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Can Ford's New Fusion Knock off the Camry?

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By John Rosevear, The Motley Fool

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Photo credit: Ford Motor Company

Ford‘s new Fusion sedan has been turning heads since its launch late last year. It’s easy to see why: With its sleek flanks, Aston Martin-inspired grille, and luxury-car-like interior, it really stands out in a sea of blander-looking competitors.

And lately, it’s been drawing quite a few customers. For the year to date through March, sales were up 26% over the first three months of 2012, as the new Fusion continues to outshine its well-regarded predecessor.

But will the Fusion have what it takes to overcome America’s best-selling car, Toyota‘s ever-popular Camry?

Rapidly rising on the U.S. sales charts
Ford already has America’s best-selling vehicle, of course. Its F-Series pickup trucks have been the best-seller for decades, followed by the perennial runner-up, General Motors‘ Chevy Silverado pickup.

That’s unlikely to change, because pickups are big business here in America. But it’s after those two that the sales race gets interesting. So far in 2013, the next four biggest sellers are all midsized sedans: the Camry, Honda‘s Accord, Nissan‘s Altima – and Ford’s new Fusion.

The Fusion isn’t far behind the Altima, with 80,558 sales through March to the Nissan’s 86,952. But it has a ways to go to catch up to the Camry, which sold 100,830 through the first three months of the year.

Camry sales look strong, but they have been down 4% so far in 2013, thanks in part to the strength of the new Fusion. Does Ford‘s hot-looking sedan have a chance of catching up and dethroning the Camry?

Probably not, at least in the near term. Here’s why.

Why Ford can’t (yet) beat the Camry
Here’s the problem: Ford’s can’t (yet) make enough Fusions to outsell the Camry. The company cut its North American production facilities way back during its painful restructuring last decade. That was a good move, one that has led to strong profits now that many of its factories are working overtime.

But it has a downside. With plants already running around the clock, Ford can’t make many more Fusions than it is already making – at least, not easily. Ford U.S. sales chief Ken Czubay told reporters last week that strong sales and strong continuing demand for the Fusion in places like California and Florida could mean short supplies of the hot sedan in coming months.

Adding production means expensive investments in additional production lines, investments that Ford has been reluctant to make until it’s sure it can sell the extra cars (and until it’s sure that its suppliers will be able to keep up).

The good news is, with the Fusion, Ford is already preparing to step up production.

A $555 million investment to close the gap
Ford has already announced that it is adding a production line to build the Fusion at its Flat Rock, Mich., plant, where the Mustang is currently built. That isn’t a cheap move: Ford is spending $555 million to install …read more

Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

Monster Car Sales Fuel Stocks

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By John Maxfield, The Motley Fool

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Stocks are broadly higher today on the back of impressive March auto sales and a positive development in the health care industry. With roughly an hour left in the trading session, the Dow Jones Industrial Average is up 71 points, or 0.49%.

Fueling the generally positive sentiment on Wall Street were the sales figures from the nation’s largest automakers for the month of March. Ford reported an overall increase of 5.7% relative to the same month last year. Year to date, that figure comes in at 11%. Ford’s success was largely a function of SUV sales. While car sales declined by 0.2%, led by an 11.9% fall related to the Focus, demand for Ford’s Escape and Explorer models soared 27.6% and 32.5%, respectively.

Ken Czubay, Ford’s vice president of U.S. marketing, sales, and service, said in the company’s prepared remarks: “Customers are buying our all-new Fusion and Escape in record numbers, and we are working harder than ever to keep pace with demand for these fuel-efficient vehicles. Full-size pickup demand continues gaining momentum, outperforming the industry for the third consecutive month.”

General Motors reported equally impressive results, notching its best March sales in five years. Its performance owed largely to its Cadillac and Buick brands, sales of which were higher during the month by 50% and 37%, respectively. By comparison, the significantly larger Chevrolet division was roughly even compared with the same month last year.

According to the company’s prepared remarks, vice president of U.S. sales operations Kurt McNeil said:

GM delivered its best March sales in five years thanks to a strengthening economy and new products, and we are expecting our third consecutive increase in market share versus last year. Sales of smaller cars have been robust for some time. Trucks have improved in lockstep with the housing market and the strength of the crossover market signals that America’s families are more confident about their financial health.

Not surprisingly, shares of both companies are up by more than 1% in intraday trading.

Meanwhile, shares of UnitedHealth Group are leading the Dow higher today, up 4.9% at the time of writing. As my colleague Dan Dzombak discussed earlier, the move follows a surprise announcement last night by Medicare Advantage, a souped-up version of Medicare.

Earlier in the year, the Centers for Medicare and Medicaid Services proposed cutting certain benefits that would flow through the enhanced health-insurance program. Its initial proposal included a 2.3% reduction in what the government pays to private insurance companies to administer the plans. This all changed with last night’s announcement, as the CMS now plans to increase the amount by 3.3% instead. Sorta makes you think they left out a negative symbol on the first go-around.

When President Obama was re-elected, shares of UnitedHealth and other health insurers fell immediately. Is Obamacare a death knell for health insurers, or is the market missing out on some of the opportunities the law presents? In this brand-new …read more
Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

Strong Sales Continue for Ford's Hot New Models

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By John Rosevear, The Motley Fool

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March was another solid month for Ford , as the automaker once again posted U.S. sales gains well above analysts’ sales estimates.

Ford said on Tuesday that its March U.S. sales were up 6% over strong year-ago totals, well ahead of the 4.4% consensus expectation from analysts.

Solid sales of Ford’s F-Series pickups, which were up 16% over year-ago numbers, were a big contributor to the good results.

But the highlights were the exceptionally strong results for the automakers two newest models, the Escape SUV and the Fusion sedan.

In fact, Ford may be having trouble keeping up with demand for these hot models.

Ford’s latest models are becoming big sales hits…
“We are working harder than ever to keep pace with demand” for the Fusion and Escape, Ford’s U.S. sales chief Ken Czubay said in a statement on Tuesday. That demand has been torrid, as both models hit all-time highs for monthly U.S. sales in March.

Sales of the Escape were up more than 27% over year-ago totals, a strong sign that the redesigned model is finding its stride with customers.

Fusion sales were up just 6% over year-ago numbers, but that’s a more impressive amount than it might seem. Last March was another “best month ever” for the Fusion, as Ford was beginning the process of selling down inventories of the outgoing last-generation model.

It has been clear in recent months that the new Fusion, a visually striking car with many luxury features, has significantly elevated Ford’s game in this segment. The Fusion appears to be stealing sales from well-entrenched rivals like Toyota‘s Camry and Honda‘s Accord, the longtime class leaders.

Those strong March results capped the best-ever quarter for the two nameplates, Ford’s newest U.S. models. It’s a sign that the company’s “One Ford” product strategy is continuing to find favor with American customers.

But as Czubay’s comment on Tuesday suggested, the automaker is facing an interesting challenge: Building enough of these well-regarded vehicles to meet demand.

…but keeping up with demand will be a challenge
After years of painful restructuring, Ford is facing an interesting challenge in North America: Many of its factories are running at or near maximum capacity, but demand for its strong new products continues to increase.

In a way, this is a classic “good problem to have”. An industry rule of thumb is that auto factories break even at 80% of “full capacity”, generally defined as two eight-hour shifts. The further you get above that 80%, the more profitable your factory.

Ford said last fall that its North American plants were running at 114% of capacity, the automaker’s highest level in over 30 years. That means that some are already running around the clock, which is a big part of why Ford’s North American division has been so profitable recently.

But that also means that increasing production will require some expensive investments in new assembly lines.

Ford is already committed to making some of those investments. A <a target=_blank …read more
Source: FULL ARTICLE at DailyFinance