When General Motors Co. (NYSE: GM) reported its results last week, the company missed on both earnings and revenue estimates, and worldwide sales were down about 0.7%. Slightly higher sales in the United States were matched by weakness in South America and Russia, as well as lower-after tax equity income in China.
Ford faces essentially the same issues. Earlier this month Ford said that China sales rose 9% for the first quarter of 2015, roughly even with GM. Year over year, however, Ford’s sales increased by just 1% in March. And Ford’s sales in China amount to only about 30% of GM’s total: 296,825 Ford units sold compared with 961,135 GM units.
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Ford has already begun offering some versions of its all-new F-150 aluminum-bodied pickups at significant discounts. The company has sunk literally billions of dollars into the new pickups, and it needs to sell boatloads to recover its investment. GM is not making that easy for Ford, discounting its Chevy Silverado to make it more attractive to buyers.
It’s a little difficult to believe that supply of the new pickups remains tight if the company is already having to discount the price on some models. But at the end of March days of supply for the F-150 was running at just 18 days according to a Ford spokesperson. The auto industry usually thinks of 60 days as a healthy supply.
Ford’s sales in both Europe and Latin America are likely to follow the softness demonstrated by GM. It is also hard to see China as saving Ford’s quarter. That leaves just the United States, and without big sales and big revenues from the F-150, let’s just say that tomorrow could be a chilly day in Dearborn.
Ford stock traded up about 1% just before noon on Monday, at $15.93 in a 52-week range of $13.26 to $18.12. The consensus price target on the shares is $17.12.
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