Surging F-150 Sales Power Big Gains for Ford Motor Company (F)

Czubay also noted that the F-Series saw big sales gains in the Los Angeles, Phoenix, Miami, and New York metro markets – all places where new-home construction has taken off recently. Texas remains the pickups’ largest market, and sales there have been strong as purchases from oil services companies have been on the rise. Ford isn’t the only company benefiting, of course – General Motors Company (NYSE:GM) saw its own full-sized pickup sales rise 23% in May on those same trends.

But the best part of this story is that while Ford’s sales have been strong, its incentives haven’t risen significantly – and neither have its fleet sales. Merkle said that Ford’s incentives were up very slightly versus last month, but well in line with Ford’s recent practice.

Meanwhile, he noted that 33% of Ford’s total sales in May were fleet sales. Despite the tendency of some investors to knock fleet sales as low-margin business, the right kind of fleet sales – commercial and government business – can be a good thing, and 33% is right in line with expectations.

Of that 33% in May, Merkle said that 14% of sales were commercial, 5% were government, and 14% were daily rental fleet sales. That’s down a bit from last year, with the decrease coming almost entirely in daily rental fleet sales. This is good news.

A “perfect scenario” for increased profits at Ford
I talked to Jesse Toprak, the chief auto sales analyst at TrueCar.com, about Ford Motor Company (NYSE:F)’s sales report on Monday. Toprak said that Ford’s average transaction price was probably up about 4.5% in May, as good sales of pickups and SUVs skewed Ford’s overall product “mix” toward its most profitable products.

As he noted, flat or lower incentives, higher average transaction prices, and increased sales are a “perfect scenario” for increased profitability, one that bodes very well for Ford’s second-quarter results.

Ford Motor Company (NYSE:F)’s profits in recent quarters have been powered by strong results in what CEO Alan Mulally calls Ford’s “engine” – its North American region. Clearly, Ford’s engine was running very well in May – and its second-quarter profits, at least for North America, look to be in good shape.

The article Surging F-150 Sales Power Big Gains for Ford originally appeared on Fool.com.

Fool contributor John Rosevear owns shares of Ford and General Motors. Follow him on Twitter at @jrosevear. The Motley Fool recommends Ford and General Motors. The Motley Fool owns shares of Ford.

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