Telematics, fleet management boost Ford Pro revenue
Software subscriptions, average monthly revenue per unit up 24% YoY
Ford Pro is boosting its software revenue, parts sales and margins through telematics and digital fleet management subscriptions as it works toward its goal of 20% EBIT from aftermarket activity by 2026.
The commercial vehicle division of Ford saw subscriptions for telematics dashboards and digital fleet management solutions for small and medium businesses nearly double year over year, Ford Pro CFO Navin Kumar said during a presentation today at the J.P. Morgan Automotive Conference in New York.
Those solutions contributed to a 24% overall increase in software subscriptions, which landed at 757,000, and a 24% increase in average monthly revenue per unit, Andrew Frick, interim president of Ford Pro and president of Ford Blue and Ford Model e, said during the July 30 earnings call.
Subscriptions drive growth
Ford Pro’s subscriptions drive higher OEM parts attachment rates, often exceeding 50%, Kumar said.
As a result of the subscription growth, Ford Pro expects to hit its target of 20% of the division’s earnings before interest and taxes (EBIT) coming from aftermarket activity by next year, he said. The division is at “a little over 16.5%” currently, he added.
“It’s such a key part of our business to make our double-digit margins more durable over a longer period and de-risk some of that cyclicality, so we’re on that trajectory.” — Navin Kumar, CFO, Ford Pro
Ford Pro’s ability to make more money for its parent company, especially with the deployment of capital spending to Ford Pro, is good for both Ford Pro and Ford, according to a July 31 J.P. Morgan research note.
Investing in software amid uncertainty
Ford Pro aims to boost its margins by improving customer productivity, focusing investments on enhancing digital fleet software — especially telematics and service facilitation. It will be adding new features to increase value for fleets and differentiating itself amid economic uncertainty, Kumar said.
“An example of that is more vehicle command and controls for fleet managers to operate and manage their fleets,” he said. “It’s a key differentiator versus what’s in the market today.”
Ford Pro sees a mixed pattern in vehicle orders, but a diverse customer base allows it to identify growth areas and tailor vehicle and service offerings to meet those opportunities, even amid uncertainties from tariffs, geopolitical tensions, fiscal policy changes and interest rate trends, especially in the U.S., Kumar said.
“In the U.S., we’re seeing demand hold up overall, but it’s especially in sectors that are tied to long-term secular investment,” he said. “When it comes to macroeconomic policy, interest rates and tariffs, our customers and us are watching that really closely, but the fundamental demand drivers for work vehicles remain solid, including sectors like non-residential manufacturing, service trades and vocations.”
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