Should Ford Worry As Toyota Gains Ground In the U.S. Auto Market?

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Mar 26, 2015

Ford Motor’s (F, Financial) sales in the U.S. market declined 2% in February. Overall auto sales in the U.S. slowed down last month because of the cold weather. In contrast, Toyota (TM, Financial) saw a remarkable sales gain of 13.3% during the month. The top global automaker’s sales went past Ford by 84 units, helping it gain market share. The sales difference might appear tiny, but it’s a significant event for Toyota.

It’s interesting to know what led Toyota’s hit higher sales number compared with Ford, and where it is that the Detroit automaker is lagging.

Small efforts make big difference

Toyota’s February sales were quite strong on the back of declining fuel prices which attracted many customers. The Japanese carmaker occupied the second spot in the U.S. auto industry after General Motors (GM, Financial) during the month. Toyota sold 180,467 units, witnessing sales growth across all main car models other than Prius. Low gasoline prices softened Prius sales.

Toyota division’s car sales went up 7.9% to 82,129 units as compared to a year ago. This was supported by Camry, Corolla and Avalon models that saw sales surge of 13.6%, 10% and 34%, respectively. The key reason behind strong sedan sales were that both Camry and Corolla were refreshed models. In contrast other sedan sales were struggling. Toyota’s luxury brand Lexus saw sales improvement of 22%. Besides, Toyota reported the best ever month for its truck models.

The Asian carmaker’s performance for the month has been summed up by Bill Fay, Toyota Division Group vice president and general manager in these words:

“The auto industry is off to its best start since 2002 as truck demand continues to rise Toyota light trucks and SUVs, led by RAV4, set a new February record."

Ford struggles with key models

Ford witnessed a mild setback with sales plunging 2% to 180,383 units that made it lose to Toyota in the home market. The key factor contributing to its depressing numbers was the 1.2% plunge in sales of the F series, the automaker’s top-selling vehicle. Production of the redesigned F-150 is yet to increase to the desired level.

The drop in sales is also attributable to the sales drop of Ford Focus and Ford Fusion –models which otherwise sell in big numbers. This somewhat dented the company’s sales tally in February.

Sales of Ford’s luxury brand Lincoln were also down 7.5% for the month. On the brighter side, Explorer SUV sales were up 32% which is the best in nine years. The company’s muscle car, Mustang, also saw solid increase in sales, up 32% which is the best since 2007. However, this was not enough to compensate for the sales drop in other major models.

Last words
Typically Toyota's sales surpasses Ford’s once or twice in a year. There’s nothing that investors need to be worried about. Ford will pick up pace in the American market once it resolves the F-150 production. Ford’s investing heavily in the launches of new cars and this should help the company maintain its market share in the U.S. while keeping competition at bay.