Shares of Ford Motor Company (NYSE:F) slipped 1.7% to $13.59 on Tuesday, following the automaker's report of a 10.3% decline in U.S. second-quarter sales to 549,200 vehicles. The broader market also retreated, with the SPDR S&P 500 ETF (SPY) down 0.5%, while General Motors (NYSE:GM) and Tesla (NASDAQ:TSLA) experienced steeper drops of 2.0% and 3.8%, respectively.
Ford's sales volume fell more than GM's 4.2% drop, yet the stock's relatively milder decline suggests investors are looking beyond headline numbers to the composition of sales. The company emphasized that after excluding planned phase-outs of the Escape and Lincoln Corsair models, and assuming flat daily-rental sales, second-quarter sales would have edged up 0.5%.
Sales Mix Takes Center Stage
Ford's focus on higher-margin vehicles is becoming increasingly important. The automaker reported first-half F-Series sales of 357,801 units, outpacing the Chevrolet Silverado by more than 80,000. The Bronco achieved a quarterly record with 45,739 vehicles sold, while Maverick Hybrid sales rose 19.3% to 29,457 units. Additionally, Ford Pro Intelligence paid software subscriptions surpassed 900,000, up about 20% year-over-year.
Andrew Frick, president of Ford Blue and Model e, highlighted the company's retail market share gains, stating, "Gaining retail market share last month … shows the strength of the Ford lineup." This emphasis on retail sales and higher-value products is crucial as the company navigates a challenging environment.
Quality Concerns and Recalls
Quality issues resurfaced with the announcement of a recall involving 110,626 Mustang and Mustang Mach-E vehicles in the U.S. The recall includes 67,842 Mustang and Mustang GTD cars due to a wiper defect, and 42,784 Mustang Mach-E vehicles for a potential rear differential pinion shaft breakage issue. Dealers will perform repairs or replace parts at no cost, according to the National Highway Traffic Safety Administration.
These recalls come ahead of Ford's second-quarter earnings report scheduled for July 28, raising questions about potential margin impacts. Investors will closely watch the earnings call for updates on quality costs and their effect on profitability.
Strategic Moves and Supply Chain
In a positive development, Ford announced a long-term agreement with Micron Technology (NASDAQ:MU) to secure memory and storage platforms for next-generation vehicles. This deal aims to mitigate risks from rising DRAM prices, which have climbed about 70% since December, according to S&P Global Mobility. Micron CEO Sanjay Mehrotra noted that "advanced memory and storage continues to grow" in importance as vehicles process more data.
Ford also addressed supply chain challenges, noting that first-half F-Series sales were affected by shifted commercial production following last year's aluminum shortages. The company expects supply to normalize in the second half of the year.
Earnings Preview
Ford and Ford Motor Credit will report second-quarter results at 4:05 p.m. ET on July 28, followed by a conference call with CEO Jim Farley and CFO Sherry House at 5 p.m. ET. Investors will focus on the margin performance across Ford Blue, Ford Pro, and Model e segments, as well as the impact of recalls and F-Series supply dynamics. The stock's relatively modest decline on Tuesday suggests the market is giving Ford the benefit of the doubt, but the earnings report will be the true test of whether that confidence is warranted.
