Resilient quarterly auto sales from Club name Ford Motor (F) on Thursday bolstered our confidence in the company’s transformation strategy to support its electric vehicle future.
Ford reported total U.S. auto sales of 531,662 during the second quarter, a 9.9% year-over-year increase, a second straight quarterly advance.
Those gains were driven by a 34% increase in F-series truck sales.
Sales in its core internal combustion engine vehicle unit increased 10% in Q2.
Electric vehicle sales fell 2.8% to 14,843 in the second quarter.
The F-150 Lightning pickup saw sales soar 119% in Q2.
But supplies of the Mustang Mach-E SUV were limited, leading to about a 21% drop in sales.
It’s worth noting that Ford EV sales are up 11.9% year to date, and total sales of more than 1 million vehicles in 2023 rose 10%.
Despite solid quarterly sales, shares of Ford dropped more than 2.5% to just under $15 each.
However, the stock was still up 28% year to date, really taking off since its May lows.
F YTD mountain Ford YTD performance
This year has shaped up to be less troublesome for the auto industry than predicted as more inventory has become available; supply chains are finally starting to run more smoothly; and consumer demand for cars has remained high despite higher interest rates.
Other leading automakers also reported stronger quarterly sales this week.
General Motors (GM) on Wednesday said total second-quarter U.S. auto sales increased by nearly 19% to 691,978.
Like Ford, GM is also focused on accelerating EV production.
However, GM’s electric vehicle sales in Q2 dropped 32% to 15,652.
Tesla (TSLA) on Monday announced record second-quarter deliveries of 466,140 vehicles worldwide, not an apples-to-apples comparison to Ford and GM numbers, which are U.S. only.
However, Tesla’s 83% year-over-year quarterly increase provides a directional benchmark.
Bottom line Ford delivered good numbers during the second quarter but we aren’t surprised to see the stock down, which is being dragged by the overall market slump Thursday.
While EV sales in the U.S. were down modestly for the quarter, it was encouraging to see continued momentum in the unit with more inventory availability on the way.
Buoyant sales at Ford for the first half of the year came during a period of tougher credit conditions.
With the Federal Reserve set to resume its interest rate hikes later this month after a June pause, it could be more challenging for consumers to take out auto loans at higher rates and under tighter lending standards.
Ford has dealt with production challenges while growing its EV business.
In February, the company had to issue a stop-shipment order and production halt on its F-150 Lightning due to a potential battery issue.
It was quickly able to recover and revamp production.
Ford also dealt with planned downtime at a plant getting an overhaul designed to increase production of the Mach-E.
On the positive side, Ford announced in May that it’s teaming up with Tesla to provide its EV customers access to more than 12,000 Tesla Superchargers across the U.S. and Canada.
Ford a distant No. 2 electric vehicle maker to Tesla hopes to produce more than 2 million EVs by late 2026.
Last month, the Energy Department announced plans to loan a record $9.2 billion to Ford to develop three new battery manufacturing plants.
During the company’s Capital Markets Day in May, Ford announced strategic agreements with some of the world’s prominent lithium producers to create more stability in its electric vehicle production.
Scale and lower battery costs are two big drivers of Ford’s path to 8% earnings before interest and taxes (EBIT) margins by year-end 2026 on EVs.
The company also expects full-year 2023 adjusted free cash flow of $6 billion compared to analysts’ estimates of about $3.4 billion.
Overall, Ford’s moves under CEO Jim Farley appear to be paying off, and we are pleased to see that the automaker keeps attracting new customers for its stellar lineup of vehicles.
(Jim Cramer’s Charitable Trust is long F. See here for a full list of the stocks.)
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