Ford sales plunge in August as industry chip constraints persist

Jordyn Grzelewski
The Detroit News

Ford Motor Co.'s U.S. sales plunged by one-third in August compared to the previous year amid an industrywide slide driven by a semiconductor shortage that has dragged on since late last year and pushed new-vehicle inventories to historic lows.

Ford sold 124,176 new vehicles in the U.S. last month, down 33.1% from August 2020. Truck sales dropped 29.4% while SUV sales fell 25.3%, according to results the automaker released Thursday.

A continuing semiconductor shortage has affected inventories and sales of Ford vehicles, including its profit-engine, the F-Series pickups.

Sales of Ford-branded SUVs were down 24.4% year-over-year, with across-the-board decreases for nameplates that were on sale last year. EcoSport was off 64.4%. Escape sales were down 32.6%. Edge sales fell 39.2%. Sales of the Explorer and Expedition, respectively, dropped 56.9% and 12.4%.

The new full-size Bronco SUV had 2,730 sales, down from 3,277 in July, while the smaller Bronco Sport SUV posted 6,698 sales, up from 2,306 in July.

Meanwhile, Ford sold 57,321 units from its F-Series truck franchise, the company's profit driver. That was down 22.5% from August 2020. Sales of the Ranger, Transit, Transit Connect and heavy trucks also were down, while E-Series vans eked out a 4% gain.

Ford's electrified vehicle sales — which include hybrids — were 8,756, up 67.3% over last year. The all-electric Mustang Mach-E SUV posted 1,448 sales in August, down from 2,854 in July. 

Mustang sales of 2,263 vehicles were off 51.1%. Lincoln brand vehicles were down 44.3%. Year-to-date, Ford's sales are down 5.4%.

Still, some Ford dealers are shrugging off the sales slump. Jim Seavitt, owner of Village Ford in Dearborn, said August was a solid month for the dealership. As Ford managed to ramp up production in August, he saw deliveries increase toward the end of the month and is optimistic about September. 

"We did well, with 140 new cars and 100 used (sold), and that's pretty doggone good for the chip crisis," he said.

Gone are the days of keeping upwards of 500 vehicles on his lot, he said. Instead, his salespeople are getting used to ordering vehicles and then selling them as soon as they're delivered to the dealership. In the meantime, they're working with customers to extend their leases if needed.

According to production data reported by the company, output improved from July to August. Amid widespread production cuts due to the chip shortage, Ford's North American plants produced 125,736 vehicles in July. In August, that rose to 226,065. The company's gross vehicle stock stood at 214,500 at the end of the month.

Meanwhile, Ford highlighted growth in its retail orders, noting it brought in 41,000 orders in August, up four times from a year ago.

Ford executives say the automaker will rely more heavily on an order bank system going forward, meaning customers reserve their vehicles in advance. The automaker reported that 30% of its retail sales in August were directly filling customer orders, up from 6% last year. The company had 52,000 vehicles in its order bank as of the end of the month.

Reservations for the forthcoming battery-electric F-150 Lightning truck reached 130,000, the automaker reported. And the new Maverick compact pickup truck now has generated more than 100,000 reservations.

Industrywide slide

While Ford's sales slump was more dramatic than that experienced by some of its competitors, it was not alone. American Honda sales, for example, were down 15.6% year-over-year. Toyota Motor North America sales fell 2%. And Hyundai Motor America sales were off 4%.

Ahead of the release of August sales numbers, analysts and forecasters projected a month of new records characterized by low sales, inventory levels and incentive spending, but high pricing and demand.

“The month of August is historically a peak selling month as manufacturers launch promotional events to clear inventories of outgoing model-year vehicles and begin sales of the new model year," Thomas King, president of the data and analytics division at J.D. Power, said in a statement. "This year, however, the industry has insufficient inventory at dealerships to meet strong consumer demand."

J.D. Power reported that dealers in the U.S. had about 942,000 vehicles in inventory available for retail sale in August, down from 3 million two years ago.

"Although inventory is arriving at dealers daily, it is simply replacing the vehicles being sold, preventing dealers from increasing inventories to a level necessary to support a higher sales pace," said King. "This means the sales pace is being dictated by production levels rather than actual consumer demand."

Dealers are selling vehicles as quickly as they get them in stock. Last month, more than 49% of vehicles were slated to be sold within 10 days of arriving at a dealership, according to J.D. Power, up from just 26% in August 2019. And the firm projected that the average number of days a new vehicle sits on the lot before being sold would fall to a record low of 26 days, the first time on record below 30 days and down from 62 days a year ago.

Meanwhile, J.D. Power projected another new record in August: an all-time high average transaction price for the industry of $41,378, the first time the figure was above $41,000. Retailer profit per unit, too, was slated for an all-time high of $4,430.

Ford reported that its average transaction price in August hit a new record of approximately $50,800 per vehicle, a $9,700 increase over last year.

Meanwhile, analysts expect the constrained conditions to persist in the short term, with the chip shortage expected to stretch into 2022.

"Ongoing supply chain issues and recent announcements of further production cuts by several manufacturers mean that the aggregate inventory situation is unlikely to meaningfully improve in September," said King. "In some instances, it will deteriorate."

For car shoppers, this means a much different Labor Day weekend than normal, experts say.

"Shoppers accustomed to Labor Day promotional events with large discounts on outgoing model-year vehicles will likely be disappointed by the lack of discounts and choice of vehicles," said King. "But as August demonstrates, there are plenty of shoppers willing and able to buy at higher prices with less choice.”

Twitter: @JGrzelewski