Ford Motor Company (NYSE:F) saw its shares fall 2.4% to $13.32 on Thursday, underperforming the broader market, after the automaker reported a 10.3% drop in second-quarter U.S. sales to 549,200 vehicles. The decline was steeper than that of rivals General Motors (NYSE:GM) and the S&P 500 (NYSEARCA:SPY), with investors focusing on the company's swelling inventory levels, particularly for its flagship F-Series pickup trucks.
Inventory Builds Raise Concerns
Ford ended June with 471,000 vehicles in gross stock, representing approximately 78 days' supply at the second-quarter selling rate. However, the F-Series, which accounts for 36% of Ford's U.S. sales, had a higher cover of about 88 days. This elevated inventory level has traders questioning whether Ford can clear out these trucks in the second half of the year without resorting to aggressive price cuts that could pressure margins.
The report landed during regular New York Stock Exchange hours, which run from 9:30 a.m. to 4 p.m. ET. The market will be closed on Friday, July 3, for the Independence Day holiday.
EV Sales Plunge
Ford's electric vehicle (EV) sales dropped sharply, falling 40.7% year-over-year to just 9,746 units. Battery-electric models made up only 1.8% of Ford's total Q2 U.S. volume, a stark contrast to the company's ambitious EV targets. Hybrid vehicle sales also declined 20% to 53,163 units, representing 9.7% of total sales. Internal combustion engine vehicles still dominated, accounting for 88.5% of sales with 486,291 units, down 8.1% from a year ago.
Despite the EV slump, Ford's estimated June retail share rose 0.2 percentage points to 12.3%, driven by demand for high-margin SUVs and F-Series trucks.
F-Series Performance and Outlook
Andrew Frick, president of Ford Blue and Model e, noted that the company is phasing out certain high-volume models and that the F-Series has pulled further ahead of competitors. First-half F-Series sales were impacted by commercial production realignment following last year's aluminum supply shortages, but Ford expects supply to improve more significantly in the second half.
F-Series gross inventory stood at 190,400 units at the end of June, while Q2 sales came in at 197,900 units. This represents nearly a full quarter's worth of supply based on the Q2 selling pace.
Other Key Metrics
Ford's total truck inventory, including the F-Series, stood at 288,800 units at the end of June, with implied days' supply of 82 days. Total SUV inventory was 170,400 units, representing 72 days' supply. The company's overall inventory cover of 78 days is well above the industry average, adding to the pressure on pricing.
In addition to the sales report, Ford announced a recall of approximately 741,000 vehicles in the U.S. due to a transmission defect that could damage the park system and allow vehicles to roll away. This update adds to investor concerns about warranty exposure.
Market Reaction and Earnings Calendar
Ford's stock traded between $13.22 and $14.00 on Thursday. In comparison, General Motors fell 0.6% to $75.06, while Tesla (NASDAQ:TSLA) dropped 7.8% to $392.01 following its delivery report. The Consumer Discretionary Select Sector SPDR Fund (NYSEARCA:XLY) slipped 1.0%.
Ford and Ford Motor Credit are scheduled to report Q2 earnings at 4:05 p.m. ET on July 28, with CEO Jim Farley, Sherry House, and senior management hosting a call at 5 p.m. ET. The upcoming earnings report will be closely watched for further details on inventory management, pricing strategy, and EV performance.
