Morningstar

Despite June Sales Declines, Good News for Ford, GM

Ford continues to see demand for its profitable light trucks, while GM's crossover retail sales grew.

Securities In This Article
Ford Motor Co
(F)
General Motors Co
(GM)

Automakers reported June U.S. light-vehicle deliveries to end customers on July 3. The seasonally adjusted annualized selling rate per Automotive News came in at 16.54 million, down from 16.82 million in June 2016 and the lowest SAAR of 2017. June sales declined 2.9% year over year to 1.475 million.

The fleet business had been making up a lot of the sell-down through May, but it appears June’s retail channel--that is, nonfleet--business softened, though not enough to make us change our 2017 forecast of 17.0 million-17.2 million.

LMC Automotive forecast in late June that the June retail SAAR would come in at 13.1 million, the lowest for June since 12.0 million in 2012, but not far off from June 2016’s 13.2 million. Ford also confirmed our February prediction that the industry’s total sales peaked for the cycle in 2016 at 17.54 million, with its head of U.S. sales saying on a July 3 call that even a strong second half of 2017 would not be enough for the industry to eclipse 2016’s full-year total. This is not surprising news to us, but it’s also not a reason to think sales are about to fall off a cliff, as June light-truck sales from several automakers looked fine to us.

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About the Author

David Whiston, CFA, CPA, CFE

Strategist
More from Author

David Whiston, CFA, CPA, CFE, is a strategist, AM Industrials, for Morningstar*. He covers stocks in the automotive industry, including dealerships, parts manufacturers, and automakers. He has covered the automotive industry since joining Morningstar in 2007. He writes stock reports, ad hoc reports, stock analyst notes, and builds discounted cash flow models for each company covered. He also assesses their economic moat and makes frequent television and print media appearances in local, national, and international news outlets. Key stocks covered include GM, Ford, CarMax, and all six publicly traded franchise auto dealers, such as AutoNation and Penske Automotive Group.

Before joining Morningstar in 2007, Whiston spent four years in PricewaterhouseCoopers’ New York real estate audit practice and one year in its Chicago office working on real estate acquisition due diligence, gaining experience around assessing an asset’s cash flow.

Whiston holds a bachelor’s degree in business administration with a concentration in accounting from the University of Richmond’s Robins School of Business. He also holds a master’s degree in business administration with concentrations in finance, economics, and organizational behavior from the University of Chicago Booth School of Business. He holds the Chartered Financial Analyst® designation, and he is a Certified Public Accountant and a Certified Fraud Examiner.

In 2012, he ranked first in the specialty retailers and services industry in The Wall Street Journal’s annual “Best on the Street” analysts survey. He ranked first in the same industry in 2011 .

* Morningstar Research Services LLC (“Morningstar”) is a wholly owned subsidiary of Morningstar, Inc

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