Ford's (NYSE:F) sales climbed 7% in June, so let's break out the bubbly.
Or not.
Look: from General Motors (GM) to Toyota (TM) to Honda (HMC), auto industry sales seemed to make a hairpin turn in June. But there are two items you need to delve into when unexpectedly flashy auto sales number run out into the street.
First off, was discounting a factor? After all, the auto industry's troubled history is filled with impressive sales numbers that were the product of heavy discounting, a four car pile-up in the making. But this time, all's clear in the intersection. Industry wide, prices actually went up in the low single digits. Toyota and Honda managed to raise prices 8% and 5% respectfully, on a year-over-year basis. That's good news indeed.
But this is oh-so bad: most of Ford's success can be attributed to sales of SUV's and pick-up trucks, the product of lower gasoline prices that might not last. Sales of the Ford F-Series pickup were up over 10%, to 55,025, while the Flex, not quite the size of Bolivia, saw sales increase by a measure of 34.5%.
Granted: Ford has done well to increase the mileage on these sorts of vehicles. And, overall, they have improved the quality of their fleet. But Ford has serious issues in Europe. That their June sales strength was in large part a function of possibly fleeting lower gasoline price is no cause for prolonged celebration.
We've seen it too many times over the years: the American automakers evolve toward higher mileage vehicles during a time of high oil prices. Then prices tick down for a few minutes in time and Americans, with the concentration span of a June bug, jump right back into big vehicles. Automakers quickly lose their small car focus. Prices go back up and business disappears.
It's good news that Ford did not have to rely on discounting to boost sales. But that they are still relying on SUV's and trucks in an outsized manner means today's rally should be held in check.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
