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zip89105

July 2017 Fusion sales dive

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Fusion sales down 42% to 13,886 units year over year

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Sales of sedans in general, especially mid-size, are falling as sales of crossovers and SUVs are increasing. There's over $4G in incentives on Fusions right now. The KY plant that builds Escapes and MKCs will be only be closed for one week this summer instead of the customary two weeks. Explorer sales were up 20% in July and a good portion of those were high-end models, thus higher transaction prices.

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Despite some good news the bad news is F stock is down -0.29 at minus 2.58% as I type this.

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Ford could have the best sales story ever and the stock can still go down. There is no correlation between short term stock prices and a healthy business. And trying to manage the business to stock performance is a recipe for disaster.

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There is a correlation between stock prices, short term or not, and sales reports. When Ford can hardly sell vehicles with discount pricing and 0% financing, or with sizable rebates for cash purchases, that is bad business. Ford definitely isn't managing their business for stock price or the price would be up, sales would be up, and customers wouldn't shun Ford vehicles. Instead of buying back shares when Ford has cash, Ford instead puts more shares out on the market, further diluting the stock price. The stock market is near an all-time high and Ford is near a 6 year low.

 

Ford could easily be a market leader if it remedied issues sooner instead of alienating customers. Ford had a windfall when GM & Chrysler declared bankruptcy, as many swore them off and bought Fords. Ford had a disastrous introduction for their egoboast F150's motors, and it took 3 years to cure the stalling issues. Many of those customers went to GM, Ram, and Tundra trucks, and aren't coming back. The Focus and Fiesta have tranny issues, a class action lawsuit, and those buyers, if first time Ford owners, will shift their allegiance to another brand. Ford, watching sales tank, transfers production to China. The Corolla & Civic sales are near all-time highs. The Ford 1.6T motor issues are being poorly dealt with, and Kuga's across the globe are catching fire. Too many recalls aren't helping either.

 

My 2016 Fusion is the first Ford I've owned in 30 years. I swore off Ford after years of bad luck with their vehicles. After 30 years I took a chance on buying a Fusion and so far I've been lucky. Ford needs to up their quality drastically or they can kiss another generation of customers goodbye.

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Ford hasn't issued new shares in at least 7 years. Being #1 in sales doesn't mean the business is healthy - GM was #1 when they went bankrupt. Ford is still solidly profitable. They've missed some short term opportunities by delaying new products and not updating existing products like Fusion and they have a lot of quality issues that all need to be fixed. But none of that really has anything to do with the stock price. The stock market tends to like short term fixes that pump up short term numbers but prove detrimental in the long term - like cutting costs by not investing in new products.

 

You're right about the things they need to fix, although I don't agree that things like the F150 problems were a big deal given where F150 sales and ATPs are right now. But I don't agree that any of that is tied to the stock price or that Ford should really care one way or the other. They need to do what they need to do for long term profitability and the stock will take care of itself over the long run.

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I'd be curious to know how auto sales in general compare year over year against 2016, and how that number compares to Ford's y.o.y. figure.

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sirtanon, what you are looking for is at the super news ticker forum. I'd cut & paste it if I could.

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akirby, you are correct, Ford hasn't issued new shares in a while, although there has been a float of 3.8B to 4B shares since 2011. Still too many.

 

Ford needs to care, because when the stock drops, the market value of Ford drops. New shares, if offered, will get depressed prices. Borrowing will be at higher interest rates. Stock options become worthless as a bargaining chip to retain or hire certain employee's if the stock price is lower than the option price. I don't see Ford doing anything to make itself a viable long term investment at this point in time.

 

Sad that the lightly remodeled 2017 Fusion sells 13k+ copies in July while being outsold by the old Camry at 33k+, the old Accord at 30k+, and the Altima CVT at more than 24k, despite APR & rebate numbers that were equal or better than the majority of the competition.

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We only disagree about the importance of the stock price. Ford has issues thanks to Mark Fields and by insider accounts the new guy is moving quickly to fix those problems. It will take 2-3 years though. New Ranger and Bronco are late but on the way. The new C platform including a full electric vehicle, lots of hybrids and plug in hybrids is on the way along with CD6 which will underpin a new explorer and aviator and Lincoln sedans (and maybe a new Mustang). A new Fusion is most certainly in the works even though it's later than it should be.

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I'd be curious to know how auto sales in general compare year over year against 2016, and how that number compares to Ford's y.o.y. figure.

Sales in general fell 7% y.o.y. Ford sales y.o.y. dropped 7.5%.

 

More

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From what I read Fiat and GM sales were worse than Ford year over year.

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I haven't followed FCA or GM much since I neither own one of their vehicles any longer nor have a financial interest. I do follow their vehicles that compete with Ford when something is new or modified.

 

That being said, it appears, to me at least, that Ford might be following the FCA lead and getting out of the low margin vehicle business in the USA & CAN, starting with the Fiesta & Focus. I don't believe Americans are going to be buying Ford's made in China. Time will tell.

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From what I read Fiat and GM sales were worse than Ford year over year.

GM sales fell 15.4%. FCA fell 10%.

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BTW - at last check Ford had $28B in cash and were on target to make at least $7B this year. That's a pretty healthy company regardless of the issues we've pointed out.

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With the exception of the Mustang, which a new model has been unveiled and people are waiting for, Fusion is down the most. 

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