Take, for instance, its plans to beef up truck sales in China now that U.S. sales of its pickup trucks appear to be topping out. It’s an untapped market to be sure, but the vehicle Ford was touting at last month’s industry exhibition was the F-150 Raptor, which comes with a sticker price in excess of $70,000.
In China, pickup trucks are widely regarded as a utility vehicles for farmers, who can own a new pickup for less than $8,000. The higher-end market is still mostly unaccustomed to pickup trucks being used as a passenger vehicle.
The gambit may not pay off, especially in light of the fact that car sales tumbled in China last month just as much as sales of cars in the U.S. did. That could mark the start of a bigger-picture slide.
At the same time, while the pending U.S. debut of the EcoSport and reintroduction of the Ranger are exciting, they’re also not going happen right away. The EcoSport’s U.S. launch won’t happen until early 2018, and the Ranger won’t be back on car lots until 2019. The ballyhooed revival of the Bronco won’t happen until 2020. Ford stock could easily languish in the meantime, and there’s no particular assurance those new vehicles (and others) will actually grow sales again. They may only cannibalize Ford’s existing sales. Never even mind the fact that “peak auto” increasingly looks like it has already happened.
In the meantime, there’s also going to be a wait until Ford’s EV and autonomous driving ambitions bear fruit. And if there’s one thing we’ve seen since 2014, it’s that investors are impatient when it comes to Ford, rarely giving the company the benefit of the doubt.
Bottom Line for Ford Stock
Don’t get the wrong idea. Ford as a company is doing well, and even if the headwind it’s running into ends up being as brisk as it seems like it will be, Ford will be fine.
On the flipside, Ford stock has already been proven to be a non-performer even when the company is doing incredibly well. Just think how disappointing the stock’s performance will be when the company is forced to retreat.
There will come a time when the secular and cyclical headwinds have run their course and F stock is well positioned for bullish progress. As it stands right now though, that upside isn’t on the radar.
As of the time of this writing, James Brumley held a long position in F stock.