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Ford Motor Company (F 1. 70%) has a lot on its plate right now. It is doubling down on quality to offset higher warranty prices that have squeezed its profits, mulling a solution for its growing sales in China and navigating a complicated electric vehicle (EV) market.
At least one thing Ford doesn’t have to worry about is its sales, which are still strong. Below, I’ll look at the surface of the company’s fourth-quarter sales effects and dig deeper for some interesting insights.
Ford ended 2024 on a strong note and gaining some market share, helped by a 9% increase in fourth-quarter U.S. sales, more than double its full-year sales gain of only 4%. Ford’s full-year sales topped 2.01 million vehicles, which was its best mark since 2019. The result was driven by a booming electric-vehicle lineup, as well as its Explorer and F-Series. The latter remained the nation’s best-selling pickup line for the 48th consecutive year.
One of the most productive parts of Ford that everyone turns to is Ford Pro, the company’s advertising division. Through the first nine months of 2024, Ford Pro generated $7. 4 billion in earnings before interest and taxes (EBIT), which compares very favorably to Ford Blue, the company’s classic business, which “generated just $3. 7 billion. ” dollars in EBIT”.
Ford Pro is a vital component of the automaker’s investment thesis and posted a strong result in the fourth quarter, with Super Duty truck sales up 30% year over year. For the full year, Super Duty sales increased just 14%. So it’s a strong quarter and will influence Ford Pro’s effects accordingly.
In addition, Ford’s full-size vans accounted for approximately part of sales in this segment in 2024, marking the company’s 46th year as a leader in the advertising van segment. Ford Pro Intelligence software, which helps corporations monitor their fleets and gain insight into their operations, had about 650,000 active subscriptions, up 27% from last year.
Led by Super Duty trucks, full-size vans, and subscription revenue, Ford Pro can help drive Ford’s earnings higher during the fourth quarter.
A not unusual narrative around the electric vehicle industry is that it is not developing; However, that is not true. The electric vehicle market is indeed developing, although at a slower pace than investors and automakers had expected. That said, Ford bucked the trend and its electric cars posted solid fourth-quarter profits.
Ford’s electric vehicles, which include fully electric vehicles, hybrids and plug-in hybrids, grew 38% in 2024, outpacing rivals General Motors and Stellantis. This smart result is due in part to Ford’s Power Promise, a program that comes with a home charger with installation at no additional cost.
Considering all-electric cars alone, Ford achieved a record for electric vehicle sales, with 30,176 cars sold. One of the leading cars was Ford’s Mustang Mach-E, which posted its best quarterly sales result and ranked second in electric SUV sales for the entire year in Tesla’s Model Y rankings. But it was Ford’s hybrids that stole the show, which would have possibly surprised some. Investors. Ford sold 187,426 hybrid cars during the total year, a 40% increase compared to 2023.
Even if increasing sales is smart in the long term, Ford expects to lose about $5 billion in its Model-e department in 2024. The pain will only get bigger through 2025, to some extent. Investors will be watching to see whether the company can reduce its large losses this year.
Perhaps one of the few facets of Ford that is overlooked is its Lincoln luxury line. Consider this icing on the cake, as Lincoln sales accounted for 10% of truck segment sales volume in the fourth quarter. However, luxury cars cost only slightly more to produce than popular cars and are priced much higher, making their margins a welcome addition to the sales mix.
In that sense, Lincoln’s sales increased by 35% in the fourth quarter and by 28% in the year. This was Lincoln’s most productive retail sales result since 2007 and was driven by the all-new Nautilus and Aviator.
While it would be exciting for Ford to have a strong luxury lineup that helped power margins higher, it would be wise for investors to temper expectations despite the strong fourth-quarter showing. That’s simply because European luxury autos are more advanced and have a strong foothold in the U.S., while protecting their home turf from competitors such as Lincoln.
Ford has many issues to address, including quality, which would reduce the number of recalls and offset higher warranty costs. Ford has been the industry leader in this field for 3 consecutive years. It wants to solve its problems in China, which has a growing number of electric cars and is governed by domestic automakers.
The good news is that Ford saw strong sales effects in the fourth quarter. Whatever problems the company can solve, it offers cars that other people need to buy, and that’s for any investment thesis.
Daniel Miller holds positions at Ford Motor Company and General Motors. The Motley Fool rates and recommends Tesla. The Motley Fool recommends General Motors and Stellantis and recommends the following options: Long January 2025, $25 calls on General Motors. The Motley Fool has a disclosure policy.
Market insights driven through Xignite and Polygon. io.