The mid-month auto-sales predictions from industry-watchers Edmunds and TrueCar don't usually get everything right, but more often than not they're directionally accurate. In other words, even if the numbers don't match up once all the sales are tallied, they tend to give us early notice on emerging trends.
One of their observations this month? Ford (NYSE: F) is grabbing market share again.
That's not exactly an "emerging" trend, of course. The Blue Oval Crew has increased its U.S. market share in 22 of the past 23 months. Making that figure 23 out of 24 won't be worth much more than a bullet point in Ford's monthly sales press release.
But if the latest predictions hold, this month's gain is going to be interesting for another reason.
Trouble for Ford's ancient rival?
Ford's gains over the past year have appeared to come from a number of sources. For instance, the company clearly benefited from Toyota's (NYSE: TM) recall fiasco earlier this year, as did Honda (NYSE: HMC) to some extent. But the current batch of data suggests that General Motors is losing ground at the moment.
On a year-over-year basis, the shift is pretty dramatic: Edmunds sees Ford's market share rising to 16.4% in September, versus 15.2% a year ago. GM's U.S. market share, meanwhile, is expected to fall to 18.3% in September, versus 21.2% in September 2009.
Of course, market share is one thing and sales are another, and Ford and GM are both expected to post year-over-year sales gains. Given that last September was the month after the "Cash for Clunkers" incentive program ended, that's not much of a surprise.
Still, Ford's sales gains seem likely to be quite solid, with TrueCar predicting a hearty 41.7% year-over-year gain. Again, we can attribute some of that gain to "Cash for Clunkers." Ford's fuel-efficient lineup did well during the incentives program and probably pulled sales forward from last September. But my sense is that the story is really pretty simple: Ford's on a roll.
Small details bringing good news
Here's an example of how things are going for Ford these days. Buyers of the company's hot-selling new-to-the-U.S. Fiesta small car are optioning them up heavily. Only 7% of Fiesta buyers are going for the lower-margin base model, Ford said this past week. That figure falls well below what the company had expected. Given that options packages are generally where the big margins are, that means Ford's profit per car is probably running far ahead of expectations as well.
The Fiesta is also attracting younger buyers, who have been hard for Detroit to reach in recent years. But Ford has worked hard to gain their business, by offering them everything from an advanced "infotainment" system to an interactive brochure packaged as an app for Apple's (Nasdaq: AAPL) iPad. And their efforts seem to be paying off.
This is a sea change. For years, U.S. automakers told us that "we can't make money on small cars" and didn't put much effort into the segment. They blamed any number of factors: high structural costs, low U.S. demand, currency manipulation by various foreign governments … you name it, and somebody in Detroit was complaining about it.
But now, with rigorous discipline and a sensible global product strategy leading to lower fixed costs, Ford's able to not just profit but also generate some excitement, even in a part of the market that's historically been a money-loser for Detroit, and even at a time when the overall U.S. vehicle-sales rate is significantly below historic trends.
Enthusiasm is still justified
I spoke with Ford CEO Alan Mulally recently about the company's progress. Given the way his team has been able to lower Ford's breakeven point, and considering the consistent increases in market share, he is as excited as you'd expect about the prospects for Ford's bottom line as the overall level of U.S. vehicle sales continues to recover from Great Recession levels.
Ford still faces some headwinds, including that daunting debt load, potentially escalating pension costs, a possible economic slowdown, and still-mighty competitors that seem to be getting their own acts together. But speaking as a Ford shareholder, one who wondered not all that long ago whether he was nuts for even thinking that the company would survive, I find it hard not to share Mulally's excitement.