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Ford European Sales Up 9.2% Y/Y

Zacks Equity Research

Shares of  Ford Motor Co. (F) rose 1% to $15.39 on Feb 18, 2014 after the automaker announced a 9.2% increase in January sales in Europe. Ford’s European sales growth was almost twice the industry rate of 4.7% in the 20 key European markets of the company. Ford sold 80,800 vehicles in the Euro 20 region and 90,700 in all the 50 European markets it covers.

January was the eighth consecutive month of European sales growth for Ford. The company’s share in the total vehicle market increased 0.3% year over year to 7.5%.

In retail, where vehicles are sold to private customers, market share went up 0.4% to 7.8% for Ford. This marked the 12th consecutive month of increase in retail market share. The company’s commercial vehicle market share grew 0.9% to 10.4%, highest since 1998.

The year-over-year increase in sales and market share can be attributed to vehicle launches by the automaker. Ford launched 11 vehicles in the last 15 months, and plans to introduce more than 10 new vehicles in 2014. The vehicles include Tourneo Courier, Transit Courier, Transit, Mondeo family, Mondeo Hybrid, and the C-MAX Energi plug-in hybrid.

Ford sales to European retail and fleet customers went up 4% to 78% of total sales in Jan 2014, which is 6% above the industry average. However, the company’s sales to rentals and dealer registrations dropped to 22% from 28% recorded in Jan 2013.

Increase in sales helped Ford to expand its market share in the region. In the U.K., Ford’s largest European market, total vehicle sales increased 11% year over year, leading to 0.6% increase in market share to 15.3%. In Germany Ford recorded a 38% hike in sales, boosting market share by 1.6% to 7.4%.

Ford’s global expansion plans, efforts to make the European business profitable, the success of the One Ford plan and sustained focus on hybrid cars are likely to boost the company’s future performance. However, we are concerned about the expected decline in pre-tax profits and cash flow in 2014, weakness in South America and rising debt and expenses.

Ford is one of the largest automobile producers in the world along with General Motors Co. (GM), Toyota Motor Corp. (TM) and Honda Motor Co., Ltd. (HMC). Currently, Ford carries a Zacks Rank #3 (Hold).

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