There was a certain reasonable quality to things when legacy automaker Ford (F) revealed a pivot to “no boring cars.” The downside to this was that it meant the end of the four-door sedan, the basic family car that ended up becoming the first cars for so many 16-year-olds out there. But then, Ford doubled down on “no boring cars,” insisting, “We don’t want to make cars for everyone.” That inherently limits the size of one’s sales pool, but can work in the right setting. Investors were willing to try, meanwhile, and sent shares up fractionally in Thursday afternoon’s trading.
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While appearing on the La Nacion show in Argentina, Ford CEO Jim Farley revealed, “We want to make beautiful off-road machines and work vehicles.” This came as a surprise to some Ford followers out there, who remember Bill Ford, Ford’s Executive Chairman, noting that “…on the passenger car side, we realize we’re not as robust as we need to be.”
This dissonance leaves some wondering just what is going on here. Are the “boring cars” making a bit of a comeback? Or is Bill Ford’s assertion of a passenger car comeback tempered by the notion of “beautiful off-road machines”? And with Ford’s earlier plans to release a block of five “affordable” models by 2030, the picture gets even murkier from there.
Affordability Gap
Yet even as Ford seems to have plans for the future when it comes to affordable cars, the current picture is less sunny. In fact, dealerships are starting to sound alarms over Ford’s lack of affordable cars, especially once the Escape stops getting made. The Ford Escape is in its final days, reports note, which means eventually the only Ford Escape sales will be used Ford Escapes. And dealers are getting concerned about what will follow the Escape, which right now is best described as “not much.”
Some are looking to the Maverick, or the Bronco Sport, to take over for Escape demand. But the difference in pricing on those models is substantial. One Ford dealer noted, “I’ve yet to come across a customer that’s cross-shopping an Escape and a Maverick. The Bronco Sport is a decent fill-in, but they’re two different types of buyers.”
Is Ford Stock a Good Buy Right Now?
Turning to Wall Street, analysts have a Hold consensus rating on F stock based on two Buys, 10 Holds and one Sell assigned in the past three months, as indicated by the graphic below. After a 36.65% rally in its share price over the past year, the average F price target of $13.12 per share implies 1.5% downside risk.
