And The Wealthy American's Favorite Car Is... The Ford F-150 Pickup Truck

| About: Ford Motor (F)

Summary

The best-selling vehicle among people making over $200K and $500K isn’t a traditional luxury brand such as Mercedes, BMW, Audi, Lexus, Infiniti or Jaguar.

It’s the Ford F-150. Yes, the pickup truck.

I elaborate on the reasons why: Safety, image, good for large and older people, luxury features that equal luxury cars - and style.

At $50,000 base and $64,000 reasonably equipped, the Ford F-150 Raptor is a luxury vehicle bargain. Small wonder it’s the King of The Rich.

Ford’s solid sales increases for the F-series trucks means that now it’s one-third of Ford’s U.S. unit sales (and larger share of profits).

Whether you're measuring people earning over $200,000 per year, or over $500,000 per year, their tastes in cars are astoundingly identical. In fact, their favorite car isn't a car at all, but a truck - the Ford (NYSE:F) F-150.

This comes from consumer research firm MaritzCX via USA Today

In other words, the wealthier among us aren't buying as many cars from BMW (OTCPK:BMWYY), Mercedes (DDAIY), Audi (OTCPK:AUDVF), Tesla (NASDAQ:TSLA), Jaguar Land Rover (NYSE:TTM), Cadillac (NYSE:GM), Lexus, Infiniti, Genesis, Volvo or Lincoln as we would like to think. It's perhaps why Mercedes is now weighing selling its upcoming pickup truck in the US.

A quick look at sales volumes also point to the importance of the Ford F-150 as measured against the luxury car competitors. Ford sold 820,799 units of the F-series in the U.S. in 2016. In comparison, Tesla sold an estimated 29,421 Model S cars and 18,233 Model X cars in the U.S. in 2016.

That's 47,654 in total, or 5.8% of the Ford F-series. It also explains the ambition to eventually also offer a pickup truck, as it has been saying many times in the last year or so. That would certainly fit Tesla's hire of Randy Rodriguez from Nissan, approximately half a year ago.

Randy Rodriguez was the lead exterior designer behind the Nissan Titan full-size pickup truck, which competes directly with the Ford F-series.

So why is the Ford F-150 outselling all other cars for people in the $200,000+ and $500,000+ income levels? What is the appeal to them from a pickup truck?

One explanation is an extension of a key reason behind the popularity of SUVs, and that has to do with Americans growing larger, taller and older - and therefore wanting a taller, bigger vehicle into which they will step. If you don't want to bend your head, or your back - you can step up into a truck with a generously cut door and high ceiling.

Life has many luxuries, and the feeling of safety has a lot to do with sitting high up in a very heavy truck that is built on a body-on-frame. That luxury sedan - or even a crossover - may have every five-star safety rating in the world, but just look at it next to a Ford F-150, and it's hard to escape the feeling that it's not the truck that would look like processed meat after a crash.

Then there is conventional luxury. Until recently, a truck only had so much luxury, and while you could get one that wasn't for your carpenter or gardener, it wasn't on par with a Mercedes or BMW sedan.

Well, those days are over. Whether it's an infotainment system that includes Android (NASDAQ:GOOG) (NASDAQ:GOOGL) Auto or Apple (NASDAQ:AAPL) CarPlay, or whether it's a set of front seats that are every bit as cooled and comfortable as the finest German luxury limousine, a pickup truck such as the Ford F-150 no longer yields to luxury sedans in terms of features.

Finally, there is style. And we all know cars sell on style. The car business is to a significant extent a fashion business. And that's where the 2017 Ford F-150 Raptor comes in.

In a full-size pickup truck market where there is no longer an ugly entrant, the Ford Raptor still stands out as an extraordinary design that puts it at the top of the styling list. I drove the car for a few days and everywhere I stopped I had people come up and look - some even taking pictures.

The Ford Raptor manages to look very modern, somewhat Star Trek, and very macho at the same time. It's fresh and proportional. I can't think of a way to perfect it further. This is the kind of attention you get in a $90,000-$120,000 luxury car.

So how much is the 2017 Ford F-150 Raptor? Well, it starts by the $50,000 mark. Equip it the way most buyers will order it, and you're at around $64,000 before usually large discounts available on full-size pickup trucks.

$64,000 is a bargain for this much attention, performance and utility all in one. And it explains why the Ford F-150 is the market's favorite luxury vehicle, ahead of all the Mercedeses, BMWs, Audis, Lexuses and Teslas that you might have thought people would have preferred.

Does the Ford F-150 Raptor drive better than the other trucks? It drives better than most, but I could make a case that GM's pickup trucks drive even a hair better - powertrain/transmission smoothness, engine noise, steering - and look almost as good. But therein resides the rub: The Ford Raptor simply looks even better than the GM trucks, so no matter how much better a GM truck is or would be, the Ford F-150 Raptor will still take more luxury car buyers away from the traditional luxury cars.

Importance to Ford's earnings and share price

Ford sells almost 70,000 F-series vehicles per month in the U.S. alone - 820,799 in the U.S. in 2016 for the year. Ford is still not as large as GM's overall pickup truck franchise, and that's why Ford will be bringing back the Ranger midsize pickup truck in 2019. The Ranger will pick up the fight against the Chevrolet Colorado and GMC Canyon - as well as of course the Toyota Tacoma, which is the midsize pickup truck market share leader.

Consider Ford's U.S. sales statistics for the first two months of 2017 alone. Basically, Ford is down 2.5% overall, but the F-series is up a whopping 10.4%. That's nothing short of huge when you realize that the F-series is already one-third of Ford's U.S. unit sales. The absolute increase in sales for the F-150 alone dwarfed the entire sales number for the vehicle that had the highest sales increase on a percentage basis - the Expedition.

And know this: If the F-series is one-third of Ford's unit sales, it's an even larger share of Ford's profits. Noodle on that.

The F-150's U.S. sales increase during the first two months of 2017 wasn't all that far from matching the entire sales level for Ford's upscale brand, Lincoln. That makes it even easier to accept that inside Ford's F-series franchise resides the entire U.S. vehicle market's leading seller to people with incomes above $200,000 and above $500,000 alike.

So there you have it: America's favorite luxury car is a truck - a Ford F-150. Specifically, the Raptor, which is the hottest thing on four wheels for the rich these days.

Disclosure: I am/we are long F, GM, GOOGL.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: At the time of submitting this article for publication, the author was long GOOGL, GM and F, and short TSLA. However, positions can change at any time. The author regularly attends press conferences, new vehicle launches and equivalent, hosted by most major automakers. Ford, General Motors, Toyota and Nissan provided trucks for review.

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