Ford CEO Jim Farley reveals key advantage over crosstown rivals: 'No other company has Ford Pro'

Ford Motor Co (NYSE: F) is capitalizing on its fleet business, turning what was once considered a "dirty" word in the automotive industry into a major competitive advantage.

Under the leadership of CEO Jim Farley, the segment known as “Ford Pro” has generated $184.5 billion in revenue and $18.7 billion in adjusted earnings since 2021.

This shift challenges the traditional view that fleet sales are less profitable and a negative for legacy automakers.

In a recent earnings call, Farley highlighted the success of Ford Pro, which performed exceptionally well despite an overall down second quarter for the company.

“No other company has Ford Pro. We intend to fully press that advantage,” Farley told investors.

Despite Ford's stock price dropping about 30% after missing earnings estimates on July 24th, the fleet business remains a bright spot.

Fleet sales: Ford’s hidden gem

Ford’s fleet business has garnered positive attention from Wall Street, with analysts dubbing it a "hidden gem" of the legacy automaker. Some even refer to the Pro segment as “Ford’s Ferrari.”

While rivals General Motors (GM) and Stellantis have restructured their operations to boost fleet sales, their commercial sales are expected to decline this year compared to 2023.

Conversely, Ford’s commercial volumes are up 7% from last year, according to Wolfe Research.

The investment firm predicts Ford will earn $9.5 billion from its fleet business this year, surpassing the combined $9.0 billion expected for GM and Stellantis.

S&P Global Mobility estimates Ford’s share in new fleet vehicle registrations since 2021 at around 30%, significantly ahead of GM's 22% and Stellantis' 9%.

Bank of America analyst John Murphy is bullish on Ford

Ford Pro's success is a key reason why Bank of America analyst John Murphy is bullish on Ford shares. His $22 price target suggests the stock could more than double from its current position.

Murphy sees potential upside in Ford Pro’s volumes as well as its software and services.

He notes that Ford Pro makes up about 80% of Ford’s software subscriptions, with an attach rate of only 12%, projected to grow to over 35% in the next few years.

Ford aims to leverage its fleet and commercial segment to achieve $1.0 billion in software and services sales by 2025.

Additionally, Ford stock offers a lucrative dividend yield of 5.98% at the time of writing.

Ford’s strategic focus on its fleet business contrasts sharply with the approaches of its competitors.

While GM and Stellantis face challenges in maintaining their commercial sales, Ford's proactive investment in its fleet segment and commitment to software and services set it apart.

This approach not only secures immediate revenue but also positions Ford to capitalize on future market trends.

Despite the broader market challenges and recent stock performance, Ford’s fleet business, under the “Ford Pro” banner, is proving to be a robust growth driver.

CEO Jim Farley’s vision and the company’s strategic investments are paying off, making Ford a compelling consideration for investors.

As the automotive industry evolves, Ford’s innovative approach to fleet sales and commitment to software and services could ensure its continued success and market leadership.