Ford and General Motors benefited from growing commercial vehicle sales in the second quarter as the commercial vehicle market remains strong.
Ford Pro, the commercial fleet division of Ford, experienced high-margin growth in the second quarter, Ford Motor Chief Executive Jim Farley said on the company’s earnings call on July 24. Pro achieved $17 billion in Q2 revenue, up 9% year over year, according to the earnings presentation.
“It’s a high-margin business tracking toward $70 billion in revenue this year with further opportunities for profitable growth outside of vehicle sales, parts and service and software,” he said. “A good example of that is a recent decision by our team to add 100,000 units of capacity of Super Duty in Canada. It not only serves our customers, but it’s capital-efficient and has very high returns for many years to come.”
Ford Pro’s Q2 wholesale sales increased to 375,000 units, up 2.7% according to the earnings presentation.
Ford Pro also continues to provide a market for Ford’s electric vehicles, as commercial customers purchase vehicles, charging, and software, Farley said.
“They’re also investing in our Pro charging depots and our integrated software because they want to be smart about the cost of charging their vehicles,” he said. “Our EV Pro contribution margin for our EV vans is now already positive.”
GM commercial financing receivables rise
While Ford’s fleet sales jumped 9% in Q2, General Motors’ fleet sales declined 11.8% to 277,000 units, according to the company’s July 23 earnings release. North American fleet sales totaled 179,000 units, down 8.7% YoY.
GM Financial’s commercial receivables rose 48.4% YoY to $16.5 billion, according to the company’s July 23 10-Q filing with the Securities and Exchange Commission. GM Financial also increased its allowance for commercial loan losses to $50 million in Q2, up 38.9% YoY.
Despite the decline in fleet sales, GM’s overall commercial strategy remains intact as some segments remain strong, Paul Jacobson, executive vice president and chief financial officer, said during the company’s July 23 earnings call.
“Demand for our vehicles is strong,” he said. “Some of the offsets are our truck sales were up 5% in the quarter where we continue to pick up share, and that’s helped to offset some of the lower [average transaction price] vehicles, and we’ve seen in the growth in the tracks.”
Market reaction
Despite Ford Pro’s performance, concerns related to Ford Blue — Ford’s internal combustion engine vehicle manufacturing division — due to its performance in Q2 contributed to the negative market reaction, according to a Bank of America research note.
“Ford Pro continued to shine and was a partial offset to Ford Blue,” according to the research note. “The operating miss was driven by disappointing Ford Blue results, which were hit by higher warranty expenses, launch costs, and other smaller items.”
General Motors’ guidance implications contributed to a slight decline for GM, especially as investors viewed the Q2 earnings with an “as good as it gets” lens, according to a Barclays research note. GM experienced a $2 billion improvement in the first half of 2024 compared with initial guidance, but only adjusted guidance by $1 billion, as China and EV headwinds project to cost GM the other $1 billion in the second half, GM’s Jacobson said.
“To be fair, GM’s implied 2H guide reflects a solid step down from the notably robust 1H print, but we assume this was widely understood and fully anticipated,” according to the research note. “Focus has already shifted to 2025.”
Shares of Ford Motor Co. [NYSE: F] were trading at $11.16 per share as of market close Thursday, down 18.36% since market open. The company has a market cap of $54.58 billion.
Shares of General Motors Co. [NYSE: GM] were trading at $44.13 per share as of market close Thursday, up 5.08% since market open. The company has a market cap of $52.25 billion.
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