Ford F series on record sales pace, despite hurdles

Record year for F series?

After U.S. sales bottomed out in 2009, the Ford F series is on pace to top its 2004 record of 939,511 units.
2018 numbers are estimates

Ford's switch in 2015 to aluminum for the F series has paid off.

DETROIT — Thanks to a blistering first-half pace, Ford Motor Co. might sell more big pickups in the U.S. this year than it ever has, shattering a 14-year-old record set at the height of the housing boom.

The automaker sold more than 450,000 of its F-series line — one every 35 seconds — from January through June. That's 4.2 percent more than in the first half of 2004, when it set an annual record of 939,511.

There's good reason to believe it can keep up the pace: Fifty-two percent of F-series sales typically occur in the second half of a year, when the new model year arrives and languishing inventory gets marked down.

Based on the first-half gain, Ford would sell more than 941,000 of the trucks in 2018, setting a new high-water mark four years into the F-150's product cycle and in a declining market. It might achieve that milestone despite redesigned models from its chief competitors and a fire at a supplier plant that halted production for more than a week in May.

"There's really nothing that's making this an easy feat," said Dave Sullivan, an analyst with AutoPacific. "There's a lot of headwinds, and there's a lot of choice for consumers. I think there's a certain amount of envy everyone in the auto industry is having over the F-series' success this far into its life cycle."

A record sales year would be an impressive feat for the storied nameplate, which has been the country's best-selling pickup each year since the first Star Wars movie debuted in theaters in 1977. It also would validate the automaker's costly gamble this decade to switch from a steel body to aluminum, a decision that raised eyebrows and spurred attack ads from General Motors questioning the F-150's durability. GM and FCA US did not follow Ford's lead with the next generation of their pickups.

"We are heading into the second half with a strong position and look forward to the opportunity that is in front of us," Erich Merkle, Ford's U.S. sales analyst, said in a statement.

'More choice'

The F series, which analysts say accounts for the majority of Ford's global profits and generates enough revenue by itself to be a Fortune 100 company, is strengthening because of a confluence of factors.

It benefited in the first half from heavily incentivized selldowns of the outgoing Chevrolet Silverado, GMC Sierra and Ram 1500, as GM and FCA prepare redesigned versions this year. Economic factors, including strong housing starts, increased infrastructure spending and high consumer confidence, have helped, as has a trend of consumers choosing pickups and SUVs over sedans.

Ford has remained financially disciplined. In the first six months of 2018, the average transaction price for the F series was $46,751 — the highest in the full-size pickup segment, while its incentives were the lowest among the Detroit 3, averaging $4,004 per pickup, according to Power Information Network data cited by Ford. That means Ford is on pace to sell $44 billion worth of F-series pickups this year.

The range of available options helps, too. Since the aluminum pickup launched for the 2015 model year, Ford has methodically rolled out new features, including a 10-speed transmission, Raptor performance variant and, later this year, a diesel option. F-series sales have increased year-over-year in 20 of the last 21 months.

"Ford continues to add more choice," Sullivan told Automotive News. "Although there's a lot of complexity, the consumer obviously is finding a truck that fits their needs. There's something for everyone, and they're willing to pay for it, too."

The even-more profitable Super Duty was redesigned for the 2017 model year. Last year, Ford introduced an F-450 that tops the $100,000 price threshold. It appears consumers are willing to pay for more upscale trucks; through June, the top two trims represented about half of this year's Super Duty retail sales, Ford said.

Rebecca Lindland, executive analyst for Kelley Blue Book, said KBB.com shopper interest in the F series has picked up noticeably this year.

She said it likely has been bolstered by a resurgence in pickups' popularity among owners who don't necessarily use them for hauling and towing.

"More consumers see pickup trucks as a daily driver," she said. "With all the luxury content, people feel they can take their family out for a nice dinner in it and not be ashamed. It's not just a work truck anymore."

2018 vs. 2004

Ford set the F-series sales record in 2004 amid many of the same macroeconomic factors in place today.

The U.S. was still a few years away from the housing crash and economic recession that crippled the industry, and construction companies were buying large numbers of pickups. Gasoline prices averaged under $2 a gallon.

But at that time, Ford was in the first full year after a redesign. The 11th-generation F series debuted in late 2003, returning to a more traditional styling than the softer curves of the previous generation. A new 6.0-liter Power Stroke diesel engine in the Super Duty also helped juice sales.

Today, gasoline prices, while rising slightly, also are relatively low. Housing starts are strong, and employment numbers are up.

"These are good times," Sullivan said. "Hopefully, it's not a bubble like 2004 and this is more of a sustainable, healthy pickup truck market."

After setting the 2004 record, F-series sales dropped for five consecutive years, the declines worsening as the industry cratered.

There's strong reason to believe, whether Ford hits the milestone this year or not, that it won't suffer a similar fate moving forward.

Although the U.S. revival of the midsize Ranger pickup next year could eat into some F-series demand, Ford will have the diesel variant available for the full calendar year then, as well as a hybrid F-150 coming at the end of the decade.

"Part of their secret sauce is that they're able to offer all of these choices," Sullivan said. "You really can't say no."

You can reach Michael Martinez at mdmartinez@crain.com -- Follow Michael on Twitter: @MikeMartinez_AN

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