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Ford Motor Company (F)

February 01, 2012 10:00 am ET


Erich Merkle -

Ken Czubay - Vice President of US Marketing Sales & Service

Jenny Lin -


John Murphy - BofA Merrill Lynch, Research Division

Brian Arthur Johnson - Barclays Capital, Research Division

Himanshu Patel - JP Morgan Chase & Co, Research Division

Rod Lache - Deutsche Bank AG, Research Division

Adam Jonas - Morgan Stanley, Research Division

Christopher J. Ceraso - Crédit Suisse AG, Research Division



Good day, ladies and gentlemen, and welcome to the Ford Monthly Sales Conference Call. My name is Tahisha, and I will be your operator for today. [Operator Instructions] As a reminder, this conference is being recorded for replay purposes. I would now like to turn your conference over for your host for today, Mr. Erich Merkle, U.S. Sales Analyst. Please proceed.

Erich Merkle

Thank you, Tahisha, and good morning to everybody, and welcome to Ford's January 2012 Sales Call. It's a pleasure to have you on the line. We’ll get things started right off with how did sales perform here for the month of January.

We estimate that total U.S. sales, including medium and heavy trucks, finished the month at approximately 890,000 to 895,000 vehicles. This would equate to an approximate 7% increase for the industry over year-ago levels and a SAAR that we estimate is going to run in the mid- to high 13 million vehicle range. We are very -- overall, we're very pleased with January's industry performance as it really carries through with what we saw in the fourth quarter of last year.

January sales at Ford were up 7% compared to January a year ago. This resulted in a total sales number for the month of 136,710 vehicles. Last month, we saw a shift in the industry to smaller passenger cars and smaller utilities. Small cars, its sales increased as a percent of total sales from just under 19% in December to almost 23% of the market in January. While some of this, we feel, can be attributed to the seasonal rotation into pickups in December, we feel that the long-term secular trend in Americans moving toward smaller vehicles continues to remain intact.

The full-size pickup truck segment expanded to approximately 13.5% of the vehicle mix in December, levels that would really be more consistent with a mid-decade housing boom. As many might have thought or would anticipate, the full-size pickup truck segment did pull back in January to an estimated low to mid-11% range in terms of share of the industry. However, what's interesting with the full-sized pickup truck segment is that January's share of segment, while it is lower than December, was still consistent with annual industry segment share during the full year of 2011. So we think that while we had a great December, we think that the numbers for January speak very positively to the pickup truck segment going forward.

We not only saw this rotation in the industry, but in Ford's vehicle mix as well. Ken is here today to provide us with some additional color commentary on the movement that we saw on small cars to utilities in January. Ken?

Ken Czubay

Thanks, Erich, and hello, everybody. What we saw in January was really proof positive of the benefits of a balanced product portfolio like what we have at Ford. Focus recorded 14,400 sales in January, representing a 60% increase compared to January of last year. In fact, Focus sales last month provided the best January sales results since 2003.

January Focus sales contributed to 30% of Ford's sales gains for the month, more than any other vehicle in our lineup. It was really strong. Additionally, we saw Focus continue to perform very well in California, and I talked about this for the last several months, posting an 86% retail sales increase in January versus last January. As we stated last month, the Golden State produced a strong 55% gain in retail sales in the fourth quarter of last year. So California is really on a roll, and our small car and small vehicle lineup is really producing a boost for all of our dealers and the customers there. As many of you know, L.A. and California have been gaining Focus sales momentum since the introduction of the '12 model about a year ago. So it's been very strong for us.

Turning to Escape. Escape continued seeing strong momentum as well with January sales up 24%. Ford sold 17,259 Escape small utilities last month, making it our best January sales month for Escape ever. Combined, Focus and Escape were responsible for a little under half of Ford's sales growth in January. Explorer sales also continued to grow. So you see a pattern there with Escape and Explorer. January sales totaled 9,966 vehicles, providing a 36% increase over year-ago volumes, which were up strong. If you remember, Explorer’s just been a roll. Explorer was up 73% in January of '11 versus January of '10, so we've had 2 very strong Januaries on Explorer sales. This makes it Explorer's best January sales month since 2006.

So let's talk for a moment about pickups, like Erich talked about in the beginning. Industry pickup sales in December were at some of the highest levels that we have seen since the housing boom. But at Ford, January F-Series sales totaled 38,493 vehicles, representing an increase of 8% compared to year-ago levels. While we did see rotation to small cars and utilities in January, F-Series still had the best January performance since 2008. So we're going back 4 years. It was a darn good month for the pickup sales. It should also be noted that there was little full-size pickup merchandising activity in January. That's kind of traditional following a very active fourth quarter 2011. If you remember, we sold just a little under 70,000, a culmination of all the activity in the fourth quarter really getting spooled up in December. Our plans for February and March include resuming merchandising activities on full-sized pickups. So we expect to see an increase there.

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