Analysts estimate that auto sales for May were 17.4 million on a seasonally adjusted annualized basis. This would be the best performance for the auto industry since 2001, but does not tell the whole picture. Not only are automakers selling more vehicles, they are also selling more expensive, larger vehicles as consumers continue to buy trucks after the price of oil fell. Oil is selling at $2.75, 25% lower than it was selling just a year ago. Ford is one of the many companies benefitting from this trend with its popular F-150 model trucks.
Deliveries of the truck were off 40% in the first quarter as the company released a newer version with an aluminum body. The new trucks will be lighter and more fuel-efficient, but the company had to shut down production to remodel its factories. The company’s operating margins in North America was 6.5%, but could have been 10% higher if not for the $1 billion the shut down in production cost in operating profit.
Ford is hoping for a better second quarter, but there is an issue with production. A shortage of frames from a supplier could dent the company’s short-term financial performance. To combat the current slowdown in production, Ford has shortened the summer break employees get in six assembly plants in order to be able to meet demand for its trucks and SUV models. Instead of a two-week break during June, employees will only get one as it tries to increase the amount of supply of vehicles in stock..