Ford Motor Company (NYSE: F) reported a 12.5% decline in total US vehicle sales for the first quarter of 2020. The sales numbers were heavily impacted by the coronavirus outbreak leading to declines in sales of trucks, cars and SUVs.
Car sales saw the worst drop at 36% while SUVs fell 11%. Trucks were down 5.4%. Sales of the F-series model declined 13.1% due to the timing of fleet sales and the pandemic hurting March retail sales. Ford brand SUV sales fell 12.7% while Lincoln SUV sales rose 6.1%. Ford’s overall van sales were up 5.7%.
Despite the overall drop in SUV sales, the company saw retail
sales gains for its Ford Explorer and ST Explorer brands. Ford also said its
inventory levels were healthy in spite of the production downtime and low
industry sales.
However, Ford’s difficulties might not end so soon. The
pandemic has caused the company to shut down production in North America, South
America, Europe, India, South Africa, Thailand and Vietnam. The company had
earlier planned to restart operations in its North American factories in April
but has further delayed them as the health crisis continues unabated. These
production stoppages are likely to impact results in the coming months.
Over the past two months, Ford has issued multiple safety
recalls for its Ford Fiesta, Ford Fusion, Ford Ranger and Ford F-150 vehicles. It
remains to be seen how much these recalls are going to cost the company going
forward.
Earlier this month, Ford announced it was undertaking
measures to maintain its financial flexibility. The company suspended its
dividend, withdrew its guidance and said it would use up its entire credit
facility. Ford also announced six months of payment relief for some of its new
car buyers.
The aforementioned factors are likely to drive up costs and
hurt sales in the coming months. Even after the pandemic subsides and the
economy slowly recovers, amid the financial crisis caused by unemployment and
low pay, there are less chances of seeing a huge demand for new cars. This
could also affect Ford’s sales numbers. All in all, it is likely that Ford might
have a tough time this year.
Ford’s shares were down 1.9% in afternoon hours on Thursday.
The stock has dropped 53% since the beginning of this year.