ROSEVILLE, Mich. – Ford Pro may simply be Ford Motor Co. ‘s “Ferrari. “And some competitors say they’re going after him.
For years, the commercial vehicle segment has been neglected, considered less interesting, but connectivity in particular is helping to replace this picture. Today, Ford Pro is generating margins that drive the Blue Oval’s investments in its future by adding electric vehicles. Meanwhile, the main competitor is making adjustments to better serve its customers.
Ford Pro alone increased its operating profit by 81% to $7. 2 billion in 2023 with an operating margin of 12. 4%, even with a slower ramp-up in Super Duty truck production with a new quality procedure and a United Auto Worker strike. $8 billion and $9 billion in 2024 and a margin of around 15%. For example, Ford Blue, the internal combustion engine and hybrid vehicle business of the Dearborn automaker, posted an operating profit of $7. 46 billion and an operating margin of 7. 3% last year. .
“I don’t forget a time when Fiat owned Ferrari, and my valuation was about $4 billion,” Adam Jonas, an analyst at Morgan Stanley’s investment bank, said when asked Ford CEO Jim Farley a question on a recent earnings call. “Today, Ferrari is worth $80 billion, and investors completely forgot about the company when it was part of Fiat. Now, Ford’s Ferrari is called the Ford Pro. And I think we agree: other people forget about the cash cow.
Ford shares closed Friday at $12. 06 per share, giving the company a market capitalization of $47. 9 billion, according to Yahoo Finance. For comparison, Ferrari NV valued it at $77 billion on the Nasdaq. Meanwhile, General Motors Co. valued nearly $47 billion and Tesla Inc. $520. 9 billion.
Understanding the pricing of Ford Pro, the automaker’s advertising vehicle unit, became clearer after the automaker began splitting profits from its three divisions: Ford Blue, Ford Pro and Model e, its electric vehicle division.
“The way the business was segmented sheds light on the price of the Ford Pro,” Tim Baughman, general manager of Ford Pro, recently told the Detroit News. “In the past, the business side of the business wasn’t so well understood. Maybe it’s not as exciting as the next Bronco or Mustang, nor does it communicate about it as, “It’s just a billboard van. “
Others also see the business value. Nearly a year ago, General Motors announced GM Envolve, a reimagining of GM Fleet as a “one-stop visitor experience” for business responses across its brands, adding the BrightDrop all-electric advertising van business. GM says it’s the most sensato. de delivery distributor of advertising fleets in the U. S. The U. S. economy was in the U. S. for the second year in a row last year, with sales up 20% compared to 2022.
“Technologies that have replaced the way consumers use their cars are also impacting the way fleet managers and homeowners use their cars for business needs, and our GM Envolve style was built through research and listening to fleet consumers, from Fortune 500 corporations to small businesses. local and owned businesses,” GM spokesman Sabin Blake said in a statement. The style “offers GM Wrap consumers a touchpoint for GM’s full diversity of fleet products and services, from hardware to software. “
Earlier this month, Stellantis NV added Ram Professional as its commercial department as part of Stellantis Pro One’s commercial strategy focused on being a “360-degree” commercial component. Its Dare Forward 2030 strategy projects that its advertising vehicle business will account for a share of the company’s annual profit of about $327 billion through 2030, adding $5. 4 billion in subscriptions.
A Stellantis representative declined to comment, however, Jeff Kommor, who recently took on the new role of Ram Professional’s senior vice president of ad sales, made the automaker’s goal transparent at the company’s press conference last week at National Truck and Work Equipment Week in Indianapolis. . According to the fleet owner: “On March 1, I was told, ‘Jeff, you have a new opportunity: Move to Ford Motor Company and become the number one device (light advertising vehicle) on the planet. So that’s my step. That’s my mission.
With those new competitive initiatives, the industry is shaping up to be a “war zone,” said Chris Frey, senior director of business intelligence at Cox Automotive Inc. , an automotive data source. “The next few years will be a little bit more challenging. A battleground in terms of pricing, vehicle offerings, and customizations that brands can do for themselves.
Ford says it has a 40% market share in the U. S. U. S. Class 1 through 7 full-size vans and vans.
“There’s a lot of praise,” Baughman said of the competitors, but “we’re done. We’re done. We have a long history of movement and we plan to play. “
At a conference last month, Navin Kumar, Ford Pro’s chief financial officer, gave a glimpse of that future, which includes video telematics, automated features and curated telematics knowledge services.
Clients like Kevin Merritt have noticed the deployment of new media in real time. His Roseville-based company, Metropolitan Air Compressor, began converting its fleet to Ford cars a decade ago when it introduced the Transit advertising van. He appreciated that his technicians don’t have to bend over when driving in the vans and that there is only one step instead of two, which makes it easier to send gadgets in and out of the vehicle. It has about 40 cars in its fleet, adding Transits, F-Series vans, and Super Duty vans.
He said he requested a cellular maintenance service that allows his technicians to be focused on their task while performing an oil change, software updates, replacement cleaning and other repairs. Ford Pro now provides this service through its 1,200 truck and Super Duty dealerships.
“It reduces the downtime of my technicians,” Merritt said. “They can continue to work while the vehicle is being repaired. “
Last year, Merritt started Ford Pro Telematics after researching the features available. He appreciated that the plug-in device to operate the software was designed specifically for cars and that the cars of the year 2020 have the module built-in.
The generation allows them to have a bird’s-eye view of their fleet, from the maintenance of each vehicle to its location and miles per gallon. Your protection manager has direct access to daily vehicle protection checks and data on driving behavior. The CFO can look at fixed costs and when it makes sense to upgrade a vehicle. The company also receives a one-time bill at the end of the month for maintenance-related costs instead of having to reimburse employees. Technicians also have access to information about the cars they drive on their phones.
“I can’t put a dollar price on it,” Merritt said. “It’s one check per month or several. It’s a position to check everything. It saves time, that’s what it saves. When you’re short on time, we have to put things aside. This makes running our business less difficult and more efficient.
Metro Air is small enough that it doesn’t have a fleet manager. With the company’s permission, agent Bill Brown Ford can notify the company when he or she becomes aware that a vehicle needs maintenance or is subject to a recall.
“Every day that a vehicle breaks down is critical,” said Jim Stevens, director of auto advertising at the Livonia dealership. “They’re wasting money, whether they’re renting a vehicle or they’re just breaking down and just can’t get the job done. “done, or they’re wasting their tasks. The merit of telematics for us, to help the visitor, is the amount of data we can collect before the visitor takes it to the dealership. We are set up in such a way that we can access their telematics systems when they grant us the permissions to do so, and we can check to identify problems, check to get ahead of the problem, order portions, and be prepared.
The broker also provides cellular maintenance or can pick up the vehicle to perform the service and deliver it to the visitor upon completion.
Ford has its own fast strengths, and F-Series trucks have been the best-selling vehicle in the U. S. It has been in the U. S. for nearly part of a century. CEO Farley said on a recent earnings conference call that order banks were outperforming the company’s Ford Pro vehicle source. Investments in infrastructure, the advancement of 5G telecommunications systems, and the encouragement of domestic production are driving physically powerful sales. Farley said dealers get up to 75% of the volume they need for Ford Pro.
He highlighted Ford’s strengths with artisans and small businesses, as well as long-term partnerships with developers. According to him, the opportunities for expansion are in the software and after-sales service.
Ford Pro has more than 500,000 paid software subscriptions, up 46% year-over-year, and margins are above 50%, according to the company. The business is expected to generate 20% of Ford Pro’s operating profit within two years. achieving a 60 percent share in connected vehicles and expanding its subscriber base by a third from 12 percent.
“The magic is in connected services,” said Stephanie Brinley, senior automotive analyst for the Americas at S.
Encouraging users to allow this option is an expansion goal, Baughman said. Customers have a free “Essentials” program that provides maintenance tracking, middleman scheduling, and can unlock or lock the vehicle remotely. Upgrading to Ford Pro Telematics costs $20 per month. Vehicle-compatible, which adds fleet tracking, fuel power analysis, location history, additional protection features, an app for workers to talk to a manager, on-board training, and much more. There are also other features depending on the customer’s needs.
The department is also an EV learning area. There’s a greater mix of e-transit sales to local and state governments and small businesses than the internal combustion engine model, Chief Financial Officer Kumar said. The company also offers some telematics features, particularly aimed at supporting electric vehicles.
“When it comes to EVs at Pro,” he said, “we’ve noticed spaces where things are going better than expected and EVs are responding very well to use cases. “
The Ford Pro’s strengths are a differentiator for the Blue Oval, said Daniel Ives, an analyst at investment firm Wedbush Securities Inc.
“Everybody’s looking to compare themselves to Tesla,” Ives said. It’s Ford’s reaction to show that this is his grandfather’s Ford. It showcases some of the next-generation projects and technologies coming to Ford. It’s an exaggeration to say it’s like Ferrari, but they have a great opportunity to attract new consumers to the Ford ecosystem.