Core pickup supply accelerates recovery! Ford Motor Company (F.US) F-150 monthly production hits a two-year high, while new vehicle sales in August remain under pressure.

Ford Motor Company (F.US) stated on Wednesday that it is continuing to ramp up production of its core F-Series pickup trucks following a fire at an aluminum supplier that severely impacted production. The company expects more trucks to begin arriving at dealerships over the next few weeks and months. However, despite the gradual normalization of supply, Ford's sales in the U.S. remain under pressure, with new vehicle sales in August dropping 10.3% year-on-year, marking the eighth consecutive month of year-on-year decline. Rob Kaffl, Ford's U.S. sales chief, said, "We are increasing production. Over the next 30, 60, and 90 days, dealers will start to see the increase in supply that comes from ramped-up output. The number of vehicles in transit and across the sales system is currently at a healthy level." Data released by Ford on Wednesday showed that production of the F-Series trucks, including the F-150 and other larger models, has increased month by month this year and has now returned to near historic levels, with some months even exceeding historical levels. In August, Ford produced a total of 57,504 F-150s, the highest monthly output in the past two years. Kaffl noted that as production continues to recover, the overall product supply available to Ford dealers is gradually returning to normal levels. The F-Series pickup trucks are one of Ford's most important product lines and a key source of the company's profitability. Over the past year, production of this core model has been severely impacted by upstream supply chain disruptions. Novelis, Ford's aluminum supplier, experienced two fires at its plant in New York last year, leading to temporary operational disruptions that directly affected production of the F-Series trucks. Ford expects this supply chain incident will result in approximately $1.5 billion in losses for the company this year. To make up for previous production losses and meet backlogged demand, Ford has been increasing production levels throughout the year, with some output already exceeding last year's figures. Despite the rapid recovery in production, current inventory levels of the F-Series trucks at Ford dealerships remain below normal. Dealers currently have about 40 days' worth of pickup truck inventory, which is only about half of what the auto industry typically considers a healthy level. Kaffl reiterated that Ford aims to increase F-Series truck inventory to 50 to 60 days, which is still below the 75 to 90 days that the industry used to maintain. This indicates that while Ford is accelerating the replenishment of dealership inventory, it does not intend to simply return to the higher inventory levels of the past, but rather aims to align production more closely with actual market demand. Kaffl stated, "We are very deliberately ensuring that production matches demand." With output increasing, Ford expects more F-Series trucks to arrive at U.S. dealerships in the coming months, supporting sales that had previously been limited by supply shortages. However, the recovery in F-Series production has not yet translated into an improvement in Ford's overall sales. Ford's data released on Wednesday indicated that the company's new vehicle sales in the U.S. fell 10.3% year-on-year in August, marking the eighth consecutive month of decline. Sales of the F-Series trucks themselves have also not recovered to last years levels. For the first eight months of this year, cumulative F-Series sales were down 10.9% year-on-year, with August seeing a decline of 1.2%. In addition to the previous supply shortages of the F-Series, Ford stated that other factors have also affected its year-on-year sales performance. Earlier this year, the company halted production on two model lines, resulting in a higher comparison base for this year's sales versus last year's; at the same time, Ford has actively reduced fleet sales to rental car companies, further suppressing overall sales. Calendar factors also impacted the August sales data. The Labor Day weekend is traditionally an important sales promotional period for automobiles, but this year, Labor Day falls in September, whereas last year it was in August. This means that last August benefited from an extra holiday boost in sales, making comparisons for the same period this year more challenging. Ford's sales slowdown is not an isolated phenomenon, as overall demand in the U.S. automotive market is also cooling down. The company expects that in August, new vehicle sales across America's Car-Mart, Inc. declined approximately 6% year-on-year. Against the backdrop of weakening industry demand, Ford needs to increase F-Series production to compensate for the capacity losses incurred due to the supply chain disruptions while also avoiding overproduction in the face of slowing market demand, thereby preventing excessive inventory accumulation. This is also a key reason why the company is controlling its F-Series target inventory at 50 to 60 days, rather than restoring it to the 75 to 90 days it previously maintained. For Ford, the critical factor in the coming months will be whether the recovery in F-Series supply can help improve sales performance. August saw F-150 production rise to a two-year high, indicating that the supply issues that had constrained this core product line are beginning to ease; however, in light of Ford's U.S. sales declining for eight consecutive months, alongside the simultaneous cooling of overall demand in the automotive industry, it remains to be seen how much of the capacity recovery can ultimately increased sales.