Ford benefited from its commercial vehicles segment in the third quarter, while General Motors got a boost from its financial services business.
Ford Pro, the commercial fleet division of Ford, sold 342,000 units in Q3, up 9% year over year, according to its Oct. 28 earnings statement.
Revenue rose 13% YoY to $15.7 billion. Subscriptions to fleet management software Ford Pro Intelligence increased 30% from Q2 to nearly 630,000, a “competitive advantage” that contributed to higher revenue, Ford Chief Executive Jim Farley said during the company’s Q3 earnings call.
“Our paid subscriptions delivered a growth of 50% in revenue, 30% just this quarter, and our gross margins are over 50%,” he said. “There’s incredible upside at Ford for our software to grow our installed base, attach rates and [average revenue per user].”
Ford Pro reported $1.8 billion in earnings before interest and taxes (EBIT), up 9.7% YoY, according to its earnings presentation. Roughly 13% of Ford Pro’s EBIT comes from repairs and software service, Farley said.
“We think that will grow to about 20% by 2026,” he said. “We have the largest service network in North America. We’re on track this year to add over 4,000 commercial service base and 2,500 Pro Mobile Service units.”
GM fleet sales continue to fall
GM’s global fleet sales declined 20% YoY in Q3 to 236,000 units, according to its Oct. 22 earnings statement. That followed an 11.8% YoY decrease in Q2.
North American fleet sales totaled 127,000 units in Q3, down 23% YoY. However, the company is optimistic that disciplined pricing will pay dividends in the long run, Executive Vice President and Chief Financial Officer Paul Jacobson said during the company’s earnings call.
“We’ll go into the year on the pricing assumptions that have served us well, which is to make sure that we set up a budget that is affordable for us and one that if the commercial environment stays consistent, one that we think we could outperform,” he said.
GM Financial, the company’s financing arm, reported $19 billion in commercial finance receivables in Q3, up 54.9% YoY, according to a news release. GM Financial’s allowance for commercial loan losses rose 58.8% YoY to $54 million. Revenue increased 10.7% YoY to $4 billion, with credit reserves bolstering the lender’s growth, Jacobson said during the call.
“GM Financial has consistently performed well with third quarter EBT-adjusted of $700 million, down $50 million year over year due to credit reserves within our expectations and still tracking in the range of $2.75 billion to $3 billion for the full year,” he said. “They continue to drive portfolio growth and paid a $450 million dividend to GM during the quarter.”
Market reaction
Shares of Ford Motor Co. [NYSE: F] were up 2.89% from market open to $32.35 as of market close today. The company has a market cap of $1.64 billion.
Shares of General Motors Co. [NYSE: GM] were up 2.49% from market open to $55.05 as of market close today. It has a market cap of $60.53 billion.
