Ford Motor Co
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Ford Motor Co
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Good Morning. My name is [Sia] [ph], and I will be the conference operator today. At this time, I would like to welcome everyone to the Ford Quarterly Sales Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-answer-session [Operator Instructions].
Thank you. At this time, I would like to turn the conference over to Mark LaNeve, Vice President of U.S. Marketing, Sales and Service. Please go ahead, sir.
Thank you, Sia, and good morning everyone. This is Mark. Welcome to our first quarter 2019 U.S. Sales Call. As you remember changing this call to quarterly, and really having it a day or two after the close, we believe allows us to have richer data, more accurate data and hopefully more meaningful insights for you all.
I’m excited to host the call today and field your questions. We appreciate you taking the time to join us. I’m joined by Emily Kolinski Morris, Ford’s Chief Economist who also has a couple of comments. But let me start with how the industry performed in Q1.
You know it struck me as I get ready for the call that a lot can happen in 90 days. So after a record long government shutdown the [Mueller] [ph] report release, another polar vortex, the Patriots winning another Super Bowl and my alma mater Virginia making it to its first final four in 35 years, Q1 is finally history.
Speaking of my alma mater, I couldn’t help thinking that my Dad was a laborer in the Steel mill back in Beaver Falls, and I can assure you he had absolutely no influence on me gaining admission to that great University.
In terms of overall industry volume to get more back on a serious note, it was down 2% and many analysts have reported a light vehicle SAAR in the high 60 million unit rate for the quarter. This would translate into a total industry SAAR supporting, which means it includes medium and heavy trucks, of approximately 17.4 million for the quarter which is a pretty good number.
Even waiting for until today, the data continues to evolve for Q1, which is why our data may reflect slightly different numbers than reported by various sources on Tuesday, within that 17.4 million number, it's noteworthy that the fleet industry was stronger on a year-over-year basis, up approximately 8% and retail was down approximately 5%.
From a pricing perspective, the industry again showed very good discipline overall with incentives down slightly in Q1, year-over-year at about 10% of selling price across the industry.
Transaction pricing, conversely was up $900 at 33,188 per unit that’s how it’s ended the quarter. This ATP increase is an important insight as it will mean that revenue which is how most industries measure top line performance means revenue increased in retail, fleet and total for the industry, despite that slight drop at retail.
In terms of Ford, our total sales were down 1.6% for the quarter, outperforming the industry that was down 2%. Similar to the industry, however, we were also down on a retail basis and up in fleet, so we had a very similar pattern. Our fleet business was up in all three channels; rental, government, and commercial. Our rental business as we've mentioned previously can be very lumpy month-to-month as we respond to when our customers want to take delivery. And as I've discussed on past calls, that increase is usually a result of timing and in this year like previous years, it will smooth out over the balance of the year, and our plans frankly are to end 2019 down slightly in the rental channel.
All three fleet channels are important to us in commercial and government, are very profitable channels and we saw a strength in both in Q1 with healthy year-over-year increases and that's a great sign for the balance of 2019.
Within our sales, our mix of trucks and SUVs last quarter was 83%. This is four points higher than a year ago, which you would expect given our strategy to mix out of traditional sedans we’re well into that, and into SUVs and trucks.
As we ended the first quarter, Ford's average transaction was -- price was $38,000, an increase of 1859 year-over-year versus the industry that was up above 920, so our increase was about double the industry average, a lot of that benefitting from the shift into SUVs and trucks, continued shift.
In terms of Q1 performance, we continue to focus on our winning portfolio strategy and the great cadence of major new products and incremental all new introductions that we have coming up over the next 20 months.
So let's start with pickup trucks. It's no secret that our two main competitors introduced new full sized trucks last year, and they are also continuing to build and aggressively market their old models as well. Despite this competitive environment, F-Series performed very well in Q1, with a slight increase in sales, stable market share, and the highest ATP by a wide margin, as well as the lowest incentive spending among the three major players.
As we highlighted in our press release, our lead and full size trucks, actually grew even more in Q1 than a year ago from about 79,000 a year ago over Silverado at that time in 18, to 95,000 this year over a new number two for Q1, it will be interesting to see how it plays out, which was the Ram. This is nearly a 16,000 unit increase in our full size truck leadership position.
As I've also said previously the full size pickup market is always competitive, very competitive. That's nothing new. It's been a battle of my entire career, and I'm sure through the entire 42 years that F-Series has had truck leadership. Through it all, F-Series has been a consistent volume and revenue performer. We’re the most capable truck, happy loyal customers, and a great dealer body that really knows how to service them.
Q1 was also the return of the Ranger, as we keep on trucks -- keep on talking about trucks which definitely added a good boost to the Ford truck franchise. We sold 9421 Rangers in Q1, combined with F-Series this reflects Ford's best first quarter pickup sales in 15 years even before Ranger reaches optimum inventory levels, which were actually continued to build, we get to a real optimal level in Q -- you know towards the end of Q3 and Q4.
We have a rich mix of Rangers, because there is a strong demand for crew cab which represented over 90% of our retail sales mix in the first quarter. This is providing Ranger with strong transaction pricing. As we closed out the quarter, Ranger transacted at $37,882 for the month of March. This is $4530 more than segment average.
Now of course this number is going to moderate down slightly as we work through the year and build inventory and dealers balance out their stock, but it's a great sign and demonstrates that mid-sized truck customers like full size truck customers are willing to invest in capable, well-equipped trucks.
Ford-brand SUVs also set a first-quarter sales record. We have a great story to tell on our SUV sales, they increased on Ford brand 3.5% versus last year, representing a new first quarter record totaling 193,753 SUVs.
This is driven by robust expedition performance up 62% with 21,773 Expeditions sold, very strong market, segment share gain as well, and as we prepared that capacity at our Kentucky Truck Plant this summer, we're looking forward to more continued performance.
Combined, Ford and Lincoln SUV sales were up 5%. We're also looking forward to the launch of the new Explorer and Escape later this year and really that move means on a volume weighted basis, we will go from having the oldest SUV lineup in the industry at the beginning of the year to the newest, as we get to the end of the year and have the newest Explorer and Escape in the market.
Let's move on to Commercial and Government. On the strength of Transit, the all-new Transit Connect and F-Series, Ford increase sales year-over-year in both Commercial and Government building on our leadership position in these profitable and growing segments.
Within these numbers, our combined van business was over 51,000 sales in the first quarter, up 1.4% and we have really strong order intake from our commercial customers heading into Q2, which is another good sign.
Moving on to cars, passenger cars. At retail, Mustang captured 34.4% of the U.S. sports car segment? In 2018, this is a 3.3 share gain versus 17. It's important to note that the sports car segment while it's been more resilient than traditional sedans, if you really look over the past five or six years, it also is not immune and it is also been contracting over the last couple years, so that the same patterns that we've seen in sedans to some extent is also hitting the sports car segment.
As we transition out of cars, it's -- you know we expect to see some volatility, some valleys in our numbers as predicted with overall passenger cars they were down 23.7%. It's important to remember the replacement products for a sedan lineup such as the new Explorer and Escape and the all new incremental entries we've announced that'll come in 2020 are still out in front of us.
Now, onto Lincoln. Lincoln continued its strong sales cadence in Q1 totaling 24,975 vehicles, that's an 11.2% gain for the first quarter. It was also Lincoln's best SUV start to the year, best quarter in over a decade.
They're getting really good performance on the entire SUV lineup. Their SUV sales were up across the board with 19,333 SUV sold. This is a 23.1% gain for the quarter and the best start for Lincoln SUVs in 18 years.
Big [ph] -- continue to come from Navigator. Sales were up 10% with 4,469 SUV sold. Nautilus sales totaled 7,835 vehicles for the quarter that was a 25.8% gain. As with Navigator, Nautilus trim series mix is very strong with Black Label and Reserve representing 72% of all retail sales for the quarter, and obviously we're looking forward to getting the Aviator in the market and rounding out the Lincoln SUV lineup later this year.
MKC sales totaled 5,787 for the quarter, also posting an 18.2% gain from a year ago, so very Lincoln SUV performance across the board. So that's a quick update, and now I'm going to turn it over to Emily for some comments on the economic front, and then we'll be looking forward to taking your questions. Emily?
Great. Thank you, Mark. And good morning to everyone on the call today. As backdrop to this quarterly review of industry and Ford sales trends, I'd like to address some of the broader economic themes we're tracking here in the early months of 2019.
As Mark noted, it was an eventful start to the year, but the recent data has confirmed that the economy remains in good shape despite a downshift in GDP growth that really started back in the fourth quarter of last year.
We won't see a first quarter GDP estimate for a few more weeks, but tracking estimates from around the Federal Reserve System suggest growth in a range of low 1% to near 2% sequentially.
To be sure that’s lower than the near 3% pace we saw for all of 2018 but it's within the recent range of first quarter reading, especially taking into account several significant winter storms and the government shutdown.
As we've noted in guidance earlier this year, we expect economic growth to be slower this year than in 2018. To be clear, that means a slower, but still positive rate of growth for the economy. And with a very solid labor market, consumer spending should remain well-supported. So let's talk about a couple of key metrics for the economy and how they've been tracking so far this year.
As I mentioned, labor markets remain a significant bright spot. We will get the March employment report to round out the quarter this Friday, which will be eagerly anticipated given the weak February reading. But note that the average jobs growth in January and February was still at 165,000. That pace is consistent with a modestly declining trend with some slowing in job creation expected given the continued tight labor market.
However, new claims for unemployment insurance remain at very low levels, consistent with positive job creation, and in fact claims have retreated back near their historic lows after the volatility observed in the early weeks of this year.
In a good labor market, it's not surprising consumers are feeling pretty good as well. The University of Michigan's Consumer Sentiment Index stands at 98.4 through the end of March. That's up 7.2 points from its recent low in January, and spot on the 2018 average for the index.
Consumers see more widespread income gains than at any time in the past four decades, notably including consumers in the lower tiers of the income distribution. New vehicle buying conditions were assessed by positively by 62% of consumers in March, and that was up three points from January.
Business conditions are also on the upswing headed into spring, with the purchasing manager’s index for manufacturing recovering some of its recent modest reversal. The manufacturing PMI stands at 55.3 in March and it's worth noting that throughout the trade tensions and other uncertainties, this index has remained solidly above the 50 threshold signaling expansion.
While businesses continue to face uncertainty and report higher input cost, readings on new orders and production remain supportive of growth in the manufacturing sector in the months ahead.
And while housing starts, remains depressed through February, an uptick in new home sales over the same period supports expectations for steady to improving conditions in that sector headed into the key spring months.
So overall, economic conditions in the U.S. are consistent with and supportive of our guidance for vehicle sales in the low 17 million unit range this year, including medium and heavy truck as we've previously indicated.
So with that, I'll turn it back to Mark and we can do a question-and-answer. Mark?
Good. Great, thank you Emily. So Sia, do you want to tee up questions from the analyst community.
[Operator Instructions] And the first question will come from Emmanuel Rosner with Deutsche Bank. Please go ahead.
Hi, good morning everybody, and thanks for hosting this call. So I realize that the format is now about the quarter, just wanted first quick comment maybe around the strength that was seen in March. It seems like it was a little bit of a stronger industry month, than we've seen I guess, through the start of the year, and so was curious if there is any specific factor as you point to it, or is it sort of like just the monthly seasonality, volatility I mean?
Yes. Thank you, Emmanuel. Retail performance on a year-over-year basis was pretty consistent throughout the quarter. It did -- it did feel and our dealers would've told you we did feel some firming up and strengthening in the market in March especially from about mid-March on. And certainly, the fleet business, especially the commercial business for us was very strong, actually throughout the quarter, but especially so in March.
Understood, okay. And then I guess sort of like focusing on retail since you mentioned that it feels like both for Ford and for the industry, we’re seeing some real fleet strength and to your point it's pretty broad based not just not just rental, but you know commercial and government as well. But then also some fairly pronounced or I guess consistent retail weakness on a year-over-year basis. Can you maybe sort of comment on what do you think sort of could explain this disconnect, and how would things so like play out for the full year, because obviously you have some front end loading of some of those rental deliveries and at least at Ford?
Yes, it's a good question. With the industry being down 5% for the quarter, now does it improve in the back half of the year? The patterns of that we've seen over the last four or five years, 2015 and 2015, 2016 have strengthened a lot in the back half of the year. Our industry was still on the upswing. I think, what we're seeing when we used to have the calls month-to-month and we're seeing quarter is in a plateaued market you're going to get some volatility on a year-over-year basis.
In our case, our retail performance was strong where it needed to be; in trucks, and in our new SUVs. We're continuing to see obviously a lot of weakness in cars, as we haven't invested in the segment, and are actually exiting many vehicles. But overall, on balance you look at the first quarter, what I'd like to see retail across the industry is stronger, sure. But, it was actually not too bad, strengthen as the quarter went on in our commercial business was commercial government business really very strong throughout the quarter, which is you know from our economics is a very very good sign.
Great. Thanks for the color,
Thank you, Emmanuel
The next question will come from John Murphy with Bank of America. Please go ahead.
Good morning guys and thanks for doing the call, I appreciate it. I just wanted to Mark and – and both Mark and Emily, just trying to give your perspective on this. I mean some of the strength in new vehicle sales appears to be dealers kind of shifting in with lower grosses, I mean I’ve known it for 20 years, it’s like in the last twelve months kind of first time, the dollar growth has come down for dealers since I've been covering the industry, so they're kind of chipping it a little bit more to get things done. Just curious, what your thoughts on there, so they’re kind of giving sort of back door incentive to the consumer that's not nicely shown up in the data that we're all seeing. There's also a pretty significant push in into leasing and I was just curious if you could give us the current levels in what’s going on there, and you think these two factors can kind of continue going forward. So it seems like there's a little bit of fatigue on the dealer side, and I'm not sure how much more we can push leasing. I mean, obviously underlying data still pretty good, but those two factors seem to be chipping in a fair amount.
Yes, John, there’s a lot to your question. I appreciate getting it. If I can kind of pick off some of the points you made. Our leasing overall leasing for us was flat year-over-year in the low 20s, so very consistent with where we've been.
Dealer gross profit on new vehicles and the Ford franchise has been very stable for the last two years. I don't actually have first quarter data, I don't -- I suspect it may weaken a little bit as you're indicating, but you know that's kind of a trailing number that we get. But we've been very stable for last couple of years. Now overall in the industry over you go back 20 years, dealer gross has been, new car gross has been under pressure and a profit stream for the dealers have been great entrepreneurs, have done better, and there are fixed businesses, sensational, fixed operations, a backbone or a dealership. F&I, our business has been pretty strong for the dealers, and used has been very strong. And we saw another good used market in Q1.
So dealers mainly, the profitability squeeze on our dealers right now is that they're paying higher floor plan costs, with the raise -- the increase that we've had in base rates. And hopefully with what the Fed indicator, we'll see some relief in that for those increases for the balance of the year. But that's been the main difference in their profitability. But your point is correct, that they're the first, they're the point of the spear, so when the market gets a little tougher, which has been a very competitive market, they're going to feel it a little bit in the gross and it's something that we keep a very, a very good eye on.
Yes. Literally. Yes. Yes. Go ahead, Emily.
I -- mean these are dynamics we would expect to see given the industry backdrop that we've described. Now remember, we were at 17.7 million for the total industry last year, and we're talking about low 17s this year. So, the headwinds of rising interest rates. I know, individual rate increases, aren’t a huge deal, but we’ve had a cumulative 225 basis points, so that adds up to some impact on payments. And we've talked about the fact that consumers and dealers and automakers would adjust to that, to try to support consumers through the transition to higher rates. I think, that's what we're seeing at the margin.
And again, that's why we're seeing at the margin a little bit slower industry pace. But it's not anything that looks alarming or beyond what our expectations would be.
Yes John, and it's important to remember -- it’s important to remember too with dealers on their floor plan costs. Our overall inventory is relatively flat. You know, a couple of thousand units dealer stock from a year ago. But if you look back over five, six years, our sales in the industry that average unit in inventory is a lot higher priced, both the mix shift into trucks and SUVs and all the equipment, driver assist technologies are gone in, so dealers are paying the comparative price for 4, 5, 6 years ago, a higher nominal rate and they're paying it on a higher per unit inventory and average inventory units. Soi that’s one of the reasons we keep a really good eye on inventory, and working with our dealers on fast returns and very efficient inventory management.
Okay. If I can sneak in one quick question on products. While we look at the incremental product that's coming out. You have the Ranger now, you have the Aviator later this year and you’ve got the Bronco next year. You also have the Escape and Explorer, [indiscernible] later this year and the probably F-150 next year. And Mark, as you think about all that sort of product onslaught which seems like it's in the truck, and SUV which is in the truck and SUV segment, how much incremental volume, you think, you can get from this these new nameplates for Ranger, Bronco, Aviator because they seem like there will be sort of hot products. And then as you think about sort of the change over the Escape and Explorer and F-150 you know and you learned any lessons on what sort of inventory management pricing as you've gone through past changeovers in the last year or two that might make those even more efficient, because they seem like those takeovers are going better than they have in the past?
Great question. And John, I’m going to give a general answer, not a specific answer. As you know, we are going to be bleeding out some fairly significant volume, if you go back over a three four Horizon on Focus and Fusion with those two vehicles coming on the line up, Fiesta and Taurus over time not so much obviously from those were more niche players. We've got obviously, a refresh on Explorer and Escape, which we're doing high volume before, we expect to do very well with both products and then you really get a bump from incremental products to the lineup.
As you mentioned Ranger, Bronco some the other products that we've announced. Now they are replacing like I said, fairly high volume products with Focus and Fusion, they weren't as high as last year or two, but historically they've been pretty high, but all-in-all we would look for them to increase overall market share and volume. I'm just not going to peg it to an exact number, and you really kind of see those numbers come into play if you really get into all the product cadences, and plant startups, it's more like 21, 22.
But we do feel we'll start getting a bounce from some of the new products in the back half of this year. At a low point right now, if you think about the cadence, we're just three months of Ranger and really most of our Sedan lineup phasing out of.
Great. Thank you very much.
Thanks, John.
The next question is from Rod Lache with Wolfe Research. Please go ahead.
Good morning, everybody. Had a couple of questions; just first on the sales pace with retail down 5% for the quarter. You mentioned that in the past, you've seen instances where things have kind of strengthened over the course of the year. Are there any factors that you see at this point that would lead retail to improve from here? And is that actually what's embedded in your full year expectations?
Yes, Rod, we’re -- the tailwinds that we believe we have as Emily indicated, the consumer is in great shape. Just simplify a lot of data. People have -- have a job and, in some level of income growth or at least optimistic about the prospects for employment and income growth they tend to buy vehicles. That's a very simplistic view, but I've seen it you know kind of work their way over overall a lot of cycles. Our consumer sentiments really strong, stock market performance in the first quarter, which believe me, gets in the consumer psyche. Everybody has a 401-K or some investment in stock market which is and that information so easily accessible and it really helps from a -- from a consumer psyche and optimism standpoint. So those are -- those are all tailwinds, overall GDP growth is still very solid. We did see I think and it felt in the last couple of quarters that move up -- the move up in consumer payments with the interest rate increases. Emily doesn't like me to call interest rates, with the Fed has indicated that they may be at the end of those increases.
So I think that's very favorable. And we -- you know I'm not I don't give a weather report but we had a lot of – seriously a lot of adverse weather, that affected a lot of industries in Q1 and as well as a lot of noise with the government shutdown and other things. So I'm optimistic, the year will strengthen and am I smart enough or clairvoyant enough to call it, I'm not, but I think it'll outperform retail of the regional pace that we saw in Q1. I really believe that, but that's -- that's a Focus group of one in my opinion. Okay?
Okay. Thanks for the color. And on pickup truck demand, market is obviously been dominated by Ford, 40% of the market. Ram and the GM products make up most of the rest, but Fiat, Chrysler has been increasing capacity and they're planning to gain share in fleet. Could you just, maybe just address how you see broadly that shaking out and just the increased competitiveness, because it is, there is an extra plant now focused on that market and also just really quickly, who are the buyers of the Rangers, just based on your initial data? Are they the F-150 buyers, or what is the alternative that they're coming out of?
I'll take -- I'll take your last part your question first Rod. On Ranger, we saw a very high degree of incremental sales in Q1 with the Ranger. There’s a lot of Ranger loyalist, frankly, which you get any new introduction that have been waiting on it and came back in into the market, really buying very well-equipped Ranger. I cited some of that data earlier and did indicate it to moderate as we move through the year. But we were really pleased to see the performance, which really like almost no incentives spending obviously in the vehicle in its launch quarter.
And on the full-size pickups, we’re pleased as I said with our first quarter performance. We’re up two-tens. Our market share was really stable which we had our continued strong pricing performance ahead of our primary competition. And as I indicated, I can’t handicap the effect of RAM bringing on the capacity. I just know that pickup truck business is super competitive every month. And you've got a fairly high degree of loyalty in the full-size pickup market. So, you don’t have a ton of customers that are in play in a given month. It's really a small percentage of the total customer base that’s really susceptible to brand switching and with our leadership position that provide somewhat of a competitive mode around our business, but we anticipate it being competitive.
We’re proud of our performance so far. Our dealers are competitors. They take great care of our customers and we anticipate similar performance as we work till the year. I hope that the segmentation is strong. It was roughly flat in Q1, right, year-over-year full-size pickup segment and hopefully we’ll get some strength from housing and some other – just lift from housing and other things and continue to have a very good full-size pickup market. That’s good for all of us.
Great. Thanks. And can you just clarify who are the buyers of the Ranger are? What are the segments that they’re coming out of? Or what are the alternatives?
I don't have that data right front of me. We’ll circle back by the end of the call, or we’ll get on with you that. I’ll get somebody on the line with you on that separately.
Thank you.
Thank you.
The next question is from Colin Langan with UBS. Please go ahead.
Hey, guys. This is Gene Vladimirov on for Colin. Good morning.
Good morning.
So EcoSport appears to be having up pretty strong quarter. Can you talk about kind of what are the drivers there and how you expect that performance as to going forward?
Well, SUV segments in general, most all of them are growing, which we had yet explosive growth a few years ago in the many utility segment. And it’s our most affordable SUV. So we get – we source customers from other brands and they come from our sedan lineup. You get people both of – we get a bifurcated owner group where you get younger millennials or couples just starting out as well as empty nesters that are looking to downsize. It's a great second, third vehicle in the household.
So, in many ways become the new entry point into the Ford brand. So it continue to gain strength and as we get more them on the road more awareness and our dealers figure out the sweet spots in their market for how to equip and priced the vehicles and we're looking for. That just a continuation of our strategy to mix other cars into SUVs and create new entry points into the brand and so far it's been working fairly well, we’re still learning.
Sure. That makes sense. And then, I mean the segment in general has been more competitive, so like any color you can give in terms of pricing you’re seeing there, any pricing pressure from pre-entrance [ph]?
Yes. It’s a fairly competitive -- you’re accurate. It's a fairly competitive segment from the standpoint of incentive spend and we expect to be competitive in the segment to keep our dealers compare to both for retail and lease transactions. We’re seeing more competition frankly in the small utility segment where Escape competes. We got a lot more entries and a lot more action, and that’s what we’re looking forward to getting our new Escape. New product tends to always win, so we’re really looking forward to getting that product into the market later in the year.
Got it. Thank for taking my questions. Good luck for the rest of the year.
Great. Thank you.
The next question is from David Tamberrino with Goldman Sachs. Please go ahead.
Yes, great. I also want to reiterate my thanks to you guys doing this call. I think that’s helpful. First question is on pickup truck inventory. It seems like they’ve been elevated through this first quarter, your sales included as well as your competitors out there. Wondering what you're seeing that you feel as if your overall inventory, if that it’s going to get worked down?
Yes, David. We’re up a couple thousand units and couple days supply dealer stock year-over-year. If somebody could pull that chart for me, I don’t have it right in front of me. I’m not at all concerned or feel like we’re in overstock situation. We roughly want to be at the levels that we’re at, and into April, May, we did have a very late changeover where we still selling the majority of our sales were 2018 [ph] models.
I believe, certainly for first quarter and I believe even in the March. So we’re now shifted in the 2019 models. But I feel, we’re in good position, very consistent with past April first dates. And our competition having a high level of inventory, I mean that fluctuates month-to-month. We’ve been faced with that situation before. They have the same pricing dynamics that we do in terms of the marketplace. So, I don’t think that we’ll be a big factor.
But yes, we were the 66-day supply year ago in March 30s, 31st and with 70 now, about 20,000 more trucks. And not part of it was – we had to replenish inventory following some of those losses that we had in the Meridian Fire. So some of that inventory, fresh inventory for the dealers, and when you meet with them as much as I do you'll almost never hear a Ford dealers add too much truck inventory. In fact that the comments that they usually have is I need more especially Super Duties.
That’s helpful. And now I want to follow back on one of Rod’s question. That was a good one. Just trying to figure out, where the Ranger buyers coming from? Are you seeing any cross shopping or comparison between the Ranger and the F-150 platform? Or is it completely new buyers set?
We’ve seen very little cross shopping with F-150 or as we measurable what we call cannibalization of F-150. We saw very little of that in Q1. And our business plan, we’ve accounted for some of it. We have good data sets based on the Colorado and Canyon at GM and the effect on the Sierra and Silverado. Tacoma doesn't provide as good of a dataset because they don't have a full-size pickup business at Toyota that our sales in GM enjoyed, but it's a different kind of a customer. They are looking to use the vehicle more for personal use. Adventure versus F-150 which really is solidly based in getting work done, and that’s the way we position the vehicles. It’s a way we advertise market and go to market and advertise. We believe it's a sound strategy and that we’ll see some level of cannibalization over time, but it was very like in Q1, but it still very positive plus business for us in aggregate.
Got it. But that’s very helpful, Mark. Just last one from me is, you mentioned retail sales being down I think 5% the quarter. Was there any fluctuation in that throughout the months? Did March improved? Or was March at that down 5% level from retail perspective?
Yes. I’ll let Emily to comment on it.
Yes. Thanks. I think as Mark noted.
Make sure we're talking industry.
Industry retail.
Yes, industry retail.
Yes. Industry retail downsize, I think it’s helpful to have the call quarterly because there is a lot of volatility month-to-month on retail. I'll just say, tying back to what Mark said earlier with Rod. We saw a lot of ups and downs last year as well. So in an industry that flat to down slightly and again we are calling the industry down slightly this year going from 17.7 [ph] to low 17. You’re going to have – most of the quarters you’re going to be down probably by differing magnitude. If there was one quarter on which I would not want to call the full year it would be the first quarter, especially on retail, it always the smallest volume, so you can get a lot of volatility in those readings. So I would again say that looking at the quarterly data it’s a best benchmark, and take first quarter with a grain of salt.
I was encouraged though by the overall number coming out roughly 17.4 [ph] and our fleet business is really important. We got high demand from the rental companies. As I mentioned we’re going to manage it to a relatively flat year-over-year volume level. But the order intake from our big customers on the commercial government side is very solid. And then a ton of that commercial business is actually very close to retail. Its units that dealer sell out of stock or ordered vehicles one at a time to small businesses. And that - it's a lot of gray areas that really retail business or fleet, we count it a fleet because it's customers that usually buy total of five vehicles over the course of the year, but they are sold one at a time and very much reflective of consumer sentiment and grassroots economic activity. And that business is very for us. In Q1 it was all of 2018 as well.
The next question is from Joe Spak with RBC Capital Market. Please go ahead.
Thanks. Mark, I actually wanted to maybe follow on last line of commentary. I mean, I think in the past you've given some context and color for how the different buckets within fleet, government, commercial, rental have performed. Is there any way we could get that at least for the quarter? And especially -- and I was wondering also you could comment, I mean, there was I think report from Cox which indicated that that was 39% of the March sales for Ford were to rentals. So I think providing some of that context for the month might be helpful just to understand how that really played out?
Yes. Joe, this one I could tell you. We had a big fleet quarter overall. We were up significantly in rental. We were down significantly in Q4. So lot of that was timing that moved into this year. Again, I want to repeat that for the full year that will smooth out. It will causes some year-over-year headaches frankly and the subsequent quarters on from the standpoint of the rental business, because our total rental for the year per our plan right now and we can’t control that. It’s down slightly.
Our commercial business was up mid-single digits. Our government business was up high single digits with really solid order intake into Q2, which a lot of indicators that my fleet team and they are very good, our model in terms of forecasting that business. And it's on high profit vehicles. Our Transit -- our full-size Transit van, we’ve got great response to our Transit Connect smaller van. A lot of that business is full-size pickups including Super Duty.
And so we’re very optimistic about that business for the balance of the year given underlying strength of the economy and other factors that we consider, but the rental number like I said it’s part of the reason that we move to quarterly calls frankly. We get volatility on rental business in the quarter, let alone a month. But a very high number this month, but that’s not to negate, some really good strength in our other commercial channels – our other fleet channels, excuse me.
And maybe and I understand there’s going to be volatility, but maybe what would be helpful because you did say that it should sort of level out through the year. Is there any context or color you can give us to how we should expect fleet as a whole to play out through the year, like when do you expect some of that giveback?
On rental it’s pretty balanced, the giveback for the balance of the year. There is volatility, I believe we’ve got one quarter that’s going to be way down in rental. But the second half of the year most of the rental is -- was frontloaded in the back – in the front half of the year, will be down the back half of the year. We expect commercial and government to be consistently solid all year long. So we’re optimistic that we’re going to have year-over-year gains for the full year in both the government and commercial sectors.
Okay. Thank you very much.
Thanks Joe.
The next question is from Richard Truett with Automotive News. Please go ahead.
Good morning everyone. I have two questions for you. Emily, with tax refunds being down do you expect that to affect sales in the summer or at late spring and summer months? And Mark, a question for you; Fiesta had a really good quarter. Is that an indication that you need to keep an entry-level car that's very affordable in the lineup?
Let you go first, Em
I’ll take that first thing. There were some early reports that tax refunds were down from the prior year. The more recent updates suggest that they’re actually pretty well in line with last year's pace. Now I will say today if you owe money, chances are you probably going to wait till the last minute to file. So I don’t think we want make the call on what tax season looks like until it’s wrapped up. But compared to the early reports I think it looks like a much more normal year than was originally being reported.
Okay. Thank you for that.
And on the Fiesta, question, Richard, it had a really strong month both retail and fleet. A big chunk of the increase was fleet by the way, but it was up at retail. Conversely, Focus was way down, over 50% down on a retail basis as we’re basically out of Focus. I mean, we’re getting to the tailwind. And we have built some Fiesta stock that help dealers. We’re managing that transition of phasing out Focus. We’ll be phasing out Fiesta like a year later. We’re cadence to lot of this to give soft landing both our customers and to our dealers.
But if you have the two together; Fiesta and Focus it would have been a real negative number which we’ve obviously made up for to some extent with EcoSport which was up huge retail and we’re continue to sell Fusions which is even longer phase-out period. But it doesn't change our strategy, but we’re -- it was all planned that really provided soft landing to our customers and dealers in the sedan market.
Okay. Thanks Mark. Thank you, Emily.
Thank you, Richard.
The final question is from Phoebe Wall Howard with Detroit Free Press. Please go ahead.
Hi, guys. Thank you for your time. Two questions. One where is the pickup growth coming from 0.2% on heavy duty and full-size and where is that? Is that Texas? Is that the Midwest? Where are you’re seeing the growth? And the second question is; your thoughts and analysis on the increasingly competitive SUV segment? And how you’re going to differentiate? But the first is where is the growth for the full-size pickup?
Great question, Phoebe. If you look at our business in aggregate for the quarter, we had a really strong performance in both light-duty and heavy-duty with Super Duty and in the commercial and government business. On a retail basis our business was actually little bit stronger in the coastal regions, and we were in middle of the country. I'm not sure why to be honest, other than you might have a stronger competitive focus in the middle of the country. But there wasn't any huge pattern. Overall, it was fairly consistent….
When you may say coastal, do you mean East Coast or West Coast?
Both. We had really strong business in Florida, Carolinas, our West Coast business was strong. But it wasn't -- it was matter of a couple percentage points difference. So it was fairly consistent with really good price -- with really good pricing dynamics. We did in 2018 we did lean in the leasing on our pickup truck little more than we historically do. We did not do that in Q1. So, some of the lease markets did enjoy some of the performances that they had in 2018, but again, a very soft shift.
In terms of the competitiveness in SUVs, like I said we see most of that play out in small SUV market while the new-product activity and a lot of in-focused incentive activity. We got a new Escape come in the balance of this year. Our Ford SUV lineup on the Ford brand very focused on great on road crossovers SUVs from an EcoSport up to an Expedition. The bottom and top end of the lineup we got new products. We gave you the numbers. We’re up triple digits on EcoSport, 62% on Expedition with solid performance by Edge and with the new Escape and Explorer with Explorer off a whole -- on the rear-drive platform.
And great work to get the Chicago plant turnaround. By the way I didn’t mention that, but some of that’s going well – going great from our manufacturing team. That’s a big job. But we’re going to be full suite of driver-assist technologies, connectivity technologies, great on-road experience, and then next year we’ll start with our entry into off-road part of the market where we can differentiate and operate there against the much more limited set of competitor such as Jeep. So, we believe we got a great strategy and it’s all out front of us yet. And I’m pleased with Q1 by way wrapping this up given that our product cadence is still on front of us and the industry performed I think better than anticipated or better than people felt halfway through quarter. And I think gives us a lot of reasons to be optimistic for the rest of the year.
Thank you.
Thank you, Phoebe and want to thank everyone for taking the call. I hope you found it helpful. We’re open to suggestions on how we can improve future ones and get those fit into our teams here and we’ll get it scheduled. Well, its going to be little tricky schedule in the second quarter because its kind of hits right in the 4th of July, the week of 4th of July, but we’ll do our best to schedule at time that’s accommodating for everybody.
Thank you and have a great rest of your day, and hopefully a great second quarter. Take care.
Ladies and gentlemen thank you for participating in today’s conference call. You may now disconnect.