On Tuesday, Ford Motor (F) announced U.S. auto sales for November. As a Ford shareholder, I closely track auto sales by unit in order to monitor this sensitive cyclical market. TrueCar (TRUE) released a forecast last week of 4.2% year-over-year sales growth for November. Overall, analysts had projected a 3.2% increase. In its release, Ford said its unit sales overall (including Lincoln) grew by only 0.4%.
Investors might be intimidated by the chart above, but Ford, like all auto companies in the U.S., is a seasonal sales company. A declining chart of sales for November does not do the investor justice. Instead, investors should examine the history of November sales performance for Ford.
Ford went through an ambitious product restructuring in 2014. The effects of that restructuring included months (like September) having soft sales as the company's product pipeline adjusted to the changes. The point for November sales is that Ford still has room to grow on unit sales before getting back to 2013 levels.
In addition to overall unit sales, investors should examine sales changes by brand and group. For Ford, the Lincoln brand saw a decline of 2.4%, year over year, with utilities declining 8.9% and cars increasing 11.8%.
Ford truck sales increased 18.3%, year over year, which is a great indicator for sales and profitability as Ford's truck line (specifically the F-150) is its most popular and most profitable model.
The fascinating thing about this report is that sales of Ford cars fell by more than Lincoln cars gained.
The last comparison would be to look at the popular models sold by Ford. In this case, the top-5 selling vehicles are the F-150, Explorer, Escape, Fusion and Focus. These five accounted for nearly 132,000 units or 72.5% of total units sold in the month of November.
The F-Series led the group in growth with a 10.4% year-over-year increase. Explorer sales were nearly flat, posting a modest 1% gain while Escape sales declined 18.5%. The Focus led the year-over-year declines with a nearly 25% drop.
As the weather gets colder, U.S. sales reports are going to become slightly less relevant. Like we learned in January 2014, a bad winter can do just as much damage to a monthly sales report as a bad economy.
Despite these observations, several relevant questions remain. Are Ford customers geared more toward "gas guzzling" vehicles than fuel-efficient cars due to lower gas prices? Is Ford's F-Series sales growth going to compensate for the drops in its car lines?
Looking forward, I'm going to continue to hold Ford stock, but at this point, I'm not inclined to add to my position unless the company's dividend yield rises above my risk free rate.
Ford investors should continue to monitor U.S. sales overall along with company performance to gauge whether or not cyclical changes are occurring in the consumer discretionary market.
(Ford is a holding in TheStreet's Dividend Stock Advisor portfolio).