Ford Moving Forward

by | Jun 6, 2024

Ford Moving Forward

Ford’s new vehicle sales have risen 11.2% over the last year.

I’m not sure about you, but with the pressure and uneasiness in the economy right now, I was pretty shocked that any vehicle manufacturer would see that kind of growth.

But that got me thinking…

Maybe it paints a broader picture of specifically how regular, everyday Americans are spending in today’s economy.

You see, across the board, luxury brands have experienced a decline in sales since we entered a high inflation and interest rate environment.

In January, Bentley reported that sales dropped 11% in 2023. Orders of high-end Mercedes dropped 11% alone in the third quarter of last year. And sales for Mercedes flagship S-class model fell 18%.

Meanwhile, sales in China, Mercedes’s largest market for its S-class vehicles fell by 12%.

Over in Korea, Audi continues to rapidly lose market share to cheaper more affordable vehicle options, with the German automaker reporting an 88% decline in vehicle sales from last February to this February.

Audi also announced in their first quarter 2024 earnings report that across-their-brands  deliveries to customers fell 4.5% for Audi’s, 28.7% for Bentley, and 16.2% for Ducati motorcycles.

Cadillac sales decreased by 7% in the fourth quarter of 2023, with some more expensive models experiencing sales drops of 34%.

So, what am I getting at here and why am I sharing this with you?

We are witnessing a change in people’s spending habits, not just in the US. But globally as well.

So whether the stock market (incredibly bullish the last 6 months) may not point to a weakening economy, spending habits certainly are.

Lavish spending on luxury goods is often one of the first things to go when the economy gets tight.

And we’re seeing that with a flight back to Ford, America’s original affordable car company.

Ford’s mission to create the same “luxury” experience in their latest models at a more reasonable cost has certainly seemed to help it gain market share based on the trends we just looked at.

For example, Ford has been rolling out an entire lineup of hybrid and electric vehicles in recent years, competing with the luxury brands that have historically had a strong foothold in that market.

And given that Ford EV and hybrid sales grew 65% in May, it’s safe to assume they are pulling the rug out from the more expensive guys — after all, we’re not talking about buying clothes here where you might get both the designer pair and the more affordable ones…

When someone buys an EV from Ford, they’re specifically not buying one from Tesla. Look for this trend to continue.

Now, I like Ford. I hold the stock in my own account and I think it’s a company who is going to be around for a very long time with a safe and stable dividend.

They’re an American staple that I don’t foresee going away for a very long time. Are they equipped to become the next Tesla or Unicorn automaker? Probably not…

But if they inch away at that market share quarter over quarter with a more reasonable valuation than those competitors, I won’t be surprised to see investors follow retail consumers in the “flight to Ford” so it’s definitely one that has some subtle upside.

But as far as stability and longevity goes, Ford is one of the companies at the top of my safe list.

— Nate Tucci

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