Morningstar

Ford Total Sales Down in April, but Numbers Not All Bad

F-Series truck sales top 70,000 in weaker than expect month for automakers.

Securities In This Article
Ford Motor Co
(F)

Automakers reported April auto sales that were weaker than the market expected but still at what we consider a healthy level. Total sales fell 4.7% year over year to about 1.43 million, while the seasonally adjusted annualized selling rate, or SAAR, came in at 16.92 million, down from 17.41 million in April 2016. April 2017 did have one less selling day than April 2016, but we calculate that the industry still declined by 1% after adjusting for the difference. We wrote in our April 3 sales note that we felt the industry was done growing for this cycle, and we stand by that belief. Incentives are helping keep sales over a 17 million unit SAAR level, but automakers pulled back on discounting in April, and volumes suffered. On a percentage-of-transaction-price basis, Ford said industry incentives in April were about 10%, versus 11% in the first quarter. ALG has the dollar level of incentive spending up 14% year over year, but down 2.5% from March. We expect volatility as the industry plateaus within a range that is still at healthy levels, and we still expect full-year sales in the 17 million-17.2 million range, a 2.5% year-over-year decline from the midpoint of our range.

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About the Author

David Whiston, CFA, CPA, CFE

Strategist
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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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