Ford Motor Co., starting to ship its new aluminum-bodied F-150 pickup, fell as much as 4.4% after Deutsche Bank AG downgraded the automaker on concern that the truck won’t command premium prices amid low fuel costs.
The shares dropped 3.6% to $14.46 at 12:44 p.m. in New York after earlier slipping to $14.33, the lowest price in about a month.
Ford, the second largest U.S. automaker, said last week it has shipped more than 5,000 new 2015 F-150 models, with fuel economy improved by as much as 29% due in part to its light-weight aluminum body panels.
With U.S. gasoline (NYMEX:RBF15) prices at a 5-year low, consumers may not be motivated to pay more for the F-150, Rod Lache, an analyst at Deutsche Bank in New York, said yesterday in a note. Lache, who downgraded the shares to hold from buy, also said automakers face “regulatory cost burdens” in part to achieve average fuel economy of 54.5 miles per gallon in the U.S. by 2025, that are “unprecedented.”
“Ford’s new 2015 F-150, which incorporates a number of advanced but costly powertrain, light-weighting and safety technologies, represents one of the most prominent early examples of this forthcoming change,” Lache wrote. “We question whether consumers will pay the price for this content with $2-$3 gas.”
Ford sold 763,402 F-Series pickups last year, 18% more than in 2012, making it the top-selling vehicle line in the U.S. for a 32nd straight year and helping boost Ford’s North American pretax profit to a record $8.78 billion.
Chief Executive Mark Fields said in September that Ford will earn a pretax profit of $6 billion this year, missing its goal of $7 billion to $8 billion, because of rising recall costs and widening losses in South America and Europe.
Ford has hundreds of new F-150s in parking lots around Detroit to give them extra quality inspections before shipping them to dealers. The company said it expects to reach full production of the truck by the end of the month at its Rouge factory in Dearborn, Michigan.
Average U.S. gasoline prices fell to $2.545 a gallon today, down 31% from a peak of $3.696 in April, and the lowest since Oct. 16, 2009, according to AAA motoring club.
“Ford’s product strategy, set 3-4 years ago, likely contemplated a somewhat different market dynamic vis a vis energy costs,” Lache wrote.