3 Hidden Gem Details in Ford's Q4 Sales Result

Ford Motor Company (NYSE: F) has a lot on its plate right now. It's doubling down on quality to offset higher warranty costs that have dented earnings, brainstorming a solution for its spiraling sales in China, and navigating a tricky electric-vehicle (EV) market.

At least one thing Ford doesn't have to worry about is its sales, which are still going strong. Below, I'll scratch the surface of the company's fourth-quarter sales results and dig more deeply for some intriguing insights.

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Brief recap

Ford ended 2024 on a strong note and gaining some market share, helped by a 9% increase in fourth-quarter U.S. sales, more than double its full-year sales gain of only 4%. Ford's full-year sales topped 2.01 million vehicles, which was its best mark since 2019. The result was driven by a booming electric-vehicle lineup, as well as its Explorer and F-Series. The latter remained the nation's best-selling pickup line for the 48th consecutive year.

Overlooked profit machine

One of the best parts of Ford that everybody seems to overlook is Ford Pro, the company's commercial division. During the first nine months of 2024, Ford Pro generated 7.4 billion in earnings before interest and taxes (EBIT), which compares very favorably to Ford Blue, the company's traditional business, which generated only $3.7 billion in EBIT.

Ford Pro is a massive part of the automaker's investment thesis and posted a strong fourth-quarter result with sales of Super Duty pickups increasing 30% over the prior year. For the full year, Super Duty sales increased only 14%, so it was a strong quarter and will drive Ford Pro's results accordingly.

Further, Ford's full-size vans accounted for roughly half of that segment's sales in 2024, which marks the company's 46th year as a leader in the commercial van segment. Ford Pro Intelligence software, which helps businesses monitor their fleets and get insights for their operations, had nearly 650,000 active subscriptions, a 27% gain, compared to the prior year.

Led by Super Duty trucks, full-size vans, and subscription revenue, Ford Pro can help drive Ford's earnings higher during the fourth quarter.

Electrifying results

A common narrative surrounding the EV industry is that it's not growing -- but that's false. The EV market is indeed growing, just at a slower pace than investors and automakers had planned. That said, Ford bucked the trend, and its electric vehicles posted strong gains during the fourth quarter.

Ford's electric vehicles, which includes full-electric vehicles, hybrids and plug-in hybrids, were up 38% in 2024, topping competitors General Motors and Stellantis. That strong result was partly driven by Ford's Power Promise, a program that includes a home charger with standard installation at no extra charge.

Looking at only full-electric vehicles, Ford hit a best-ever EV sales record, with 30,176 vehicles sold. One vehicle leading the charge was Ford's Mustang Mach-E, which posted its best-ever quarterly sales result and placed second behind Tesla's Model Y for full-year electric SUV sales. But it was Ford's hybrids that stole the show, which was perhaps surprising to some investors. Ford sold 187,426 hybrid vehicles for the full year, up 40%, compared to 2023.

While the surge in sales is good for the long term, Ford expects to lose roughly $5 billion on its Model-e division during 2024. The pain will extend throughout 2025, to some degree. Investors will be watching whether the company can reduce its massive losses throughout this year.

Luxurious afterthought

Maybe one of the few aspects of Ford that's overlooked is its luxury Lincoln lineup. Consider it the cherry on top, as Lincoln sales were 10% of the volume of its truck-segment sales during the fourth quarter. However, luxury vehicles cost only marginally more than standard vehicles to produce and generate much higher price tags, making their margins a welcome addition to the sales mix.

On that note, Lincoln's sales jumped 35% during the fourth quarter and 28% for the year. It marked Lincoln's best retail sales result since 2007 and was driven by the all-new Nautilus and Aviator.

While it would be exciting for Ford to have a strong luxury lineup that helped power margins higher, it would be wise for investors to temper expectations despite the strong fourth-quarter showing. That's simply because European luxury autos are more advanced and have a strong foothold in the U.S., while protecting their home turf from competitors such as Lincoln.

What it all means

Ford has quite a few problems it needs to fix -- like quality, which would help lower the number of recalls and offset higher warranty costs. Ford has led the industry in this department for three consecutive years. It needs to solve its problems in China, which is increasingly filled with electric vehicles and dominated by domestic automakers.

The good news is that Ford posted a strong fourth-quarter sales result. Regardless of the company's problems, which are fixable, it's putting out vehicles that people want to buy -- and that's important for any investing thesis.

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Daniel Miller has positions in Ford Motor Company and General Motors. The Motley Fool has positions in and recommends Tesla. The Motley Fool recommends General Motors and Stellantis and recommends the following options: long January 2025 $25 calls on General Motors. The Motley Fool has a disclosure policy.