

Erich Merkle

Ryan, take one more caller please.

Operator

Next, we have Jennifer Keiper with FOX News Radio.

Jennifer Keiper - FOX News Radio

Hi, guys. Thanks for taking my question. A couple of questions for you. Number one, the Asian automakers were really putting the push on with regard to incentives and it seemed like American automakers were feeling some pressure, you are still feeling that pressure? And the other question is you talked about May being a very good month and then you mentioned June, do you think that’s going to be more so-so, because of the way the calendar fell that you are not going to have the holiday weekend so forth? Is it – it doesn’t sound like you expect June to be gangbusters?

John Felice

Yes, Jennifer, I guess, let me reframe that, because we were encouraged on what we saw in terms of the overall – I will take the second question first in terms of the industry pace. I think it’s more to your comment, more of anomaly of the way the calendar falls. We had five weekends in May. We saw great demand in the industry going through. June will be a little bit unique, because the SAARs will probably be comparable in terms of run-rate, seasonally adjusted rate, but the way the weekends fall, the increase we saw in a month over month basis maybe down a bit. So, that’s what we are working through in taking a look at, but there is nothing fundamentally in demand, it’s just the way the calendar falls with five weekends in May, so sounding and going forward.

When you look at you had referenced some of the competitors, as we have talked about on prior calls, we are seeing and talking to segments of the industry more competitive activity, especially as we have shared on prior calls in segments like CD, where we are seeing some of the other competitors being more aggressive in incentive spend and also lower transaction price.

Jennifer Keiper - FOX News Radio

Thank you very much.

John Felice

Thank you.

Erich Merkle - U.S. Sales Analyst

Thank you very much, Jennifer. And with that, we are going to wrap up this month’s call. Thank you for joining us. And Ryan, it was a pleasure working with you today and we will look forward to talking to everybody next month when we do a breakdown of June sales. Thank you. Have a good day everyone.

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