Ford Notes: Sales Deceleration Concerns Emerge, Lincoln Financial Services Launched

November 9th, 2011 by Trefis Team
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Ford’s (NYSE:F) stock has taken some lumps in the last week and continues today given GM’s (NYSE:GM) weaker than expected earnings. This adds fuel to concerns over decelerating U.S. auto sales that weighed on sentiment last week after Ford reported 6 percent year-over-year sales growth in U.S. in October that missed analyst expectations. [1] [2] Prior to this, investors were already concerned about Ford’s lackluster performance in Q3 (See our previous post: Wimpy Economy Hurts Ford Car Sales but Stock Good for $14)

Our price estimate of $14 for Ford’s stock is more than 20% above the current market price.

See our complete analysis for Ford stock here

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U.S. auto sales deceleration could continue

Ford’s deceleration in sales is especially worrying given that recently the Federal Reserve has also lowered its forecast of U.S. economic growth over next two years significantly. [3] U.S. economic growth slowdown will adversely effect the automotive industry amongst others over the medium-term because of faltering customer confidence.

Lincoln Automotive Financial Services launched

In U.S., October sales of Lincoln declined by almost 11% year-over-year [4] To arrest this decline, this week, Ford launched a new Lincoln Automotive Financial Services. [5] Besides helping support Lincoln sales, the new Financial Services will also support increased revenues of Ford Motor Credit Company through increased total vehicle loans outstanding.

To support the sales of Ford trucks, Ford this week also launched an upgraded model of Ford Flex with better fuel-economy, enhanced technology, safety and driver-aid technology. [6]

You can drag the trend lines in the modifiable charts above to see the impact of these trends on Ford’s stock value.

Understand How a Company’s Products Impact its Stock Price at Trefis.

Notes:
  1. October 2011 U.S. Sales [↩]
  2. Auto Sales: The Detroit 3 Disappoint [↩]
  3. Fed Lowers Its Forecast for Growth, but Takes No Steps [↩]
  4. Breakdown of Ford’s October 2011 U.S. Sales [↩]
  5. Lincoln Automotive Financial Services Launched to Support the Lincoln Experience [↩]
  6. New Ford Flex Brings More Technology, Better Fuel Economy, Modern Sophistication to Seven-Passenger Crossover [↩]