Founded in 1993, The Motley Fool is a financial company committed to making the world smarter, happier, and richer. The Motley Fool reaches millions of people each month through our premium investment solutions, free recommendations and market research in Fool. com, private finance education, top-notch podcasts, and the nonprofit Motley Fool Foundation.
Founded in 1993, The Motley Fool is a financial company committed to making the world smarter, happier, and richer. The Motley Fool reaches millions of people each month through our premium investing solutions, free recommendations and market research on Fool. com, private finance education, top-rated podcasts, and the nonprofit Motley Fool Foundation. profit.
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 gained some market share, helped by a 9% increase in its U. S. sales in the fourth quarter, more than double its full-year sales growth. year through only 4%. Ford’s annual sales surpassed 2. 01 million vehicles, marking its most productive functionality since 2019. The result was driven through a line of electric vehicles in development, as well as its Explorer and F-Series. the best-selling line of pickup trucks in the country 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. During 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 only $3. 7 billion in EBIT. “
Ford Pro is an important component of the automaker’s investment thesis and posted a strong fourth-quarter result as sales of the Super Duty pickup truck increased 30% year over year. For the full year, Super Duty sales were only up 14%, so it’s a strong quarter and will influence Ford Pro’s effects as a result.
Further, Ford’s full-size vans accounted for roughly half of that segment’s sales in 2024, which marks the company’s 46th year as a leader in the commercial van segment. Ford Pro Intelligence software, which helps businesses monitor their fleets and get insights for their operations, had nearly 650,000 active subscriptions, a 27% gain, compared to the prior year.
Led through Super Duty trucks, full-size trucks and subscription revenue, Ford Pro may boost Ford’s fourth-quarter earnings.
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 come with fully electric, hybrid and plug-in hybrid vehicles, grew 38% in 2024, outpacing competition from 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 most productive quarterly sales result in its history and ranked second in Tesla’s Model Y electric SUV rankings. year-round sales. But it was Ford’s hybrids that stole the show, which would have possibly surprised some investors. Ford sold 187,426 hybrid cars for the entire year, up 40%. from 2023.
Even if expanding sales is smart in the long term, Ford expects to lose about $5 billion on its Model-e division in 2024. The pain will be worse through 2025, to some extent. Investors will be watching to see if 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 the icing on the cake, as Lincoln sales accounted for 10% of its truck segment sales volume in the fourth quarter. However, luxury cars only charge slightly more produce than popular cars and command much higher prices, 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 quite a few problems it needs to fix — like quality, which would help lower the number of recalls and offset higher warranty costs. Ford has led the industry in this department for three consecutive years. It needs to solve its problems in China, which is increasingly filled with electric vehicles and dominated by domestic automakers.
The good news is that Ford reported strong sales results in the fourth quarter. Whatever problems the company has that can be fixed, it provides vehicles that other people want to buy, and that’s for any investment thesis.
Daniel Miller has positions in Ford Motor Company and General Motors. The Motley Fool has positions in 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.