Demand for Ford commercial trucks exceeds supply

Demand for Ford‘s commercial vehicle division, Ford Pro, is exceeding supply as dealers “clamor” for inventory.   

“Dealers are clamoring for more Pro allocation. They normally get only 50% to 75% of the volume they want,” Ford Motor Co. Chief Executive Jim Farley said on the company’s Feb. 6 earnings call.   

“The fundamental factors for our vehicle profitability in Pro that’s driving that demand will be here for a while,” Farley said. “It’s basic infrastructure, government state, 5G, onshoring, manufacturing, manufacturing sector.”  

An increase in construction activity would further exacerbate the supply problem for dealers, Farley warned. “If that starts to fire up, we’re going to even have more capacity issues on Pro.” 

Ford Pro wholesale vehicle sales hit 1.4 million during the full year in 2023, up 6.8% year over year, according to the earnings supplement.     

A 16% rise in state and local government spending during the year drove the increase in sales, Farley said. “We do really well on state and government Pro sales. A sizable portion of that is in infrastructure, and people need Super Duties and Transits.”  

To grow its Pro business, Ford is also increasing its focus on up–fitting trucks for small and mid-sized businesses, Farley said. “Every one of our landscapers, plumbers, electricians — they all up-fit their Transits and Super Duties and Rangers specific to their vocation.”   

Software attachment by the numbers

Software services and telematics are a key part of Ford Pro’s business model, and represent critical areas of potential growth, Farley said on the call.  

• As of the end of 2023, Ford Pro Intelligence had 510,000 paid software subscriptions, up 45% YoY.  
• In 2024, Ford Pro expects software and services attachment rates to be 20%.  

What they’re saying 

Analysts recognized Ford Pro’s growth potential in research notes following the OEM’s Feb. 6 earnings report. 

“Pro continues to be a standout and one of the best businesses in all of autos,” RBC Capital Markets analyst Tom Narayan said in a Feb. 7 report. 

“Pro is Ford’s ‘Ferrari,’ or the closest thing to it,” Morgan Stanley analyst Adam Jonas said in a research note Feb. 6.  

Farley himself described Ford Pro as a “high-margin” business, encompassing hardware, software and physical services with mainly recurring revenue. “I believe Ford Pro is where the industry is going, an integrated business between all three of those factors,” Farley said.  

Shares of Ford Motor Co. [NYSE: F] were trading at $12.83 per share as of market close Thursday, up roughly 0.12% or $.01 since market open. The company has a market cap of $51 billion.  

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