Profit machine: Ford Pro commercial vehicle and tech business sets the automaker apart

“I can’t put any dollar value on it,” Merritt said. “It’s one check a month versus multiple. It’s one spot to check everything. It saves time is what it saves. When you run out of time, you have to push things to the side. It makes running our business easier and more efficient.”

Metro Air is small enough that it doesn’t have a fleet manager. With the business’s permission, dealership Bill Brown Ford can assist in that by notifying the company when it sees that a vehicle needs maintenance or is under a recall.

“Every day that vehicle is down is critical,” said Jim Stevens, commercial vehicle manager at the Livonia dealership. “They're losing money, whether they're going to rent a vehicle, or they're just down a vehicle and just can't get the job done, or they lose a job. The benefits of telematics for us to help the customer is the amount of information that we can gather from it before the customer brings it into the dealership. We're set up to where we can access their telematics when they grant us those permissions to do that, and we can try to pinpoint the issues and try to get ahead of the problem and order the parts and be prepared.”

The dealership also offers mobile maintenance or can pick up the vehicle for service and deliver it back to the customer when done.

Ford has its own immediate strengths with F-series trucks being the best-selling vehicle in the United States for nearly half a century. CEO Farley said during a recent earnings call that order banks are exceeding the company’s supply of Ford Pro vehicles. Government infrastructure investments, the buildout of 5G telecommunication systems and the encouragement of domestic manufacturing are fueling built-tough sales. Farley said dealers normally get up to 75% of the volume they want for Ford Pro.

He noted Ford’s strengths among tradespeople and small businesses as well as long-term partnerships with upfitters. Growth opportunities, he said, are in software, service and aftersales.

Ford Pro has more than 500,000 software paid subscriptions, up 46% year-over-year, and the margins are more than 50%, according to the company. It’s expected this area will drive 20% of Ford Pro operating income in two years by getting to a 60% mix on connected vehicles and increasing its number of subscribers to a third from 12%.

"The magic is really connected services," Stephanie Brinley, principal automotive analyst for the Americas at S&P Global Inc., said, highlighting their thicker margins. For commercial customers, "it's about their business. They spend a little bit more if it makes sense for their business, but if it makes their vehicles run better, and if you’ve met value metrics for that customer, they'll stay, and they'll apply it to a greater number of vehicles."

Encouraging users to activate that option is a focus for growth, Baughman said. Customers have access to a complimentary "Essentials" program that has maintenance tracking, offers dealer scheduling and can remotely unlock or lock the vehicle. To upgrade to Ford Pro Telematics is $20 per month per vehicle, which adds fleet tracking, fuel efficiency analytics, location history, additional security features, an app for employees to communicate with a manager, in-vehicle coaching and more. There are additional options depending on customer needs, as well.

The division also is a space for electric vehicle learnings. There's a larger sales mix on the E-Transit to local and state governments and small businesses than the internal combustion engine model, CFO Kumar said. The company offers certain telematics features specifically to support EVs, too.

"When it comes to electric vehicles in Pro," he said, "we've seen areas where it's going better than expected, and the EVs are actually really effectively meeting the use cases."

The strengths of Ford Pro are a differentiator for the Blue Oval, said Daniel Ives, analyst at investment firm Wedbush Securities Inc.

"Everyone is trying to compare themselves to Tesla," Ives said. "It's Ford's answer to show this is not your grandfather's Ford. It shows some of the initiatives and next-generation technology that's coming to Ford. It's a stretch to say it's Ferrari-like, but they have a massive opportunity to get new customers into the Ford ecosystem."