Vehicle manufacturers Ford and General Motors experienced mixed commercial sales results, as demand persists but tightening credit forces prioritization.
Ford Pro, the commercial fleet division of Ford, continued to grow in the first quarter, John Lawler, chief financial officer at Ford Motor said during the company’s earnings call on April 24. Ford Pro reached $3 billion in quarterly earnings before interest and taxes (EBIT), according to the company’s April 24 10-Q filing with the Securities and Exchange Commission.
“Full year of customer demand for the all-new Super Duty contributing to better market factors for Ford Pro and industry supply-demand normalizing,” he said. “There’s no change to our segment outlook, which anticipates continued strength in Ford Pro … and that’s driven by the continued growth and favorable mix, partially offset by moderated pricing.”
Ford Pro’s EBIT in 2022 totaled $3.2 billion for the year, according to the company’s Feb. 6 10-K filing.
Meanwhile, Ford Pro’s Q1 wholesale unit sales increased 21.4% year over year, totaling 409,000 units, according to the company’s 10-Q. Ford Pro’s revenue landed at $18 billion, up 36% YoY.
In addition to increasing the number of active attached software subscriptions for Ford Pro customers to over 560,000, the company credited Pro’s growth to higher volume, favorable mix and higher net pricing, although demand still exceeds supply, Ford Motor Chief Executive Jim Farley said on the company’s earnings call.
“The demand on Pro is fundamentally different than retail, there’s no doubt about it,” he said. “At the same time, our customers are in the kind of white-hot demand that we saw in retail two years ago during the supply shock, and we’re doing everything we can to increase our capacity for our customers. It’s very frustrating for them.”
GM fleet sales drop 22% YoY
While Ford’s fleet sales experienced a 21.4% boost in Q1, General Motors experienced an almost equivalent percentage decrease for the period. GM’s fleet sales declined 21.7%, ending at 209,000 units, according to the company’s April 23 10-Q filing.
The decline in fleet sales was attributed to production issues and an increased emphasis on retail at GM, Paul Jacobson, executive vice president and chief financial officer, said during the company’s April 23 earnings call.
“We encountered some production constraints impacting the timing of fleet deliveries on our commercial van and midsize pickups,” he said. General Motors “expects to recover most of this volume in the second half of the year. We are committed to growing our strong and profitable fleet business, but we’ll continue to balance fleet and retail customer demands with a focus on profitability.”
GM Financial’s commercial receivables landed at $14.3 billion, up 38.9% YoY, according to the company’s 10-Q filing. GM Financial increased its allowance for commercial loan losses to $35 million in Q1, up 20.7% YoY, Jacobson said.
“The commercial environment continues to be resilient, and this is a very common theme that we’ve had now for more than a year worth of quarters,” he said. “There’s a lot of downward bias, but we’re continuing to manage commercially month to month and producing in line with demand.”
Market reaction
Shares of Ford Motor Co. [NYSE: F] were trading at $13.04 per share as of market close Thursday, up 0.69% since market open. The company has a market cap of $51.70 billion.
Shares of General Motors Co. [NYSE: GM] were trading at $45.62 per share as of market close Thursday, up 1.20% since market open. The company has a market cap of $51.41 billion.
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