Ford Motor's Management Presents at April 2013 U.S. Sales Conference (Transcript)

Ford Motor Company (F)

April 2013 U.S. Sales Conference Call

May 1, 2013 10:00 am ET

Executives

Erich Merkle – U.S. Sales Analyst

Kenneth M. Czubay – Vice President-U.S. Marketing, Sales and Service

Jenny Lin – Senior U.S. Economist

Analysts

John Murphy – Bank of America Merrill Lynch

Joseph Spak – RBC Capital Markets

Adam Jonas – Morgan Stanley

Suresh Patel – Credit Suisse

Mike Ramsey – Wall Street Journal

Karl Henkel – Detroit News

Brad Wernle – Automotive News

Dee-Ann Durbin – Associated Press

Keith Naughton – Bloomberg

Deepa Seetharaman – Reuters

Ted Reed – Wall Street Journal

Brad Wernle – Automotive News

Presentation

Operator

Good day ladies and gentlemen and welcome to the Ford Monthly Sales Call. At this time all participants are in listen-only mode. We will facilitate a question-and-answer session toward the end of today’s call. (Operator Instructions) I would now like to turn the call over to your host for today, Mr. Erich Merkle, U.S. Sales Analyst. Please proceed.

Erich Merkle

Thank you Stephanie and good morning and welcome to Ford’s April 2013 sales call. Based on preliminary sales data, we estimate that April total vehicle sales came in at about 1.32 million to 1.34 million vehicles, this includes of course medium and heavy trucks. Applying seasonal adjustment factors, we estimate that the month of April produced a SAR in the mid 15 million total vehicle range; again this would include medium and heavy trucks.

We expect that industry in April total vehicle sales increased about 10% over a year ago levels. Year-to-date industry sales, including medium and heavy trucks, are operating at approximately 15.6 million vehicles pace, about 7% better than a year ago levels. We believe the industry retail sales mix was approximately 79% of the overall industry in April with the month’s retail SAR operating in the mid-12 million vehicle range.

When we start taking a look and digging down at some of the segment levels, small cars increased slightly to an estimated 22.7% of the overall industry. This compares that just over 22.4% in March compared to last year; the small car segment is slightly lower than the 23% of industry we saw in April of last year. As was the case last month, the Ford Escape was a significant driver of the small utility segment which continues to expand. This segment accounted for almost 15% of the industry last month, which places at approximately one full percentage point higher than a year ago.

The cycle cadence along with the demographic trend of downsizing baby boomers remains very much intact. Full-size pickups continue to outpace the industry, again by a very substantial margin. With the segment representing approximately 11.5% of the industry in April, this is more than one full percentage point higher than April of last year. To date, this segment is up approximately 20% and is growing at a rate almost 3 times higher than the overall industry. The full-size pickup truck segment continues to show signs of strength supported by replacement, demand and the recovery and housing.

With that I’d like to turn things over to Ken Czubay for some more details around some of our product performance. Ken?

Kenneth M. Czubay

Thank you Erich and good morning everyone. For April, Ford Motor Company reported an 18% year-over-year increase, with 212,584 vehicles sold, providing us with our best April total sales performance in six years. Ford Motor Company sold a 143,784 retail giving us a 27% increase and our best monthly retail sales in seven years. Two of our newest vehicles really stood out, lifting our retail sales performance again last month. Fusion retail sales were up 53%, while Escape retail sales were up 58%.

Our team is working full out to keep up with Fusion demand, while inventories are less than a 40 days supply; the Fusion remains one of the fastest turning vehicles in our lineup. Overall, sales of the Fusion were up 24% last month, making it our best Fusion April sales month ever. We’re seeing particularly strong sales in the west and southeastern regions of the country, where our share has historically been lower than the national average. Fusion retail sales in the west doubled last month and they were up 70% in the southeast.

Fusions are turning, selling and conquesting at some of their highest rates in Los Angeles, San Francisco, Miami, Orlando and New York. Last month, Fusion sales in LA and San Francisco were up 155%, and 132% respectively. With a competitive conquest rate of 59% in LA. New Fusion customers are trading in primarily Hondas and Toyotas. While it will continue to be challenge to have enough Fusions this summer, particularly in the west and southeast. We’re looking forward to having our Flat Rock Assembly Plant come online this fall, adding additional Fusion capacity. Small car sales also moved markedly higher as our Fiesta, Focus and C-MAX hybrid sales totaled 32,245, representing a 31% increase over a year-ago levels.

Now, looking at utility vehicles, as Erich mentioned, Escape is driving our total and retail sales and share higher this year. We sold an April record of 25,826 Escapes, representing a 52% increase over last year. For the first quarter, Escape has been America’s Number one selling utility, surpassing Honda’s CR-V. April provides yet another very strong number for the competition. Nationally, Escape’s competitive conquest rate is 52%. In New York, it is as high as 58%. In April, retail sales of the Escape are up 55% in the northeast. New York and the northeast are very important. It is the country’s largest market for utility vehicles.

Sales of our super segment vehicles, which include our small cars as previously, mentioned, Fiesta, Focus, C-MAX hybrids, and, in addition, the Fusion and Escape were up 34% in April, totaling 84,793 for the month.

Moving to pickups. We continue to see full-size pickups running at a much faster rate than the overall industry. As Eric mentioned, this has been the case through the first four months of this year, as full-size pickup segment appears to be recovering with F-Series leading the way. F-Series sales were up 24% in April with 59,030 vehicles sold. This was our best F-Series April sales month since 2006. April now were represents are 21st consecutive month of year-over-year gains in the segment.

We also want to share an update on Lincoln and MKZ today. Led by our newest product offering, the MKZ, Lincoln sales were up 21% last month. Now, on MKZ, as we have been seeing since January, April and the second quarter of this year are good proof points for the appeal of MKZ, as inventories normalized throughout the country. April was our best sales month ever for MKZ, with 4012 Z’s sold. This is MKZ’s first time ever above the 4000 vehicle mark. In April, MKZ was one of our fastest-turning vehicle on Lincoln or Ford dealerships’ lot. MKZ’s were turning at 22 days with just a 11 days on MKZ hybrid. Approximately 30% of retail sales this month were made up of MKZ Hybrids, a very strong percent of sales.

Our fastest growth market for MKZ was the LA region, where retail sales more than tripled compared to last year’s level, with MKZ Hybrid leading the charge of Lincoln on the West Coast. This year, MKZ Hybrids were about 60% of retail sales in LA. Given the strong demand for MKZ Hybrids, we’ll be increasing our hybrid production mix to 30% for the upcoming 2014 model year to support our dealers, particularly on the coast. We are very encouraged with our early performance of the MKZ, the first of four new Lincolns coming in four years. And is yet another proof point that we are on the right path toward the long-term reinvention of the Lincoln brand.

That’s a look at Ford Lincoln. Now, I’d like to turn things over the Jenny for an update on the economic front. Jenny?

Jenny Lin

Thank you, Ken. Good morning everybody. Since our last month, the sales call in early April, economic indicators are consistent with an economy growing in 2% and a 2.5% range. Key themes include, the manufacturing sector is spending at a slower rate, but core capital goods orders are improving. Housing sector recovery is in full swing. Employment growth is modest, encouraging the consumer spending growth pace is picking up. Our net, our outlook for the U.S. economy remains in the same range of 2% to 2.5% this year.

Here are some of the details. Manufacturing production was flat in March, although it was up 2.9% over a year ago. This is much slower than the 4.2% growth we’ve seen in 2012. In February and March, the two commonly-used Manufacturing Purchasing Manager’s indices were showing mixed result. Today, we see them moving in the same direction. Both measures indicate a continued slowing manufacturing sector in the near-team.

Core capital goods orders continue a recovery which started late last year, now at levels last seen in early 2012. It is a good sign that business spending maybe picking up. Housing related data points to a good housing sector recovery underway. Home prices represented by the Case-Sheeler Home Price Index continue to move up, rising 9.3% in February, as compared to a year ago with all 20 cities covered in the index posted year-on-year increases for at least two consecutive months.

New home sales grew by 18.5% in March, averaging 20.7% during the first quarter of this year. Note that this growth could be supply constrained as months of supply is now at only 4.4 months and about, this is about two months tighter than the historical average of 6.2 months of supply. For existing home sales, March was another good month, with sales up 10.3% compared with a year ago. Supply is also tied at 4.7 months. The medium sales pricing, regardless of size and [chase went] 11.8% in March.

Housing starts and permit are also trending higher, with increases of 35.6% for start and 27.4% for permit, again on a year-over-year basis during the first quarter. The final April University of Michigan consumer sentiment reading manage to recover to 76.4, another month of volatility between early and final readings. Despite the volatile headline sentiment readings recently, consumer spending growth pace has picked up, supported by low interest rates and rising equity wealth. Consumer spending grew at the rate of 2.2% from a year-ago in March, spending on durable goods was up more than 7%. Low borrowing costs and rising consumer wealth should continue to support spending growth going forward. Our net, the U.S. economy is projected to grow between 2% and 2.5% range this year. To recap, as Erich mentioned earlier, April total industry sales were estimated in the mid-15 million unit range, this is SAAR, including medium and heavy duty trucks. Our full-year call for the industry sales is in the 15 million to 16 million unit range.

With that summary, let me turn it back to Erich. Erich?

Erich Merkle

Great, thank you, Jenny. To take care of a few housing keeping items, I want to start off here with our fleet numbers and when we take a look at our total fleet as a percentage of our total sales in the month of April that was 32%. The breakdown from that was 14% for commercial, 5% for government and 13% for daily rental. This compares to April of last year, when we had 37% of our total sales were comprised of fleet, 15% was commercial, 5% was government and 17% was daily rental.

Taking a look at April year-to-date, 32% of our sales, of our total sales were comprised of fleet. The breakdown of that number is 14% of total sales coming from commercial, 4% from government and 14% from daily rental. When we compare this to a year ago, 33% of our fleet was made – from our total sales 33% was fleet, 15% came from commercial, 4% from government and14% from daily rental, again very stable, very consistent.

Taking a look at our gross stock, our vehicle inventory, for the month of April 2013, cars were 176,000 vehicles, trucks 255,000 vehicles, utilities 145,000 vehicles giving us a total of 576,000 vehicles translating into a days supply of 70. This compares to April of 2012 when we had a 143,000 cars, 188,000 trucks, 145,000 utilities, giving us a total vehicle gross stock in April of 2012 of 476,000 vehicles, translating into 66 days supply. Taking April 2013 and comparing it to March of 2013, the previous month, we had 173,000 cars, 245,000 trucks, 145,000 utilities giving us a total 563,000 vehicles in March of 2013, this translated into 62 days supply.

With that Stephanie, we’d like to start taking some calls and we’ll start off with the folks from the analyst community, please.

Question-and-Answer Session

Operator

Thank you. (Operator Instructions) Your first question comes from the line of John Murphy with 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 MKZ. The sales in the month were very impressive. I’m just curious how much of the sales in the month were sort of a backlog of orders that had been built prior to April, and how much were actually placed and executed in April? Companies.

Kenneth M. Czubay

Hey, John, this is Ken. We don’t have that number. That’s difficult to get. As we’ve been saying in the first quarter, we would have our inventories, including sold vehicles, up to plan in April. We did. We delivered many, if not almost all of those pent-up sold orders, but significant number was new traffic coming in April.

John Murphy – Bank of America Merrill Lynch

Okay, that’s helpful. And then if we think about pricing across the board, I mean you guys are running tight on some very key models here and you are turning very quickly. I’m just curious how you’re doing on pricing and incentives and how you are standing up relative to the industry at large

Erich Merkle

Yeah, if we take a look at our overall incentive spend for April, John, Ford’s overall incentive spend for April was down about $250 compared to April of last year and compared to March of 2013, Ford’s incentive spend was up roughly about $60 sequentially and that was a little less than the overall industry.

John Murphy – Bank of America Merrill Lynch

Okay, that’s very helpful. Thank you very much guys.

Erich Merkle

You bet. Stephanie, our next called please.

Operator

Your next question comes from the line of Joe Spak with RBC Capital Markets. Please proceed.

Joseph Spak – RBC Capital Markets

Thanks guys. Thanks for taking my question. I was just wondering if you could elaborate a little bit more on some of the mix you’re seeing within the strong sales of Escape and Fusion. You mentioned Fusion is still a little bit constrained, so I imagine the mix is still sort of higher end. But on the Escape, I was wondering if you could give the platinum and higher-end trim mix and whether that is down from what we were seeing a couple months ago.

Erich Merkle

No, Joe it’s still running consistent with what we’ve seen a couple months ago. The mix is still very strong on Escape. When you start taking a look at SEL and titanium, they’re still running right around 50%.

Joseph Spak – RBC Capital Markets

And that’s on both vehicles?

Erich Merkle

That’s for Escape.

Joseph Spak – RBC Capital Markets

Okay, and then on Fusion?

Erich Merkle

We’re digging that data here in a minute.

Kenneth M. Czubay

I think the key Joe is that the consumers are still realizing the value of the content of those two products, and the order submissions from dealers and the sales at dealer lots driving the high content. And it’s mostly driven by the fuel economy story, which is significant improvement, not only from the previous model, but you know it’s a real winner in the marketplace. So that’s consumer driven rather than us driving the mix.

Erich Merkle

Yeah, and also keep in mind that when you start taking look at Fusion, and when you start looking at the next generation Escape, we dropped the SEL. So we have an SE and then a higher content at SE premium. So clearly with the Fusion, we’re seeing a lot of the mix going towards SE, heavily contented, which is really the replacement for the SEL and then of course titanium as well. So we’re seeing a very rich mix there as well.

Kenneth M. Czubay

Just one other fact for you Joe is that EcoBoost is a very high percent when you get into the higher trim levels well over 50%.

Joseph Spak – RBC Capital Markets

Okay and thanks for that color. And maybe just one more on pricing. You’ve seen some competitors actually announce some MSRP cuts. And I don’t know whether they’re trying to sort of gain some Internet searches or not. But I was wondering if you have any sort of perspective on just industry pricing going forward, especially given Alan has stated concerns with the yen, with the recent yen weakness.

Erich Merkle

Sure, I mean, if you take a look at the pricing at this point, quite honestly, Joe, the industry, it was down about $170 year-over-year that you would look at where it was sequentially, up a little less than a $100, about $90. So still, the pricing still seems to be very contained.

Kenneth M. Czubay

And pricing may just be one factor of that that some of our competitors may use in the marketplace. There is also incentives and fixed marking, et cetera. So we’re continuing to monitor all of those marketplace elements.

Joseph Spak – RBC Capital Markets

Thanks a lot.

Erich Merkle

Okay. Thank you, Joe. Stephanie, our next question please?

Operator

Your next question comes from the line of Adam Jonas with Morgan Stanley. Please proceed.

Adam Jonas – Morgan Stanley

Hey, everybody. A couple questions on the auto loan side. What is your average auto loan term now, I’m not sure if Seneski is on the line for Ford Motor Credit today versus a year ago. And do you think that we might be at the limit in terms of term?

Kenneth M. Czubay

It’s remained steady. This is Ken, Adam. Mike is not on the line. It’s remained steady. Ford Credit continues to do a great job for us as a matter of fact their performance for our dealers sit in the marketplace has increased. So we’ve seen no, it’s almost no insignificant change in rate, term or performance of portfolio.

Adam Jonas – Morgan Stanley

Okay.

Kenneth M. Czubay

They are strong.

Adam Jonas – Morgan Stanley

Okay, great. And how about off-lease volume trends? What are your dealers seeing as we kind of anniversary on pretty sharp recovery of lease originations? Are the dealers starting to see some improved availability of certified preowned, or kind of off-lease vehicles? Any comments there?

Kenneth M. Czubay

Our dealer had an excellent CPO month last month, and we will start to see a recovery of off-leased vehicles in the second and third quarter.

Adam Jonas – Morgan Stanley

Okay, and just finally, how is the Ford Focus Electric doing and how is it doing versus your expectations? Thanks.

Erich Merkle

Yes, Focus Electric is doing great. We’ll have the report out tomorrow that’s when we put it out. So but we’re very pleased with the performance of the Ford Focus Electric at this point.

Adam Jonas – Morgan Stanley

Okay thanks a lot.

Kenneth M. Czubay

It’s another example of the power of choice between the hybrids, the electrics and the traditional engines.

Adam Jonas – Morgan Stanley

Okay, okay.

Operator

Your next question comes from the line of Chris Ceraso with Credit Suisse. Please proceed.

Suresh Patel – Credit Suisse

Hi, this is Suresh Patel on for Chris.

Erich Merkle

Hi, Suresh.

Suresh Patel – Credit Suisse

Hey, just I guess a question on the F-Series. Strong sales in the month, a pretty strong sales year-to-date. I’m wondering what is the maximum capacity you guys have on the F-Series? And are we kind of reaching that level today? Maybe you put it another way, if the industry starts to sell at something in the $16 million selling rate and pickup as a percent and the industry goes up to $13 even with your current share, it would imply something like 800,000 units in sales for the full year. And I’m wondering if you guys can handle that level of demand.

Erich Merkle

Well we’re building everything that we can right now. And we feel, we’ll continue to monitor the situation but clearly we’re continuing to see great demand for full-size pickups in the marketplace.

Kenneth M. Czubay

I think one other element as you know last year, if you go back to the data that Erich gave you a few moments ago on inventory, you will note that we’re somewhere around 250,000 vehicles in inventory right now, that’s up a fair amount from last year. We’ve recognized that market was going to grow in full-size pickup. We added capacity last year. And we’re very comfortable with the level of inventory right now, notwithstanding the fact that F-Series continues to lead the pace in the truck recovery. So we’re in good shape at 245,000 about and we’re running our facilities at pretty close to capacity.

Erich Merkle

Yeah, okay.

Suresh Patel – Credit Suisse

Okay.

Erich Merkle

Thank you, Suresh. Stephanie, could we take, start taking callers from the media at this point?

Operator

Your next question comes from the line of Mike Ramsey with Wall Street Journal. Please proceed.

Mike Ramsey – Wall Street Journal

Hey, good morning, everybody. The basic question I had was is it fair to say that the long-awaited pickup truck boom from housing has now arrived? Last year, I think I asked this question every month, and it was no, no, hasn’t really seen it. Is it fair to say that now we are officially seeing a lot of demand from Tradesmen and other home building related purchases?

Jenny Lin

Yes, Mike. This is Jenny. I believe so. We were seeing this continued strength of the full-size pickup sales particularly supported by housing recovery and also the boom in the energy sector. So there are two elements and I think, particularly on the housing recovery, I think we clearly see that underway now.

Kenneth M. Czubay

So Mike a little commentary on the numbers. As I mentioned last month, with us selling almost 61,000 F-Series, it was the best month in many, many years. And then this month to come in at 59,000 is also back to back that’s excellent performance, that’s over the last several years, you’re looking for the trend. Over the last several years, the only months that have exceeded that have been Decembers which for various tax reasons and longer selling months have we gotten in that range. So there would be 61 and 59 that’s about 120,000 F-Series in two months. Clearly supports the trend that Jenny is indicating and you’ve picked up.

Erich Merkle

I would also just add real quick to the data. Full-size pickups have been increasing in terms of their sales year-over-year in 2010 of course 2011 and 2012, but they have really a pace with the overall industry. For the first four months of this year, we’re starting to see the segment outpacing the overall industry.

Mike Ramsey – Wall Street Journal

Okay

Erich Merkle

Okay, by about almost three times.

Mike Ramsey – Wall Street Journal

Great thank you.

Erich Merkle

Okay, thank you Mike.

Operator

Your next question comes from the line of Karl Henkel with Detroit News. Please proceed

Karl Henkel – Detroit News

Hey, good morning guys.

Erich Merkle

Good morning, Karl.

Karl Henkel – Detroit News

Just had one quick question, on F-Series and the year-over-year growth. And I'm just wondering trying to drill down on this where is most of that growth in terms of trims and engines? Is it pretty consistent or are you seeing maybe a different type of buyer who is buying this year as opposed to years past? If you can kind of walk me through or what you are seeing specific to the F-Series there?

Kenneth M. Czubay

What we’re seeing is we’re seeing growth across the Spectrum. Geographically, the growth is stronger it’s following as Jenny pointed out housing areas, I think we’ll find there is housing growth in all parts of the country, but it’s particularly strong in the southeast and then in the west when I’ve been visiting dealers out there just last month, they are giving me strong reports on that. It’s really also fueled by the desire to improve fuel economy which Ford leads a way on. EcoBoost continues to do very well.

Our percent of EcoBoost, here let me get my arms around that number. Our percent of EcoBoost is 40%, so we continue to drive performance and fuel economy with that. So, we’re seeing good purchases at the high level, which Ford has always done very well with and with the introduction of the STX package, which is at the lower end, we’re finding that we’re capturing that into the market also. So, when people when want trucks in America, they go to F-Series.

Erich Merkle

Thank you, Karl. Stephanie?

Operator

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

Brad Wernle – Automotive News

Hi, guys. Ken, you mentioned you're increasing, planning to increase the hybrid mix of the 2014 model year, I think you said 30%. What is that percent in the current mix and when do you plan to begin producing 2014 models of the MKZ?

Kenneth M. Czubay

Brad, it’s we’re going to increase it up to 30%, not increase it 30%...

Brad Wernle – Automotive News

No, that’s what I meant. Sorry about that.

Kenneth M. Czubay

And we will start that with the 2014 model year which is in this summer.

Brad Wernle – Automotive News

For sale in the fall?

Kenneth M. Czubay

Yeah, sale when…

Brad Wernle – Automotive News

Right.

Kenneth M. Czubay

30 days after we...

Brad Wernle – Automotive News

Okay. Great, thanks a lot.

Kenneth M. Czubay

All right, thanks Brad.

Erich Merkle

Thank you, Brad.

Operator

Your next question come from the line of Dee-Ann Durbin with Associated Press. Please proceed.

Dee-Ann Durbin – Associated Press

Hi, good morning. I have a similar question, actually, but I’m not sure you said what is the actual percent of MKZ’s that are produced now that are hybrids? And also, if you could give me that the percent of total MKZ sales that are hybrid, you gave retail, but I would like total. And if you could compare that to hybrid Fusion sales; what percent of Fusion is hybrid sales?

Kenneth M. Czubay

Okay, lot of question Dee-Ann. We currently are at about 20%...

Dee-Ann Durbin – Associated Press

20%

Kenneth M. Czubay

Of our build…

Dee-Ann Durbin – Associated Press

Okay

Kenneth M. Czubay

And we’ll be stepping that up to about 30%.

Dee-Ann Durbin – Associated Press

Okay.

Erich Merkle

We’ll have the other…

Kenneth M. Czubay

And will have the other documentation tomorrow on the splits.

Dee-Ann Durbin – Associated Press

And the other question, when was the last time we saw a monthly sales increase for Lincoln?

Kenneth M. Czubay

Gosh…

Erich Merkle

We would have to go back and check.

Kenneth M. Czubay

We’ll get back to you on that, Erich will get back to you on that.

Dee-Ann Durbin – Associated Press

Yeah, thanks Erich. I appreciate it.

Erich Merkle

Okay, thanks Dee-Ann

Dee-Ann Durbin – Associated Press

Bye-bye

Kenneth M. Czubay

Okay, bye-bye

Operator

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

Keith Naughton – Bloomberg

Hi, guys.

Erich Merkle

Hi, Keith

Keith Naughton – Bloomberg

Hey, I was wondering, with the capacity you’re adding on Fusion, will you have the capability to outsell the Camry or the Accord?

Erich Merkle

We are going to produce the demand and right now demand is so strong with Fusion particularly in the west and southeast that we feel that it warrants another shift in the addition of capacity in Flat Rock where that puts us relative to Camry, we’ll see.

Kenneth M. Czubay

That’s not a sales rise but we certainly want to meet demand.

Keith Naughton – Bloomberg

Thank you

Erich Merkle

Okay. Thanks, Keith. Stephanie, next caller please.

Operator

Your next question comes from the line of Deepa Seetharaman with Reuters. Please proceed.

Deepa Seetharaman – Reuters

Hey, just two quick questions. Is it fair to say that the growth in crossovers and trucks is coming at the expense of the midsize car segment? And what kind of incentive activity and what’s the pricing environment like right now in that segment, the midsize car segment? Thanks.

Erich Merkle

Sure. If you talk about expense, if you look at last year, Deepa, and there were some sell-downs by different automakers in the midsize sedan segment that gives us some pretty tough comps for the segment. It’s likely that the midsize car segment, we could see improvement there. We’ll see easier comps in the second half of the year. So that could be part some of the distortion that you’re seeing on a year-over-year basis.

Kenneth M. Czubay

I think there has been a general longer term trend that that segment has been decreasing, but it’s still strong for us and we just, which has been the strength of the other cars and the small utilities that have been really strong. But when you look at the overall balance, as we mentioned earlier, cars were up 21%, utilities were up 16% and trucks were up 16%, a very balanced job even in a market that’s shifting toward the truck segment as Erich called out, because of the growth of housing and oil services, et cetera. So where Ford traditionally would have done much better, it’s a balanced job by all of our three major segments.

Deepa Seetharaman – Reuters

And the pricing environment for the overall segment?

Erich Merkle

It’s interesting because in terms of the pricing environment for the midsize sedan segment, for the segment overall this isn’t just for, this is a segment. Sequentially, we’re looking at something that is down about $62, a little over $60, year-over-year its down about $500 and I think a lot of that has to do with the newer offerings in the segment.

Deepa Seetharaman – Reuters

The newer offerings are driving lower prices, or it is just getting more competitive and you have to drop prices to attract buyers?

Erich Merkle

Well no, no the incentive spend is actually coming down.

Deepa Seetharaman – Reuters

Incentives, sorry, okay.

Erich Merkle

They has a lot to do with the new offerings especially some really high volume new offerings.

Deepa Seetharaman – Reuters

Okay, thank you.

Erich Merkle

Okay.

Operator

Your next question come from the line of Ted Reed with Wall Street. Please proceed.

Ted Reed – Wall Street Journal

Thank you. I wanted just low inventory of Fusion, even though it seem that we could see many months ago the Fusion sales were going to increase. Did you guys miss something in terms of the demand for Fusion that would occur?

Kenneth M. Czubay

No, not at all. I mean the Fusion plant has done working flat out for months and months and months. So we didn’t miss anything. We are at a lower days supply. Our dealers have shown a great ability in the last, every month this year to operate at lower days supply to meet consumer demand. And of course, we’re planning on the Flat Rock Assembly Plant producing Fusion that capture more of that growing segment later this year.

Ted Reed – Wall Street Journal

Well would you like inventory to be.

Kenneth M. Czubay

Slightly more but our dealers are very adoptable to work at the inventory levels that they have. So I think we’re going to find at the entire segment has lower days supply driven by high demand. And when you combine the fuel economy and the offerings on the Fusion, we’ll be in there next month to report great sales on Fusion.

Ted Reed – Wall Street Journal

Thank you.

Erich Merkle

Thank you, Ted.

Operator

Your follow-up question comes from the line of…

Erich Merkle

Yes, Stephanie, we’re going to take one more call from the media and then we’re going wrap things up.

Operator

Your follow-up question comes from the line of Brad Wernle with Automotive News. Please proceed.

Brad Wernle – Automotive News

Yeah, I wonder if you folks have any comments on pricing moves being made by the Japanese carmakers. Nissan has announced it is cutting prices on seven models.

Erich Merkle

No, we don’t give out pricing for other automakers, Brad.

Brad Wernle – Automotive News

I know you don’t give it out, but can you comment on it?

Erich Merkle

Not really no.

Brad Wernle – Automotive News

Thanks.

Erich Merkle

Okay. All right, Stephanie, we’ll really appreciate working with you today and thanks everyone for tuning in. We’ll look forward to taking to you next month about May sales. Thank you very much everyone.

Operator

Thank you for your participation in today’s conference. This concludes the presentation. You may now disconnect and have a great day.



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