Three parts to the Ford (F$) investing thesis.
1- Cheap valuation
2- Improving macro environment for auto sales
3- Ford is best in class at this time
This report from Edmunds.com bolsters that view. We think 2011 US auto sales come in at 13-14m units and by mid decade hit 16-17m units. We also think Ford’s market share will increase due to a superior line of new products coming out. Given that and given that the current valuation does not reflect ANY improvement in either annual auto sales or Ford market share gains share remain undervalued.
This month’s new car sales (including fleet sales) are expected to be approximately 1,242,000 units, a 16.5 percent increase from March 2010 and a 25.1 percent increase from February 2011, according to Edmunds.com, the premier online resource for automotive information. Retail sales are expected to be approximately 987,000 units, up from approximately 786,000 last month.
Edmunds.com analysts predict that March’s Seasonally Adjusted Annualized Rate (SAAR) will be 13.07 million, down from 13.38 in February 2011. SAAR for retail sales are expected to decline from last month to about 10.4 million in March.
Average automaker incentives in the U.S. are estimated to be $2,321 per vehicle sold in March 2011, down $245, or 9.5 percent, from February 2011, and down $494, or 17.5 percent, from March 2010.
“GM seems to have pulled back on incentives in March and could suffer a sales hangover through the next few months, given that the company’s earlier offers have been quite generous and may have pulled ahead future sales,” said Edmunds.com Senior Analyst Jessica Caldwell. “Unless $GM generates significant month-end activity or Ford runs into constraints with inventory, Ford may overtake $GM in monthly sales for only the second time since 1998.” March 2011 had 27 selling days, one more than March 2010.