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Ford's (F) Plan to Exit Sedan Hits Mexican Vehicle Output

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Per Bloomberg, Ford Motor Company’s F vehicles production in Mexico is declining as the company is planning to exit from the sedan market of the United States. The recent demand for trucks and sports utility vehicles (SUVs) among the customers forced Ford to take this decision.

Per data, compiled by a trade group of automakers, the company’s production at its Mexican facilities declined 31% in April, marking the lowest April production since 2009. Further, exports from Mexico witnessed a decrease, including a slump of 36% in units exported to the United States.

The slump in output from Mexican facilities is due to Ford’s strategic shift in its U.S. market. The company has been focusing more on SUVs and trucks and is disposing of its less-selling sedan models. Out of the sedans manufactured in Mexico, Fiesta subcompact, Ford Fusion and Lincoln MKZ are already losing popularity in the United States.

Ford Motor Company Price and Consensus

Ford Motor Company Price and Consensus | Ford Motor Company Quote

Ford is frequently adjusting its production, depending on demands in the North American market, in sync with its goal to reduce inventory. Auto manufacturers consider 60 days’ supply to be an ideal-inventory level. At the beginning of May, the U.S. inventory of Ford’s Lincoln MKZ, Fiesta and Fusion were 104 days, 85 days and 74 days, respectively.

In the United States, the company has recently stopped manufacturing Focus sedan and C-Max Hybrid at its Michigan-assembly plant. The hub will now be converted into a production site for Ranger pickup and Bronco SUV units.

Price Performance

Over a month, Fords stock has gained 0.2%, outperforming 0.3% loss of the industry it belongs to.

Zacks Rank & Stocks to Consider

Ford currently carries a Zacks Rank #3 (Hold). A few better-ranked stocks in the auto space are Gentex Corporation GNTX, Oshkosh Corporation OSK and Ferrari N.V. RACE. Gentex and Oshkosh sport a Zacks Rank #1 (Strong Buy) while Ferrari carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Gentex has expected long-term growth rate of 9.7%. In a year’s time, shares of the company have gained 13.3%.

Oshkosh has expected long-term growth rate of 18.6%. Shares of the company have risen 9.8% over the past year.

Ferrari has expected long-term growth rate of 17.3%. Over the past year, shares of the company have gained 62.8%.

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