Ford Motor Co. (NYSE:F) Q3 2019 Earnings Conference Call - Final Transcript

Oct 23, 2019 • 05:30 pm ET

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Ford Motor Co. (NYSE:F) Q3 2019 Earnings Conference Call - Final Transcript

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Q & A
Operator
Operator

[Operator Instructions] Our first question comes from the line of John Murphy, Bank of America.

Analyst
John Murphy

Good afternoon, guys and thanks for the call. Just a first question on, to the rest of the year, already it's the fourth quarter. Even when you back out the UAW bonuses, it looks like you're doing $1 billion, $1.5 billion in the fourth quarter, so it seems like it's a little bit on the light side, and you very specifically highlighted higher-than-planned incentives in North America. I'm just curious, are you see something on the competitive front, where pricing is getting much more difficult? It just kind of seems a little bit odd, after you just posted $700 million positive net price in the third quarter. It just doesn't seem to match up with what you just did, so something changed dramatically in the competitive environment?

Executive
James P. Hackett

Hey, John. Jim Hackett. Let me ask Joe to bring you up to date on that.

Executive
Joseph R. Hinrichs

Hi, John. Thanks for the question. So if you look at it, the simple answer to your question is, I wouldn't say there's anything dramatically changed in the environment at an industry level. Let me explain to you what's going on. For example, in the third quarter, Ford's incentive increase year over year was slightly lower than what the industry average was for the US market in the third quarter.

What's happening in the second half of the year, our incentives overall are slightly higher than we'd expected versus our plan for the year. That's largely driven by a couple of products. If you look at the Ranger launch this year, it's gone very well, we've been gaining share every month this year, and we had 18% segment share in September. But as you could expect, the competitors haven't let us just grow that share without any fight, so we've seen a little bit higher incentives on Ranger than we'd expected, given the launch of the vehicle this year. Still very optimistic about the product. It won APEAL, it won IQS for J.D. Power, but incentive spend on that product has been a little higher than we were expecting in the second half of the year. If you look at what happened in the summer months, our competition on F-Series was very aggressive, and so in September, we took some actions. We saw our segment share in F-150 come back up in September, and so we had to take some actions there. And Edge is in a very competitive segment, a little more competitive this year than we had planned for the year. That's kind of where you look at it, but in general, that's more us versus our plan for the second half of the year, but I was referring to the US industry in the third quarter as a reference point. Incentives are still pretty much under control and the industry is behaving in a pretty rational way so far.

Analyst
John Murphy

Okay, and then just a second question, and this might be