Ford Motor Co. (NYSE:F) is capitalizing its fleet business. What was once considered “dirty,” in the automotive industry, has become a major competitive edge.
Since 2021, under the leadership of CEO Jim Farley the segment “Ford Pro”, has generated $184.5 Billion in revenue and $18.7 Billion in adjusted earnings.
This shift challenges the conventional view that fleet sales were less profitable for legacy automakers and a negative.
Farley, in a recent earnings conference, highlighted the success of Ford Pro. The company’s second quarter was down, but Ford Pro performed exceptionally well.
Ford Pro is unique. Farley told investors that they would “fully press this advantage”.
Ford’s fleet business is still a bright spot, despite the stock price of Ford dropping by about 30% on July 24th after it missed earnings estimates.
Fleet sales: Ford’s hidden gem
Ford’s fleet division has received positive attention from Wall Street. Analysts have dubbed it a “hidden jewel” of the legacy automaker. Some refer to the Pro segment of Ford as “Ford’s Ferrari.”
While rivals General Motors and Stellantis have restructured operations to boost fleet sales this year, their commercial sales will decline compared to 2023.
According to Wolfe Research, Ford’s volume of commercial vehicles is up 7% compared to last year.
Ford’s fleet business is expected to generate $9.5 billion in revenue this year, exceeding the combined $9.0 million forecast by GM and Stellantis.
Ford’s share of new fleet vehicle registrations is estimated by S&P Global Mobility at 30%, which is significantly higher than GM’s 22% or Stellantis’ 9%.
John Murphy, an analyst at Bank of America, is bullish about Ford
Ford Pro’s success has been a major factor in the analyst John Murphy’s bullishness on Ford shares. His $22 price goal suggests that the stock could double from its current level.
Murphy sees a potential upside to Ford Pro’s volume as well as its software, services and other products.
Ford Pro accounts for about 80% (or more) of Ford’s subscriptions to software. The attach rate is only 12% but it is projected to increase to over 35% within the next few years.
Ford aims to leverage the fleet and commercial segment in order to achieve $1.0 Billion in software and service sales by 2025.
Ford stock also offers a lucrative 5.98% dividend yield at the time this article was written.
Ford’s strategic approach to its fleet business is very different from that of its competitors.
Ford is a leader in the fleet segment due to its proactive investment and commitment in software and services.
Ford can now take advantage of future market trends and increase revenue.
Ford’s fleet division, under the “Ford Pro”, is proving to have a strong growth rate despite the recent stock performance and the wider market challenges.
Ford’s strategic investments and CEO Jim Farley’s vision are paying off. This makes Ford an attractive investment for investors.
Ford’s innovative approach and commitment to software, services and fleet sales could ensure its continued market leadership as the automotive industry changes.
This post Ford CEO Jim Farley reveals a key advantage over rivals in the crosstown area: ‘No one else has Ford Pro.’ may be updated as new information becomes available.
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