Seeking Alpha
We cover over 5K calls/quarter
Profile| Send Message|
( followers)

Start Time: 10:07

End Time: 10:44

Ford Motor Company (NYSE:F)

August 2014 U.S. Sales Conference Call

September 3, 2014 10:07 AM ET

Executives

Erich Merkle - U.S. Sales Analyst

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

Emily Kolinski Morris - Senior Economist

Analysts

John Murphy - Bank of America Merrill Lynch

Brian Johnson - Barclays Capital

Colin Langan - UBS

Itay Michaeli - Citigroup

Christina Rogers - Wall Street Journal

Brad Wernle - Automotive News

Alisa Priddle - The Detroit Free Press

Bernie Woodall - Thomson Reuters

Keith Naughton - Bloomberg News

Operator

Good day ladies and gentlemen, and welcome to the Ford Monthly Sales Call. My name is Mark and I’ll be your operator today. And at this time, all participants are in a 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’d now like to turn the call over to Erich Merkle, for U.S Sales Analyst. Please proceed sir.

Erich Merkle

Thank you, Mark. Good morning everyone and welcome to Ford’s August 2014 sales call. Upon our early review of this morning’s incoming data we believe total industry sales including medium and heavy trucks likely closed out the month in the mid 17 million range on a seasonally adjusted annualized basis. This would translate into absolute sales of about 1.55 million to about 1.6 million vehicles, placing the industry up approximately 3% relative to August of 2013.

Retail continue to be very strong as we estimate August SAAR may have reached 15 million vehicles with retail representing approximately 88% of total sales. The industry appears to be very strong at this stage in the recovery.

Taking a look at some of the segment details, when we take a look at full-sized pickups, they’re very consistent at a 11.5% of the industry. This is inline with the segments share of industry in both July of 2014 and August of 2013. Average transaction prices in the segment are running $2,800 above year-ago levels. The industry is producing solid full-sized pickup volumes, coupled with really strong pricing.

Small utilities represented approximately 17.3% of the industry last month as with previous month’s small utilities are 2 percentage points higher than year-ago. We expect this growth to continue for the remainder of the year and temper a bit as we move into 2015. The long-term outlook remains favorable as a greater number of baby boomers are moving into empty nester status and towards smaller utilities, which appear to be a natural purchase for this population of consumers.

The pressure on passenger cars continues. Small cars represented just under 22% of the industry last month, which compares to just over 22% for the same month last year. Mid-sized cars represented approximately 16% of the industry in August compared to 16.2% a year-ago. And lastly premium segmentation was a bit softer in August, but we anticipate the typical cyclical increase as we enter the final few months of the year.

So with that industry overview and some of the segment guidance, I’m going to turn things over to John and John’s going to give you a little more detailed look at Ford and Lincoln.

John Felice

Well, thank you Erich and good morning everyone. Ford Motor Company sales totaled 222,174 vehicles in August, slightly ahead of year-ago results. Fleet sales were off 6%, which was due to our continued planned pullback in daily rental sales. Daily -- sales to daily rentals in the month of August were down 36% versus a year-ago.

Continuing on with fleet, commercial and government sales were up 4% and 9% respectively. Our retail sales were up 2% in August, held back by lower F-Series volume, which was down 4% against a strong year-over-year comparison.

As we’ve stated on previous calls, we’re carefully managing our inventory levels of F-Series, F-150, as we work through the changeover to the all new 2015 F-150. Our Dearborn truck plant stopped producing the current model F-150 late last month and our preparations for the all new F-150 are underway.

Even so, F-Series had another strong month in August with more than 68,000 vehicles sold. F-Series incentive spend was down $650 relative to year-ago and average transaction prices pushed 41,000 per truck last month. Lower F-Series sales along with our pullback in daily rental will continue to temper our sales a bit for the remainder of this year.

We delivered a strong month in what we call super segment vehicles; they include Fiesta, Focus, C-MAX, Fusion, and Escape. Our performance in these vehicles have really benefited in recent years from the strength of our line up. Our sales for the month of super segment vehicles totaled 89,620, a 10% gain compared to last year with retail sales up 16%.

Taking a look at performance of specific vehicles last month, Fusion sales continue to move higher achieving a record August sales month. With 29,452 vehicles sold, Fusion sales were up 19% while retail sales increased 23%. This represents a record August at both total and retail sales.

Fusion retail sales increased in every region in the country with the best performance coming from the West where retail sales were up 27%. Its been a great year for Fusion and Fusion is on track to produce its best annual sales and share results ever with sales on pace to top 300,000 for the first time this year.

Sales of Escapes totaled 28,996 vehicles, an increase of 9%. Retail had increased 23%. Like Fusion, both retail and total sales represent our best ever August levels.

Americas best selling mid-sized utility vehicle, Ford Explorer, sold 17,748 vehicles last month, representing a 25% gain. This is Explorer’s best August sales result going all the way back to 2004.

Interestingly 2004 was a much different time as three row utilities dominated the share of the market and small utilities really hadn’t taken hold yet. This makes Explorer’ sales performance even more impressive as small utilities now represent, as Erich mentioned, the largest segment in the industry. Explorer is also bringing younger buyers to our showroom, as the research data indicates more than a third of the buyers are under the age of 44.

Taking a closer look at Lincoln, at Lincoln our total sales were off slightly a year-over-year down 1% due to a plant reduction in fleet sales. Retail sales at Lincoln were up 5% year-over-year. Our all new Lincoln MKC continues with its sales momentum with 1,760 vehicles sold in August.

We saw an increase in MKC sales as our inventory levels improved throughout this past month. And they’re turning quickly as we have referenced before, days to turn is really strong on MKC at just 13 days.

As we move into September with good stock levels we’re really excited about the future sales as we roll out our national advertising campaign with Matthew McConaghey. Lincoln is indeed on a long journey as we continue to reinvent the brand, our dealers are really excited about the product line up and the strong response to see and everything we have planned for Lincoln.

As we’ve shared on prior calls, our balanced approach to the business continues. Our transaction prices are in line with year-ago levels. Our inventory levels are right where they need to be and we continue with our record number of new product changeovers this year.

Well that’s a quick look at Ford and Lincoln. And with that, I’d like to turn things over to Emily for an update on the economic front. Emily?

Emily Kolinski Morris

Thanks so much, John. Good morning, everyone. Well, the recent economic indicators remain very favorable and consistent with our expectations for growth in the 3% range during the second half of this year, for a full-year forecast of about 2%.

Supportive factors include continued robust manufacturing activity and gains in capital goods orders, gradually improving employment conditions with modest income growth reflected in steady consumer confidence reading and stabilization with the potential for modest gains in housing. These incoming indicators coupled with the supportive policy backdrop should provide positive momentum for the economy as we continue in the second half.

Let’s look briefly at some of the details of the recent releases. The September Purchasing Managers Index posted another solid increase reaching 59 this month for the highest index level since March of 2011. Continued strength in production and in the new orders components suggests good momentum for manufacturing in the coming months. Capital goods orders were also up with non-defense aircraft orders gaining 9.8% on a year-over-year basis in July as businesses invest in new productive assets.

Final August data from the University of Michigan Consumer Confidence Index, reflected a modest increase with the index moving back to the upper end of its recent range at 82.5. Upper income households, in particular, measured in this survey as those earning above $75,000 per year continue to be more optimistic regarding current and future income gains.

While there are still shortcomings in the labor market, conditions have improved significantly this year. New claims for unemployment insurance remain just below 300,000 on a four week moving average basis, supporting payroll growth in excess of 200,000 monthly including the 209,000 jobs created in July with August job reports due out this Friday.

The number of unemployed has decreased by 1.7 million people over the past 12 months. While within that, there has been some improvement in long-term unemployment which has declined 1.1 million over the same period. Nonetheless, levels of long-term, part time, and under employment remain undesirably high.

Finally, on housing, the data have improved somewhat in recent months, but the gains remain relatively restrained. July new home sales were down 2.4% sequentially, but were up 12.3% from the prior year. While existing home sales reached their highest level this year, although that was still down 4.3% on a year-over-year basis.

The Homebuilders Survey from NAHB rose to 2 points in August to its highest level since January with buyers -- more serious buyers entering the market according to the survey respondents. But mortgage credit continues to be a key constraining factor for the housing recovery, which has been cited in the recent NAHB surveys and is also reflected in data from the Fed’s Senior Loan Officers survey with the July results to that survey released just this past month.

A moderate fraction of domestic banks reporting -- reported easing their standards on prime residential mortgages, while most of the banks indicated that their standards for non-traditional mortgages and home equity lines of credit will relatively little changed and that lack of change means that the conditions remain at relatively tight levels. Although banks did report having experienced stronger demand for prime residential mortgages, which was the first gain in that measure since a year-ago and also a gain in demand for home equity lines credit for the first time since October of 2013.

So to recap on the industry, as Erich mentioned earlier, August total industry sales are estimated in the mid 70 million unit range that’s including medium and heavy trucks. Based on that estimate the six months moving average of sales would now approach 70 million units at an estimated 16.9 million units through August. Good macroeconomic fundamentals including the robust manufacturing activity, improving labor market conditions and continued supportive monetary policy have contributed to this improving trend.

And our 2014 sales projections remain in the range which was provided as part of our second quarter earnings release, we continue to expect total U.S industry sales in the range of 16.3 to 16.8 million units this year.

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

Erich Merkle

Thank you, Emily. And to go over a few housekeeping items, we are going to start off here with gross stock or our inventory. So if we take a look at August of 2014, we had 155,000 cars in gross stock, 307,000 trucks, 124,000 utilities, giving us a total of 586,000 vehicles representing a 69 day supply.

July of 2014 we had 175,000 cars in gross stock, trucks stood at 312,000; utilities were 126,000 giving us a grand total of 613,000 for the month of July 2014, translating into 75 day supply. Comparing to August 2014 to August of last year, in August of 2013 we had a 171,000 cars in gross stock, 232,000 trucks in gross stock, 132,000 utilities in gross stock, giving us a total of 535,000 vehicles translating into a days’ supply of 65.

Taking a look at our fleet as a percentage of our total sales, as we go through and we take a look at August of 2014, 20% of our -- fleet represented 20% of our total sales. That is -- was 10% for commercial, 6% for government and 4% for daily rental. Comparing this to August of 2013, if you take a look, our total was 21% -- fleet was 21% of our total, 10% was for commercial, 5% for government and 6% for daily rental. If we take a look at August 2014 calendar year-to-date, 29% is -- fleet made up 29% of our total sales, for commercial that was 13%, government 6%, daily rental 10%.Comparing this to August 2013 calendar year-to-date of last year, fleet was 30% of our total, 13% from commercial, 5% from government, and 12% from daily rental.

So with the housekeeping out of the way, Mark, let’s open lines up and take some of our first calls from the analyst community please.

Question-and-Answer Session

Operator

(Operator Instructions) Your first question comes from the line of John Murphy from Bank of America. 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 a first question on the F-Series, Erich. I mean as you mentioned that there was -- or it might have been John, I apologize. I can't remember who said it, but there was $41,000 was roughly the average transaction price for the F-Series in the month of August. Just curious what that was in July and what it was in August of 2013?

Erich Merkle

Sure. Let me take a look. So if we take a look at July, roughly John we were a little over 40,000 in July and in August we’re roughly -- we’re getting really close to 41,000. And if we take a look at our average transaction prices for F-Series relative to last year -- so that’s about $2,800 more than August of last year.

John Murphy - Bank of America Merrill Lynch

So it would fair to characterize the pricing in large pickups as fairly robust at this point or at least …?

John Felice

Yes, I think -- John, I think you’re absolutely spot on. What we’ve seen this year is in the truck full-sized pickup segment, strong pricing and that’s a combination of customers wanting more mix and content on the vehicles, new product launches in the segment and then also discipline on our part as we go through the changeover. As Erich mentioned or I mentioned in my earlier comments, solid transaction price in full-sized pickup with our incentive spend, despite being very late cycle being down about $650 year-over-year. So its been a very healthy environment.

John Murphy - Bank of America Merrill Lynch

And the inventory on the F-150s right now, what does that stand at?

John Felice

Our F-Series inventory is at 111 days supply rate now.

John Murphy - Bank of America Merrill Lynch

Okay. And then just lastly -- I’m sorry, yes.

John Felice

Yes John, just more importantly on days supply as planned, as we’ve discussed before we’ve been working on the -- not only the changeover to the new truck, but planning our inventory for quite sometime. We’re exactly where we want to be to get to through this extended changeover.

John Murphy - Bank of America Merrill Lynch

Okay. And then just lastly on the Fusion, I mean obviously it’s a great vehicle but it’s had a pretty recent surge in the last month or two or actually a couple of months. Is there anything that’s going on there as far as pricing or is it just brand awareness? And if you think about the Fusion is that a vehicle that ultimately you can trade people up into sort of a mid or large crossover utility vehicle?

John Felice

Yes, to touch on a couple of points there John, one of the things we’ve seen and we’ve mentioned it a little bit in our opening is, especially in the West Coast we’ve seen a strong, it’s the heartland of C, D segment and we’ve had really strong performance in the adoption of Fusion on the West Coast. So we’ve seen significant growth there. We’re on a quite a long run of good sales performance overall on Fusion. And in the showroom you do see a lot of cross-shop between small utilities and C, D or Fusion size segment. So with two a really strong product offering, one to punch between Fusion and Escape, it works really -- its a dynamic that works really well for us in the showroom and bringing new customers in especially in growth markets like the West Coast.

John Murphy - Bank of America Merrill Lynch

Thank you.

Erich Merkle

Yes, I’m sorry, John. Mark, could we take the next caller please?

Operator

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

Brian Johnson - Barclays Capital

Good morning. You’ve talked about strong pricing in the pickup truck segment. But I want to talk a bit about pricing in the car segment and the CUV segment. Can you give us a sense of A, where the pricing is overall in each of those segments? And B, if you’re seeing anything in terms of the dispersion of pricing power, e.g. around stronger pricing from either newer models, models with features like infotainment or active safety or anything that seems to be if say, car pricing is overall soft kind of bucking the trend?

John Felice

Well, John good question. Looking at the pricing environment I’ll really say there’s -- I’ll let Erich give some of the specific examples here in a moment. It’s really been a tale of three segments of the industry. As we touched on earlier, truck, full-size pickup and truck pricing has been very strong. We’ve seen exceptional demand in the utility segments both large and small and medium. So, I’d say pricing has held up very well there. The place we have seen more in competitive environment is on cars, without a doubt. Car’s has been -- where there’s been more intensity in the U.S. market this year. And with that I know Erich might want to join -- share some of the specifics, but it’s been a very good balance but different in each segment of the business.

Erich Merkle

Yes. And we have heard -- I mean it’s really difficult to determine content and what that value is in cars quite honestly Brian. But I can tell you, in terms of passenger cars, we’re starting to see some pricing decline or deteriorating in cars right now for this month, it’s essentially flat on a year over year basis of course, so it’s trying to hold its head above water. But when you look at the utility segment you’re looking at something where ATPs on year-over-year basis are up closer to $1000. And of course earlier we talked about pickup trucks and pickup truck average transaction prices are certainly -- there’s the most pricing power in that particular segment as pickup trucks are up $2800 on a year-over-year basis ATP.

John Felice

And John as you mentioned you had a follow up question on our new products driving some of those product opportunity, and I think that’s something we’re seeing in the industry and obviously sets up us very well with the record number of launches we have heading into 2015.

Brian Johnson - Barclays Capital

And I guess related to that, is there anything that as you look across the pricing results across models within the car segment where there’s either you or another manufacturer who seems to be bucking the negative trend in cars. And if so, what's driving it or is the data fairly uniform with the clients across the board?

Erich Merkle

Yes, I really can't give that kind of granularity because I’d have to speak about many of the different auto makers which I can't do Brian. So, we’ll just have to leave it at that.

Brian Johnson - Barclays Capital

Okay. Thanks.

Erich Merkle

Thank you, Brian. Mark, next caller please.

Operator

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

Colin Langan - UBS

Great. Thanks for taking my questions. Can I just follow up on the question on incentives? Can you give color on your ATPs in the car and utility segments for this month; I mean you seem to be in line on the truck side, full-size truck side?

John Felice

Yes, I don’t have that level of granularity with me Colin, but I’d be more than happy to help you out with it offline if you like.

Colin Langan - UBS

Okay. Do you have the overall ATP?

John Felice

Yes, I do have the overall -- I can certainly do that for you. So, if we take a look at our industry, so for Ford our overall incentive spend for August, so I’ll just give you incentives and I’ll give you ATPs all at the same time. But it was competitive. We were up approximately $250 from August of 2013, and down about $30 compared to July of 2014. Our average transaction prices for the month. We’re down about $450 with the year ago levels and down about $120 compared to July. But keep in mind the average transaction prices that we’re seeing right now, they’re running consistent on a year-to-date basis. But the decline that we’re seeing recently is really because of the lower sales mix of F-Series. So, keep in mind our sales mix for F-Series is lower than it was a year ago and that’s really what's making up that ATP decline.

Colin Langan - UBS

And how do your ATPs compare with the industry?

John Felice

Our ATPs are about a $1000 higher than that of the industry.

Colin Langan - UBS

But I mean you were down $450 year-over-year for ATP. The industry was …

John Felice

The industry, yes. If we take a look at the ATPs for the industry they’re up $920. The overall industry is right now -- right around $30,000 per vehicle and we’re operating close to $31,000.

Colin Langan - UBS

Okay. And then just on the SAAR for the month is there anything unusual because you’re at a pretty strong 17 million pace, anything unique in the month that we could consider onetime or is this the sustainable level?

John Felice

Well, Colin its -- as Emily mentioned we have seen a very, and a longer running rate. We’ve just seen almost 17 million SAAR, so it’s been very solid for an extended period of time. But August did set up very well, like a year ago we had an early Labor Day that fell into the sales month of August, so that really pumped up a lot of activity. And as you look at August it started solid. It remained solid and closed very strong. So, all around it was just a very good month for the industry.

Colin Langan - UBS

Okay. Thank you very much.

Erich Merkle

Thank you, Colin. Mark, we’re going to take one more call from the analyst community and then we’re going to turn it over to the folks in the media please.

Operator

Your last question from the analyst is Itay Michaeli from Citi. Please proceed.

Itay Michaeli - Citigroup

Great, thanks. Good morning everyone.

John Felice

Good morning, Itay.

Itay Michaeli - Citigroup

Good morning. Just a big picture question. I think to Colin’s question you mentioned industry ATPs were up about $900 year-on-year. It looks like the retail SAAR may hit around 50 million. I mean, what do you think August sort of says about where we are in the cycle. I mean if you look we are still seeing ATP growth even last month as well in July with accelerating retail SAAR. Are you becoming sort of incrementally more optimistic about the sustainability of the cycles the next couple of years or do you think its just sort of a seasonality factor there?

Emily Kolinski Morris

I’ll start on that -- I wouldn’t want to a few years ahead based on August sales results. But I think in terms of the current condition again if you look at the macroeconomics fundamentals they’re all flashing green at this time and combined with good conditions in the industry I think its, in terms of continued replacement demand being in the market as well as discretionary demand potentially coming back given the strong fundamentals underlying the economy because its just a very good picture right now.

Itay Michaeli - Citigroup

Sure. Then maybe a similar question, Emily, on the pickup truck segment it looks like we’re kind of leveling off 11.5%, but that’s off what seems to be very strong industry ATPs for pretty much every OEM. How do you think that, that whole dynamic between industry pricing and pickup truck mix will fair in the next several months to a year just given the new product which I presume will continue to support higher pricing, but then also some of the competitive activity we might see in the next 12 months. Just maybe a thought on how you think about that dynamic between pricing and sales mix for pickups industry wide?

Emily Kolinski Morris

Well I’ll let some of our sales experts here talk a little bit about the product side. But in terms of the fundamentals I guess yes it sounds a little bit funny to talk about increasing sales and increasing prices. But again in an environment with strong underlying demand that certainly is possible and that’s what we’re observing right now.

John Felice

Yes, and this is John speaking. When you see, when you take a look at the absolute full size pickup sales on a year-over-year basis, segmentation appears to be about flat on a year-over-year basis to your comment at about the mid 11% range. But with the industry being stronger, total pickup sales has increased and that’s despite the pricing we’ve seen in the segment. So, that with the pending improvement continue to improve in the housing industry and in our upcoming launches the all F-150 we remain very optimistic about the full size segment opportunity.

Itay Michaeli - Citigroup

That’s very helpful. Thanks so much.

Erich Merkle

Thank you. Mark, we’re going to start taking some calls from the media community and so, if we could get our first call from the media, please.

Operator

The first call is from Christina Rogers from Wall Street Journal. Please proceed.

Christina Rogers - Wall Street Journal

Hi, there. Thanks for taking our questions this morning. I just wanted to kind of circle back to the point you made about this split in the market place. And I was just wondering I mean it seems to me that what you’re seeing here is you have a very much a pull market on the truck and utility side, but the passenger car side is becoming more of a push market. I was just wondering if you could share some observations what you’re seeing on that front; and also if you see this more of a permanent shift. I mean right now you have got a lot of these utilities get kind of the same gas mileages as some of the mid-sized sedans. So I’m just wondering if this is something that we’re going to see long-term?

Erich Merkle

Sure, Christina, I’ll go ahead and take that. If we take a look at some of the various industries as we call, and we look at passenger car, we look at utilities and we look at full-size pickup trucks, you’ll see that full-size pickup trucks there’s a lot of demand for full-size pickup trucks which I think shows in the pricing of the pickup trucks. We’re also seeing great demand for utilities, particularly the small utilities as I mentioned at the beginning of the call and we think that that small utility trend will continue as baby boomers continue to become empty nesters and they seem to naturally flow into these small utilities. So, again it gets back to kind of the simple law of supply and demand. You’ve got greater supply at utilities, particularly the small ones which is making for a more favorable pricing environment. Unfortunately it pulls something from cars and that’s where you’re seeing some of the weaker pricing is coming out of the passenger car segment. So, right now it would appear as though going forward at least into the near term that it’s going to be -- pricing is going to be much better in full-size pickups and in utilities than you’ll likely see in passenger cars.

Christina Rogers - Wall Street Journal

Do you see this, I mean going forward the kind of -- the shift in demand with Sedans versus SUVs has been largely subject to gas prices but now when you have some of the utilities with the same fuel economy as sedans I mean, it doesn’t seem like that they’re as sensitive. Do you think this is something more of a permanent shift going forward?

John Felice

Yes, well along with some of the – this is John, Christina. Along with some of the demographic trends and versatility, Erich referenced in the move of car to SUVs. I think you nailed it in your opening question which was the improvement of fuel economy in small utilities and the breadth of product. When you take a product, a great product like Ford Escape or the 1.6-liter EcoBoost you get great fuel economy. And so consumers are -- we’re seeing a lot of cross-shop between the C, D segment and also small utility. So, we picked up about two points of share thus far this year in small utilities. It will taper off at some point but that growth trend seems to be more systemic than it is just a blip.

Christina Rogers - Wall Street Journal

Okay. Thank you.

Erich Merkle

Okay. Thank you, Christina. Mark, our next caller please.

Operator

Your next question comes from the line of Brad Wernle from Automotive News. Please proceed.

Brad Wernle - Automotive News

Hi, guys. Just a quick question on the Lincoln’s side the MKZ down 22% is that mostly due to fleet and how many folks who might be Z customers are going over the MKC when they come into the showroom?

John Felice

Yes, Brad good morning, this is John. On a year-to-date basis as we have talked about in prior calls we have been on a really strong run with Z kind of year-to-date basis we’re up about 24% year-over-year and have picked up about 1.5 in share. Fleet was down pretty significantly in the month of August, retail was down, but down less. And part of that was just right in the midst of going through the changeover from ’14 to ’15 model year and quite frankly in some of the key markets around the country given the sales pace of strong sales pace of ’14, we did have a few gaps in inventory. Those were self correcting as we went through the months, so we have a very good outlook going forward.

Brad Wernle - Automotive News

Thank you.

Erich Merkle

Thank you, Brad. Mark, our next caller, please.

Operator

Your next question comes from the line of Alisa Priddle from The Detroit Free Press. Please proceed, ma’am.

Alisa Priddle - The Detroit Free Press

Good morning. Actually my question was a bit similar to what Christina had asked. Just wondering if you think that the mid-size car segment is going to become a real battleground for the rest of the year even more so than what we’ve been seeing to date?

John Felice

Alisa, I think we’re going to see the dynamics continue which we’ve seen as -- not necessarily battleground. I think it’s going to continue to be though a very competitive segment as we go forward. So that’s the dynamic we’ve seen in the last 90, 120 days.

Alisa Priddle - The Detroit Free Press

But do you not sort of see it ramping up even more so than what you’ve seen?

John Felice

No, if you take a look at the inventory levels around the industry it’s not out of balanced totally. And again most manufacturer have been rational, it’s just relative to trucks and utilities a bit more competitive than the other segments of the industry.

Alisa Priddle - The Detroit Free Press

And also I just wanted to check on the Police Interceptor, is that because of your deliberate pullback on fleet?

John Felice

Well now actually Police Interceptors and I don’t know if I have the numbers right in front of me, have performed very, very well this year. And our pullback in fleet has been really focused on our rental business. It’s all been part of our plan to manage our business profitably, improve our residual values and quite frankly fuel retail demand we’ve had on some of our hot products like Escape. So, Interceptor our commercial and government business has shown gains year-over-year and has been very strong.

Alisa Priddle - The Detroit Free Press

So, it could just be a seasonal thing this month, between big contracts?

John Felice

Yes, this month commercial and government sales were actually up on a year-over-year basis. We were down 36% in rental this month.

Alisa Priddle - The Detroit Free Press

Okay. All right. Thank you.

Erich Merkle

Okay. Thank you, Alisa. Mark, next caller please.

Operator

Your next question comes from the line of Bernie Woodall from Thomson Reuters. Please proceed sir.

Bernie Woodall - Thomson Reuters

Good morning, Ford. I was wondering what you think about the rest of the year on the pickup truck sales. Do you think that GM might overtake you on pickup sales for the rest of the year?

Erich Merkle

Bernie, good morning this is John. No, again we’re coming into this last four months of the year with a commanding lead in overall leadership and on our pace to our 38th year. And again through careful planning, we’re well positioned and right on plan with our inventory levels to go through this exciting change over to the new F-150. So on plan and really excited about progressing through this changeover.

Bernie Woodall - Thomson Reuters

Go ahead Erich, I’m sorry.

Erich Merkle

I just look at the calendar year to date results Bernie. So, okay?

Bernie Woodall - Thomson Reuters

Okay. And then the fourth quarter, I guess they’re going to slip ahead in the fourth quarter perhaps then?

Erich Merkle

Yes, we’ll leave that to the fourth quarter. We haven’t reported that yet.

Bernie Woodall - Thomson Reuters

Okay. Thanks.

Erich Merkle

Okay. Thanks. We’re going to take one more call from the media folks and then we’re going to wrap it up, Mark.

Operator

Keith Naughton from Bloomberg. Please proceed, sir.

Keith Naughton - Bloomberg News

Hi. John, you mentioned that Fusion is on a pace to top 300,000 for the first time I think you said.

John Felice

That’s right.

Keith Naughton - Bloomberg News

And I’m just wondering if you think you can outsell any of the Japanese three, particularly maybe the Accord.

John Felice

Well, not really. I haven’t looked at the competitive levels, Keith. We’re kind of working our plan with Fusion and with the additional capacity we have at Flat Rock and the demand we see in the market. We’re very encouraged by the results, seeing the year-over-year gains in sales and share but we’re just going to work our numbers and look the final score card to tell the balance.

Keith Naughton - Bloomberg News

Okay. Thanks.

Erich Merkle

Okay. Thank you, Keith. Thank you very much everyone for joining us today. We look forward to talking to everybody next month about September sales results. So, everyone have a great day. Thank you very much, and it’s great working with your Mark.

Operator

Thank you, sir. (Operator Instructions) Thank you for your participation. You may now disconnect. Have a great day.

Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. (Until now investors have had to pay thousands of dollars in subscription fees for transcripts.) So our reproduction policy is as follows: You may quote up to 400 words of any transcript on the condition that you attribute the transcript to Seeking Alpha and either link to the original transcript or to www.SeekingAlpha.com. All other use is prohibited.

THE INFORMATION CONTAINED HERE IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY'S CONFERENCE CALL, CONFERENCE PRESENTATION OR OTHER AUDIO PRESENTATION, AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE AUDIO PRESENTATIONS. IN NO WAY DOES SEEKING ALPHA ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY'S AUDIO PRESENTATION ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS.

If you have any additional questions about our online transcripts, please contact us at: transcripts@seekingalpha.com. Thank you!

Source: Ford Motor's (F) August 2014 U.S. Sales Conference Call- (Transcript)
This Transcript
All Transcripts