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Ford Motor Company (F)

October 03, 2011 1:00 pm ET

Executives

Ken Czubay - Vice President of US Marketing Sales & Service

Jenny Lin -

Erich Merkle -

Analysts

Todd Lassa - MotorTrend

DeeAnn Durbin

Joe Szczesny

Mike Ramsey

Peter Nesvold - Bear Stearns

Ravi Shanker - Morgan Stanley, Research Division

Keith Naughton - Bloomberg

Himanshu Patel - JP Morgan Chase & Co, Research Division

Chrissie Thompson

John Murphy - BofA Merrill Lynch, Research Division

Christopher J. Ceraso - Crédit Suisse AG, Research Division

Patrick Archambault - Goldman Sachs Group Inc., Research Division

Dan Galves - Deutsche Bank AG, Research Division

Operator

Good day, ladies and gentlemen, and welcome to the fourth monthly sales call. My name is Modesta, and I will be your coordinator for today. [Operator Instructions] 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, Modesta, and welcome. Welcome to the September sales call. This is my -- as many of you will know, my name is Erich Merkle. This is my first call here with Ford Motor. And it's been -- I know many of you, but I look forward to working with many of you as we go forward into the months and years that are in front of us.

But I wanted to start things off today here with taking a look at sales, which is the reason you're all here. We estimate that annualized sales for the month of September was about -- came in at about 13 million to 13.1 million units. It was a solid month, as you will know. The cadence, we saw that the cadence strengthened as the month progressed, and September shows relatively good signs with the industry growing from what was not such a solid month in August of about 12.3 million units.

We continue to see a restocking of inventories, and we're seeing an increase in merchandising activity around the industry, which we believe was part of what helped us here in the month of September. For Ford, September sales totaled 175,199 units, up 9% from a year ago. Ford brand sales were up 14%, with utilities and pickups posting up the biggest increases with sales gains of 35% and 15%, respectively. Ford fleet mix in September was 28% of sales, with daily rental representing just 9% of Ford's total sales.

Now at this point in time, a person that you're all very familiar with, I'd like to turn it over to Ken Czubay for some additional color around sales.

Ken Czubay

Thank you, Erich, and welcome to your first call.

Erich Merkle

Thank you, Ken. Thank you.

Ken Czubay

It's going to be a lot of fun and you're going to do a great job. September was a solid month for Ford and the industry. As Erich pointed out, we experienced the same improvement in cadence during the course of the month that we believe the industry did, with pickups and utilities especially coming on strong as we moved toward the end of September.

Ford brand utilities were up 35% in September with 48,798 vehicles sold. Year-to-date, Ford brand utilities are up 30%. We're proud of Ford's #1 position in this important segment. It's really been a dynamic one so far this year. The utility has changed throughout the years, and our continued leadership proves that Ford has been able to adapt quickly to the changing needs of our customers.

Utility customers are looking for a balance between strong capability and fuel efficiency. It's won from one end to that to another from time to time, but now everyone's focused on strong balance, and Ford delivers. For those customers, we have the Escape, the Edge and the Explorer, all with best-in-class fuel economy. With 2.0-liter EcoBoost now making its way into Edge and Explorer, it makes our high fuel efficiency message to our customers even stronger. The 2-liter EcoBoost Edge delivers 30 miles per gallon on the highway. The new Explorer with this engine, that's the 2-liter, provides 28 miles per gallon on the highway, and that's with a vehicle that seats 7 people.

Escape delivered our biggest utility headline for the month. Escape had a 41% sales increase, delivering record September sales of 20,225 vehicles. Through September this year, Escape sales totaled 187,850, more than any other utility in America.

Explorer provided a 204% increase last month versus a year ago. During the third quarter of this year, Explorer sales totaled 31,134 vehicles. This is almost triple the volume of third quarter a year ago. The Explorer is really hot in the marketplace.

On the car side, Ford Fusion bested last September's record by 23%. Fusion sales totaled 19,510 last month and have set monthly records 11 out of the last 12 months. With sales through September totaling 188,439, Fusion is on pace to break the 200,000-vehicle sales mark and achieve an all-time sales record.

Nationally, Focus sales were a little lower than a year ago as inventories were tight in September compared to year-ago levels. That continued as we made the transition from the previous model to this model. The good news is retail sales of our new Ford Focus were up 30% in California versus September 2010 volumes. And compared to August, September Focus sales in our San Francisco region were up 45%. Our L.A. region led with being up 53%. The state of California, the largest car market in America, posted a 50% increase month-over-month, bringing us new customers and helping further strengthen Ford on the coast. I've talked about that the last few calls. Between Fiesta, Focus and Fusion, we are incredibly reestablishing the Ford brand on the coast and especially in California.

So importantly, California customers are rewarding us for investing in new technology. They love the technologies and fuel-efficient powertrains, driving transaction prices for Focus higher than the prior model.

Moving to trucks. September kicked off truck season for Ford, and what a month it was. Sales of the new Ford F-Series moved past the 50,000-vehicle mark this month and delivered sales of 54,410. If you remember, we've thought in terms of 50,000 being the benchmark. We almost beat that by 10% last month. This 15% gain over last month represented our best September F-Series month since 2007. We have record sales of EcoBoost F-150s in September also. This continues to be our best-selling engine in the F-150, and it's helped us increase our conquest sales for the F-150 during its first 6 months in the marketplace. From 0 in December to our best-selling engine in the F-Series, unbelievable.

Also, let's take a quick look at Lincoln. Third quarter sales were up 17% versus the same period a year ago. Lincoln is up 2.5% for the year, even with September results off 6.6% last month versus September of '10. We will continue to maintain our laser focus on the Lincoln brand, and we'll have much more to say about new product for Lincoln in the months ahead.

Now for the latest in economic data, let's turn to Jenny. Jenny?

Jenny Lin

Thanks, Ken. Since our last call in September, recent economic indicators in the U.S. offer some tentative signs of stabilizing, although debt crisis developments in Europe are having a negative impact on financial market stability, globally. Consumer sentiment recovered 3.7 points from the August low to 59.4 in September, although it still reflects a gloomy near-term outlook. Good time to buy vehicles index has been stable at 54% for the last 3 months. Jobless claims edged down slightly to 417,000 in the week of September 24.

Forward-looking indicators such as new capital goods orders was up about 11% over a year ago, suggesting business investment spending is holding up well. Today's Manufacturing Purchasing Managers Index, PMI, reversed the declines over the last 2 months. PMI was up one full point to 51.6 in September. 12 out of 18 manufacturing industries reported growth.

U.S. gasoline prices have remained stable over the past 90 days at about $3.60 per gallon. Lately, we are seeing gasoline price declining below $3.40 per gallon in some parts of the country. This is providing some relief to many customers.

To recap, as Ken and Erich pointed out earlier, new vehicle sales in September are estimated in 13 million unit range at the seasonally adjusted annual rate, including medium- and heavy-duty trucks. Given the September industry performance, the full year industry could reach around 13 million units.

With that -- with this summary, let me turn it back to Erich.

Erich Merkle

Thank you, Jenny; very nice recaps, very nice commentary there from Ken and Jenny. I'd like to start off and give a little bit of a housecleaning, I think, as George would call it.

In September of 2001, we'll start off -- we'll talk a little bit about inventories. Our inventories for cars in September 2001 were 126,000 units -- 2011, excuse me. 2011 were 126,000 units. It's 298,000 for trucks, which gives us a grand total of 424,000 units, which translates into 61 days.

September of 2010, if we look at last year, this compares, as you'll see, very favorably, 151,000 in cars. Trucks, we were at 251,000, giving us a total of 402,000 units or translating into 62 days.

Fleet mix. If we take a look at the fleet mix. September of 2011, as I said earlier, our total fleet mix was at 28%, and this compares to September of 2010 at 29%. Year-to-date, we are flat for 2011 and 2010 on our fleet mix at 33%.

So with that, Modesta, let's get some callers started and we'll start out with the folks here in the analyst community. Thank you.

Question-and-Answer Session

Operator

[Operator Instructions] Our first question today comes from the line of Chris Ceraso with Credit Suisse.

Christopher J. Ceraso - Crédit Suisse AG, Research Division

So a couple of items. The Focus, you mentioned maybe it was availability, but it looks like it was quite a bit weaker in September even relative to August. Did availability get worse sequentially? Or was there something else going on?

Ken Czubay

Chris, this is Ken. What we saw in September is we were restocking with the new model, and that was more back-end of the month loaded, and we are having a terrific sell-down of the prior model. So as we diminish the inventory, the old model, we couldn't restock it fast enough. But I would tell you, at the end of the month, we ended up in good shape and we're expecting a terrific Focus month throughout the country in October.

Erich Merkle

Yes. And Chris, I would just add that as the stocks grew in September, we saw sales follow along with them. So another very positive indicator, as Ken commented, for Focus as we move into October.

Christopher J. Ceraso - Crédit Suisse AG, Research Division

SO how many units of the new model did you have at the end of the month?

Erich Merkle

We don't break out the units by model, by model year.

Operator

Your next question comes from the line of John Murphy with Bank of America Merrill Lynch.

John Murphy - BofA Merrill Lynch, Research Division

Two questions for you, just on this -- just to follow-up on the inventory constraint. Given the success you've had in the Fiesta and the Fusion, I mean, it seems like your car shows are doing pretty well. I mean, was this inventory constraint something that actually created this decline and we actually would've seen a plus sign in the year-over-year change for the Focus? That's the first question. And then the second question is, the Escape really is -- once again, it's selling incredibly, incredibly well. It's in the end of its model lifecycle. I think you guys are going to change over to the new one sometime early next year. I'm just curious, what is really driving the strength in the Escape because it really is quite strong. Is it hybrid mix? Are there incentives? Are there fleets that are coming in? I'm just trying – curious, trying to figure out what's going on with the Escape.

Ken Czubay

John, let me take the lead with that. Our car sales have been strong. But from -- as we've loaded up the shelves, on Focus in particular, they haven't been where we wanted. And as I just mentioned to Chris, I am very confident in October that we will have a strong across-the-board Fiesta, Focus, Fusion month and across the country. Relative to Escape, frankly, it's is recognized for its terrific value proposition, particularly delivering strong fuel economy.

Erich Merkle

Yes, John. And I would add to that. If you look at our car sales year-to-date, our car sales are up 19.3%. And clearly, as Ken alluded to earlier, we are optimistic about the Focus, particularly with our inventory levels, our stocking as we go into October. So we do expect to see car sales get better, get back on track in October for sure as it relates to Focus.

John Murphy - BofA Merrill Lynch, Research Division

And then if I could just sneak in one last question on the Explorer, is there any inventory constraint there on the Explorer? And how is the mix running on the Explorer, just the sort of high end, low end, the limited and the special versus the regular version?

Ken Czubay

We have an outstanding mix of inventory right now. We're loading up on the 2-liter EcoBoost. That was the first period of shipping. So that did well, and we have an excellent mix across the country. We're very pleased with that vehicle's performance.

Erich Merkle

And I'll comment on what Ken -- also add to what Ken is saying a little bit. In terms of Explorer, it's doing very well. We have good sales, and EcoBoost is performing very well for us in what we would call the Sunshine State. So that's also a very good positive for Explorer as we move forward so...

Operator

Your next question comes from the line of Rod Lache with Deutsche Bank.

Dan Galves - Deutsche Bank AG, Research Division

Erich, it's actually Dan Galves in for Rod this afternoon. I wanted to ask about kind of market share going forward. There's been some puts and takes this year. I think Mercury's been probably a 50 or 60 basis point headwind. Maybe you got a bit of a benefit from the Japanese inventories. But market share is about flat year-over-year. Can you talk a little bit about the cadence of new products over the next year, kind of a rebound, an increase in Focus inventories? What do you expect for market share going forward? And if you can give us any sense of kind of what the difference in market share is in California and other kind of coastal states versus overall, that would be very helpful.

Ken Czubay

Dan, let me comment on this. This is Ken. First off, we will be equal -- our guidance is to equal or improve market share. And while, as you pointed out, there's been some ins and outs and segmentation has changed, we've been very pleased with the year. We really don't comment beyond the guidance because at the end of the day, the consumers are coming in, in very good numbers, buying our products for the qualities of fuel economy and technology and everything else, and we'll let the competitive landscape fall as it does. We have a very good cadence of product launches next year, and we anticipate that with our improved availability, our guidance will hold on market share. So, so far, a very good year for Ford after having a very good year last year. So we're pleased with the year and the first 9 months.

Dan Galves - Deutsche Bank AG, Research Division

Okay. And can you give us a little color? I mean, the SAAR appears to be improving sequentially this month and it also appears to be more than just the Japanese that's improving. Can you give us any color on why you think there's been improvement kind of in -- from August in the non-Japanese mix?

Jenny Lin

Dan, this is Jenny. I can comment on it because it's 2 things. Like you said, it's inventory improvement. And also, it's the pent-up demand story that the people are waiting. As the economy seems to be stabilizing a little bit, I think there are a lot of people who had been postponing to buy new vehicles are now finally coming to replace their vehicle. So there's a little bit of that, too.

Ken Czubay

Dan, I think it's indicative. When you look at even the truck situation, with us breaking significantly through the 50,000 mark last month on the F-Series and the significant proportion of EcoBoost on the F-150, what the consumers are saying is they're getting tired of paying repair bills, especially on trucks. And as they see the value proposition at Ford coming home they’re -- more and more want that Ford F-Series with EcoBoost in the F-150.

Operator

Your next question comes from the line of Patrick Archambault with Goldman Sachs.

Patrick Archambault - Goldman Sachs Group Inc., Research Division

I had 2 areas, 2-product questions for you. I noticed obviously the Taurus was down quite a bit. I mean, it's obviously been down year-to-date. So it's not the first month we've seen that. I know that I think in the past, George had said that, that was somewhat segment-related, but that seems like a pretty big falloff this month. So I wanted to see if how much of that was segment and how much of that was product. And I had kind of the inverse question about the Ranger, which obviously seems to have flown off the shelf this month, much higher than its kind of year-to-date pace.

Ken Czubay

Yes, okay, exactly. George has said, and I agree, the segment is one that is in decline. So we are seeing some segment -- in terms of the large car, we're starting to see the segment starting to shift lower actually. As more people move towards smaller cars, not necessarily subcompacts but certainly more towards perhaps the midsize segment and then the midsize segment on down to perhaps compact cars. So we are starting to see people shift away from the large car in general. And when you look at what we've done, one of the reasons we've announced -- we've stopped production of the Crown Victoria, and it's really -- we're going to focus really, no pun intended, but we're going to focus on the Taurus as our large car going forward. And so I think when we start getting Taurus out there, we know we have the interceptor versions that are coming as well. We'll probably start to see that pick up a bit. In terms of Ranger, had a really good month. A lot of that just has to do with people know that we're getting rid of the truck. The truck is coming to an end. And towards -- later towards the end of this year, the plant will be ending production of the Ranger.

Erich Merkle

One more comment about Taurus, Patrick, is a lot of our customers are coming in looking for the Taurus. And when they see the capability of the Explorer, I think that they're switching to that because it delivers not only the seating capacity, but utility and the solid fuel economy. So we're seeing movement from that size sedan to more utilitarian view with the Explorer.

Operator

Your next question comes from the line of Himanshu Patel with JPMorgan.

Himanshu Patel - JP Morgan Chase & Co, Research Division

A couple of questions. We've seen strength in the truck segment at Ford and GM. I'm curious, what do you think is driving this? You mentioned elevated promotional activities at the start of the call. Was there something particularly elevated this month that could explain the year-over-year increase? Or is there any other factor there?

Erich Merkle

No. Himanshu, I think if you look at September, seasonally, it is a strong truck month. There's a lot of merchandising that happens around the pickup truck in September. And the Texas State fair is going on towards the end of September as well. So there's a lot of activity in the month of September around trucks. And the other thing is we just have, eventually, the average age of the truck. It creeps up and it gets really quite old, and people are -- they have to replace it. So seasonally, yes, we usually see some strong sales in September. But even year-over-year, I think we're starting to see some solid advances. The seasonality aside, we're seeing some solid advances in pickup truck sales. And I think a lot of that has to do with the replacement of the vehicle.

Ken Czubay

I think also the lowering of the fuel cost. It's been odd because the fuel cost went down. The segment probably increased last month, and yet, there still is a significant shift to our 6 cylinders, including the EcoBoost. So they're coming out because they just need to replace the vehicle. Gas is lower, that's an impetus, and they are still going to the capability and fuel economy of the F-150s in particular.

Erich Merkle

And we've talked about this before too, Ken, where we've -- with EcoBoost, you get the enhanced fuel efficiency without -- and you still have all the capability with 424 pounds of torque so a massive amount of torque and great fuel efficiency.

Operator

Your next question comes from the line of Peter Nesvold with Jefferies.

Peter Nesvold - Bear Stearns

No one has mentioned bonus depreciation, and I don't know how easily it is for you guys to track it. But I mean, logically, would it make sense if someone was going into this season, pickups typically pick up around this time of the year anyway. The credit gets cut in half by the end of the year. Any perspective on how much of that could be driving the strength of September, and to some degree, August in pickups?

Ken Czubay

Well, Peter, this is Ken Czubay. What we're finding is that as we're talking to our commercial customers, they are more attuned to that. When this phenomenon has happened in previous years, it tends to be more of a November, December. I don't want to say they're not planning ahead, but their accountants give them a little bit of a nudge and say, "Now is the time." So I don't think that was -- it was certainly some part of the improvement in September, but I think the other factors that Jenny and Erich outlined were probably bigger factors. As we get closer to the end of the year, I think it will become a bigger factor.

Peter Nesvold - Bear Stearns

And what was the year-over-year change in growth in fleet sales and then daily rent inside that?

Ken Czubay

I think you gave that, Erich.

Erich Merkle

I give a total...

Peter Nesvold - Bear Stearns

I know you gave the mix.

Erich Merkle

Let me see. Yes, for September, we have total fleet at 28%.

Peter Nesvold - Bear Stearns

That's the mix. Do you know what the...

Erich Merkle

So 28% has been the total sales.

Peter Nesvold - Bear Stearns

Do you know what the year-over-year – I mean I could probably back into it, but do you know what the year-over-year change was?

Erich Merkle

I don't have that right offhand here, but I can certainly get that for you later.

Ken Czubay

Yes, I think, I’m just doing some quick math, rental was down a little bit in September and commercial was flat and government was flat. So the 3 components were essentially unchanged.

Operator

Your final analyst call comes from the line of Ravi Shanker with Morgan Stanley.

Ravi Shanker - Morgan Stanley, Research Division

Is the 2-liter EcoBoost Explorer already on sale? And if it is, can you -- do you have any data on the take rate for that?

Ken Czubay

Yes, the 2-liter EcoBoost Explorer is already on sale.

Ravi Shanker - Morgan Stanley, Research Division

And is there any data on what the take rate of that might be relative [indiscernible]?

Erich Merkle

It's slightly under 10%. It has really done well in the first month.

Ravi Shanker - Morgan Stanley, Research Division

And what about the 3.5 EcoBoost, how much is that of the platform?

Ken Czubay

It would be the remaining.

Erich Merkle

That would be -- not on Explorer. It's not available on Explorer.

Ken Czubay

Okay, Modesta. Could we turn it over to our folks in the media now? Thank you.

Operator

Your first question comes from the line of Mike Ramsey with the Wall Street Journal.

Mike Ramsey

I'm going to bring this back up again. I know it’s been asked by a couple of people. But I just want to double check. There is no -- there have been no manufacturing constraints with the Focus -- I mean, there's nothing that has gone wrong that has contributed to the lower inventory, and therefore, sales for the -- I just want to double check that, that is the case. There haven't been any hiccups in production or shortages of parts or things like that, that contributed to that?

Erich Merkle

No, there have not been. We've been running full out, as George said last month, since the summer shutdown back in July.

Ken Czubay

It's just been the ramp-up of production over the last several months. And as we fill the pipeline, the stock should be up to where we want them. As a matter of fact, the stock as of today is in darn good shape. So we're -- as of today, it was just a ramp-up last month.

Operator

Your next question comes from the line of Chrissie Thompson with The Detroit Free Press.

Chrissie Thompson

A couple of questions. Can you tell me -- you may have said this before already, but what's the days supply on Focus? You said it’s where you wanted, Ken. So what is that?

Ken Czubay

Well, we don't normally break out days supply by vehicle line, Chrissie.

Erich Merkle

Chrissie, we'll have that -- I mean, we don't break that out so...

Chrissie Thompson

It's okay. But you're hoping to increase it though, correct?

Ken Czubay

Well, I mean, we're going to increase sales, I mean, put it on the calendar for a month from now. We're going to have a good October with Focus, and I would -- even though we're going to be at a fully-stocked level on the dealer's inventory, I would suspect the days supply will still drop, driven by improved sales in October.

Chrissie Thompson

Okay. Do you expect to be fully stocked in October?

Ken Czubay

Yes, we'll be in a good shape in October, at the end of October.

Chrissie Thompson

Okay. And then can you just provide a little bit of context on what you would typically plan with a vehicle like the Focus as far as the time to fill the shelves, as you say, Ken, and...

Ken Czubay

Well, in this case, there was a plant changeover for the all-new model, and we are -- new powertrains, new body style. So we're on track for where we wanted to be. It was buildup in the new plant, and then when you take shipping into account, we’re where we want to be on October 4.

Operator

Your next question comes from the line of Keith Naughton with Bloomberg.

Keith Naughton - Bloomberg

I wanted to talk a little bit about vehicle mix. So in the month of September, you sold -- your mix was 71.5% trucks and SUVs and 28.5% cars. A year ago, it was 66% versus 34%. Is that mix where you want it to be and where Alan Mulally wants it to be as he tries to balance out the portfolio?

Erich Merkle

Keith, I think if you were to look at calendar year-to-date, that's probably a better number. We've just been talking about the Focus here a little bit, and we're in a much better position with the Focus as we move into October. And as we move into October, I think that mix will probably change a bit as the Focus builds out, as the Focus gets out. It's on dealer lots now so...

Ken Czubay

And I want to say, mix is a zero-sum game. It was truck month in the start of truck season. And as pointed out in a previous question, we're starting to get into some of the "let's buy ahead for tax purposes," which typically affect trucks a little more so…

Keith Naughton - Bloomberg

But wouldn’t last September have been truck month as well?

Erich Merkle

Yes, I mean...

Keith Naughton - Bloomberg

When it was 66%, 34%?

Ken Czubay

Yes, it was truck season. So I think the biggest shift is finally -- the biggest inputs on it, Keith, are we're finally at the inventory level where we want to be with Focus and the great job that Explorer and -- that Explorer is doing and Escape is doing in truck month. So I think that tilted the balance to utilities and trucks.

Erich Merkle

And if I could take our product line right now, it's very broad. We've got everything from subcompact cars all the way up to a large full-sized Super Duty. So I think we're very pleased with where we're at and where we're going.

Operator

Your next question comes from the line of DeeAnn Durbin with the Associated Press.

DeeAnn Durbin

I'm wondering if Star-wise, do you see things staying at the same pace as they were in September through the end of the year? Are you still anticipating some big -- some swings, big or small swings downward? And was there anything in September that makes the results unsustainable over the next couple months like higher incentive spending or anything else?

Jenny Lin

DeeAnn, this is Jenny. Yes, we do expect that going forward that the Star should continue with steady growth, steady increase as overall inventory improved, and so we do expect that. We do not expect it to drop slower sales. So given that we got a first testimony here of September industry performance, I think full year industry will be pretty close to 13 million units.

Erich Merkle

I think, too, on the incentive front, if -- I know we've been talking about that a little over the last few sales calls, but we're seeing things -- the overall industry, when you look at the month of September, it was actually down just a little bit over August. And year-over-year, it's down just a little bit. So we're not seeing this rash of incentive spending that some folks have been talking about.

Operator

Your next question comes from the line of Joe, and I apologize, Szczesny with The Oakland Press.

Joe Szczesny

I just had a question. Perhaps I missed part of the discussion earlier. But again, I'd like an explanation for the kind of the weakness that was shown by the Fiesta and the Focus in the early -- this past month.

Ken Czubay

Well, Joe, this is Ken. Fiesta sales were up 30% year-over-year, and there was absolutely no weakness there. And I think that demonstrates that when we have a steady flow of vehicles, we can sustain that. Now we can't sustain a 30% month -- year-over-year increase, but we're very steady. The vehicle is doing quite well, particularly in the coast. On Focus, I don't know when you came in the call, but clearly during the course of the month, we made the transition into our new vehicle. And at the end of the month, the cadence was improving. We are almost at the stock level that we want to be at and we anticipate Focus will do quite well. As you can see with Fiesta and with Fusion, it was an excellent month with our small car offerings, combining the 2 of them. And when we combine Focus into the mix in October, it will be a solid 1, 2, 3 offering for the consumers.

Joe Szczesny

So you've eliminated the bottlenecks in the Focus production that have kind of slowed you down here in the past few months?

Ken Czubay

The dealers are at a very good stock level right now. We really didn't have much of a production bottleneck. It was just stocking the shelves across the country.

Operator

Your next question comes from the line of Tom (sic) [Todd] Lassa with Motor Trend.

Todd Lassa - MotorTrend

It's Todd. I guess I'm just going to finish up with just kind of one of a million questions on the Focus here. If you look at your compact versus midsized cars and compare it with what happened over at Chevy, you've kind of got the opposite effect. And I know you're talking about trying to get the inventory of the Focus up. But I wonder if you have any color or any info on what happened in dealerships if buyers were able to easily shift over to the Fusion as kind of an alternative if they couldn't get their -- get the Focus considering probably a rather small difference in ATPs and with gas prices falling somewhat in September. Any anecdotal evidence there?

Ken Czubay

Yes. I mean, dealers, Todd, dealers have told us that with the great availability of Fiesta and Fusion, that customers were coming in. Some waited because they're very intrigued by the car, but most found the value proposition of the Fusion and the Fiesta appealing to them. But some people waited. We will fulfill that waiting in October.

Todd Lassa - MotorTrend

Any evidence of whether the Focus buyers that couldn't get their car decided to go with the Fusion -- more with the Fusion or more with the Fiesta? Or are they all just kind of waiting until next month?

Ken Czubay

Well, some did switch. We believe that demand for the Focus will be very high this month as it will continue with Fiesta and Fusion.

Erich Merkle

And I think, Todd, we're excited. We're going to look forward to see what that mix brings in October. So I think that will be the one way to kind of properly analyze the situation.

Todd Lassa - MotorTrend

Can you clarify at all what percentage of Focus were the new model last month versus August?

Ken Czubay

No, we've -- all of them have been working well. There's a huge demand for the Focus. We haven't satisfied it yet. We'll do that in October.

Erich Merkle

Modesta, that should take care of our call today. Again, I appreciate everybody's attendance today, and we'll look forward to talking to you again next month. Thank you very much, everybody.

Operator

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

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Source: Ford Motor Co., Sep 2011 Sales/ Trading Statement Call, Oct 03, 2011
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