Ford's (F) recovery story is one that has been told many times as analysts and my fellow Seeking Alpha contributors have explained their positions for the automaker given its meteoric rise in share price since the depths of the recession. Ford has a lot going for it: earnings growth, a yield over 2% and an industry blistering with demand. F has another potential tailwind approaching when the 2015 Mustang is unveiled on December 5th in six cities around the world. Ford President of the Americas Joe Hinrichs is optimistic regarding the release telling the world to "expect an exciting day" on the 5th. The question is can this reinvigoration of Ford's iconic car make a material difference in sales?
New Design
The 2015 Mustang is rumored to boast several qualities that have never been seen before in this line:
- Independent rear suspension
- EcoBoost Motor
- New chassis constructed with higher concentration of aluminum
- New design
The independent rear suspension has replaced the live rear axle previously utilized by Ford. This provides the car better handling and a smoother ride for passengers. This addition may not be an innovation as it is found in nearly every modern car other than pickup trucks but it is certainly a vital improvement.
Ford's world-renown EcoBoost engine will undoubtedly make a difference in the revitalization of the Mustang. Edmunds believes that this engine upgrade will result in 330 horsepower, an improvement from the 305 horsepower that the 2014 Mustang has under the hood.
A new chassis designed with more aluminum and will make the car 200 pounds lighter, despite being 2 inches wider. This slimmer frame will help with fuel economy as well as all-around performance.
The Mustang's new sleek design is also something to take note of. Images have been leaked on the internet and they're worth taking a look at if you're a fan of modern automobiles (and even if you're not). Images of the car can be found here and here as well as one of my favorite images below:
(Click to enlarge)
Car enthusiast around the world are impatiently waiting to see Ford's presentations tomorrow to witness and verify all of these rumored design upgrades. A timeline of significant events in the Mustang's history as told by Ford can be found at this link.
Historical Sales
I am projecting an estimate of 78,888 for 2013 Mustang sales based on the figure of 6,574 average sales per month retrieved on mustang6g.com's chart
As you can see Mustang sales have certainly tailed off in recent years but the optimism regarding the highly anticipated 2015 model has investors buzzing. Going off of that figure for 2013 sales (and bypassing the 2014 model as sales figures are not yet available for a long enough period) we can make a few estimates. It's difficult to accurately estimate what sales will be like for the new model, especially since Ford has not yet officially revealed all the new features. This leaves room for outperformance or underperformance of expectations. For now, I'll be using growth estimates based on other parts of Ford's business. For example, in the column labeled Truck Growth Rate, I will be projecting sales based on the YTD sales growth of Ford's trucks, a figure that currently stands at 11.9%. This will give investors several reference points to make their own projections for sales figures. A summary of Ford's November and YTD can be found here.
| Projected Mustang Sales | |
| All Vehicles Growth Rate | 88,118 |
| Truck GR | 88,276 |
| Utility Vehicle GR | 86,303 |
| F-Series GR | 94,271 |
| Fusion GR | 96,243 |
| Focus GR | 77,389 |
| Escape GR | 100,188 |
| Lincoln Brand GR | 77,784 |
| MKZ GR | 93,088 |
Use whichever vehicle or category you would like as a comparison. Personally, I expect positive growth around 11% (from projected 2013 levels) which would result in approximately 87,566 cars sold.
Some projections are rather positive regarding the potential sales for the vehicle while others are hesitant to comment on future sales. The company has decided it is going to "let the car speak for itself".
A Much Needed Distraction
Obviously Ford hopes that the unveiling will go over smoothly and please both consumer and investors, but it serves another possibly unintended purpose. It gives investors following the company something to focus on other than the fierce competition F faces from General Motors (GM), Toyota (TM) and Honda (HMC), among others and the incessant talks of CEO Alan Mulally departing the company to take the helm at Microsoft (MSFT). Shares of Ford have been trading in the $16.50-$17.50 range for a few months now due to these two headwinds resonating in the mind of investors. The release of the 2015 Mustang will be a welcomed diversion for all stakeholders of F and is expected to be a rather joyous celebration of Ford's history as well as their future.
Conclusion
The 2015 Mustang is a very highly anticipated vehicle that will certainly have an effect on Ford's top and bottom line. If the rumored improvements are part of design plans, F is looking at a potentially huge release that will reignite sales of its historic car. December 5th will prove to be a big day for Ford and I think Ford is going to impress when under the spotlight, as has been tradition under Mulally's command.
Disclosure: I am long F. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. (More...)
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