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Ford’s June sales fell by 26.9%  missing second quarter expectations.  Ford’s June and second quarter sales were below analyst expectations as the global shortage of semiconductor chips continued  to force significant production cuts and inventory constraints.

Ford Electric

Ford Electric

Ford sold 475,327 vehicles during the second quarter, a 9.6% increase from a year earlier when the coronavirus pandemic caused Americans to shelter in place but less than expectedl eading the closure of car dealerships throughout the nation.

For June Ford said Friday that its sales declined by 26.9%, including a roughly 30% drop in its F-Series pickups. Edmunds expected Ford’s sales to increase by 10.5%, while Cox Automotive forecast an increase of 20.5%.

On a positive note the company said reservations for its electric F-150 Lightning pickup that’s due out next year have topped 100,000 since its debut in May.

Ford’s sales follow GM and other automakers reporting significant increases in second quarter sales but at a slower pace through the quarter due to low vehicle inventories caused by the chip shortage. Transaction prices riose 15.5%

“The quarter started off extremely strong, April broke a lot of sales records as far as over 18 million, and then we saw that inventory continue to dwindle,” said Jessica Caldwell, executive director of insights at Edmunds.

“Consumer demand is still very strong, but the inventory is somewhat lacking.” June’s selling rate was about 15.5 million vehicles, according to analysts.

Forecasts for the selling rate were between 15.7 million and 16.4 million, down from 17.1 million vehicles in May and 18.6 million vehicles in April. 

The chip shortage is causing a shake-up in America’s automotive ranks. For the second quarter, Toyota Motor was the best-selling automaker in the U.S., ousting General Motors.

Ford Warned in The First Quarter on The Chip Shortage

Ford motors reported massive upside in Q1, with adjusted EPS of $0.89 blowing away consensus of $0.21. Revs and EBIT at $4.8 bln were also better than expected.  However the industry-wide chip shortage proved to be a problem as we saw in the June sales numbers. There was already a shortage of automotive semiconductors, but the problem has been exacerbated by a fire at a supplier plant in Japan during March. Ford expected to lose about 50% of its planned Q2 production, up from 17% in Q1.  Ford now assumes that it will lose 10% of planned second-half 2021 production.

Overall, Ford now expects to lose about 1.1 mln units of production this year to the semiconductor shortage.  Ford maintained its full year adjusted EBIT guidance at $5.5-6.5 bln, including an adverse effect of about $2.5 bln from the chip issue.

Ford expected Q2 will be the trough as it expects the flow of semiconductors from the Japan supplier to resume by the end of Q2.  Ford still is aware that the broader global semiconductor shortage may not be fully resolved until 2022. 

In Q1 Ford had successful launches of the Mustang Mach-E SUV, all-new 2021 F-150 pickup, and Bronco Sport SUV. .Ford believes  the all-electric Mustang Mach-E is the first credible mass-marketed competitor to Tesla (TSLA).  The Mach-E is expected to entice new customers to Ford  with the knowledge 70% of customers who have purchased the Mach-E thus far are new to Ford.

New CEO Jim Farley has been streamlining operations and reallocating capital to franchise strengths, including pickup trucks, SUVs, commercial vehicles, and iconic passenger vehicles, while phasing out unprofitable sedans. He also is focusing more on EVs and AVs. Ford will now invest at least $22 bln in electrification through 2025, nearly twice what Ford had previously committed

Source: Ford

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