Ford’s not-so-secret profitability weapon

Fleet sales, once seen as a low-margin "negative" for automakers, have become a profit powerhouse for Ford.

Why it matters: Ford Pro serves commercial customers with work-ready vehicles, service, software, charging, and financing to improve fleet operations. Over the past 3 years since its creation, it has become a multibillion-dollar success.

By the numbers:

• Ford Pro has generated $18.7 billion in adjusted earnings and $184.5 billion in revenue since 2021.

• Ford holds a 30% market share in fleet sales, with commercial volumes up 7% this year, reported S&P Global Mobility. 

Big plans: The division is targeting $1 billion in software and service sales by 2025, said Ford CEO Jim Farley. 

• Software subscriptions currently have a 12% attach rate, projected to grow to over 35% in the coming years, according to Bank of America analyst John Murphy.

• Ford also plans to increase its revenue from telematics and other services to $2,000 per vehicle annually, with 20% of Ford Pro's revenue expected to come from these services by 2026.

One thought bubble: Ford Pro is leveraging the aging commercial vehicle fleet, which averages 17.5 years. There is a growing need for businesses and other commercial customers to upgrade their vehicles.

Ramping up: Ford Pro's success is also tied to the strong performance of its Super Duty trucks and Transit vans. The demand for these vehicles is outstripping production capacity. This is why Ford recently announced it was adding 100,000 units to its Oakville Assembly plant.

What they're saying: “If you’re looking for the future of the automotive industry, stop looking at FSD and Tesla. Look at Ford Pro. It’s got half a million subscribers with 50% gross margin,” said Farley.

The bottom line: Ford is proving that fleet sales can be a goldmine and setting a new standard for demand growth.

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