Goodbye Toyota Motor Corporation (ADR) (NYSE:TM) and Honda Motor Co Ltd (NYSE:HMC)
Behold four reasons for Ford’s recent success:
Image courtesy of Ford.
Those four vehicles, from left to right, are the Escape, Fusion, Focus, and Fiesta. Ford Motor Company (NYSE:F) has named the combination of these four segments to be the “super segment”. Ford is focusing its effort and toward new models because it expects that global growth will be in those segments. Consider that in 2004 the super segment accounted for about 35% of new vehicle sales, but now it’s over 50%.
Ford Motor Company (NYSE:F)’s retail market share of this super segment is up 28% which is a solid gain. Most of that share is at the expense of Toyota Motor Corporation (ADR) (NYSE:TM) and Honda Motor Co Ltd (NYSE:HMC), which have long dominated these segments with fuel-efficient and valuable vehicles. In 2008, the two leading Japanese auto’s accounted for about 36% of the super segment while Ford had 8%. Fast-forward five years and Toyota and Honda now combine for 28%. Ford Motor Company (NYSE:F) alone accounts for 13% in the super segment through April sales – on the heels of Toyota Motor Corporation (ADR) (NYSE:TM)’s leading position at 15%.
Ford’s increased share in the super segment is one of the reasons its stock has rallied, but here’s why it will continue. According to Ford, it expects even more growth in the super segment than already seen, driven by baby boomers continuing the trend of downsizing their vehicles. In addition to that, on the opposite end of the generational spectrum, the millennials have been drawn to the Fiesta. Ford Motor Company (NYSE:F) hopes to keep luring younger first-time buyers to its brand – creating a loyal, future bloodline.
The bulk of success in the super segment comes from the Fusion and the Escape. Amy Marentic, group marketing manager, Ford global small and medium cars had this to say in a recent press release: “Each of our vehicles in the segment is doing great things for Ford in different ways … Two-thirds of all buyers shop both the Escape and Fusion when they come to our dealerships, and sales of both are way up.”
Escape and Fusion
Consider that since the Explorer in 2004 no Ford Motor Company (NYSE:F) vehicle, besides the F-Series, has topped 300,000 in annual U.S. sales. This is the first year in nearly a decade that two additional vehicles could top that mark. Through the first four months of 2013 the Fusion and Escape sold 107,280 and 98,809 units, respectively. In addition to the tremendous sales both vehicles can fetch a lofty price tag with premium options – helping to keep Ford’s 11% operating margin in North America.
Bottom line
As I mentioned earlier, Ford Motor Company (NYSE:F) and General Motors Company (NYSE:GM) took different approaches between top- and bottom-line progress. Investors would like to see Ford’s stock rally continue, and it will rely on the super segment to grow its top-line revenues and the F-Series to continue bringing home strong profits. It looks like both of these trends will continue, and 2013 should be a great ride for Ford investors.
The article 1 Reason Why Ford’s Stock Rally Will Continue originally appeared on Fool.com.
Motley Fool contributor Daniel Miller owns shares of Ford and General Motors Company (NYSE:GM). The Motley Fool recommends Ford and General Motors. The Motley Fool owns shares of Ford.
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