iamweasel

I think it is. Of course the smart thing to do when production is limited would be to build your highest profit models/trims, but those higher end models/trims require more parts/chips, so I think they are just building what they can based on what parts/chips they can actually get.

I don't think they are gaming the system to keep inventory tight. They can't even build the customer orders for my company (who has 3 Ford dealerships with hundreds of customer orders in the system) **AND** they are cancelling legit customer orders, too, due to supply/production issues. It's still bad out there - they are having major problems producing trucks.

Increasing production and adding incentives is fine to a point. Even from a few years ago the contribution margin (vehicle profit less fixed costs, including incentives) is down, though, so they do need production to increase over current levels. Now if they want to right-size production and close a plant or two, and use more 3-crew operations to obtain the same capacity as they have now, that would be a more efficient way of building vehicles. You would not have as much fixed cost allocation per vehicle.

Think what the profit would have been if they could produce at full capacity. That's the issue.... Contribution margin of a vehicle produced is greater than the incentive cost to sell them in most cases, so any lost production is an opportunity cost. At let me add this, too. Just looked through some of the financials in the press release, they don't provide many details but one thing that stood-out was the volume increase. For June, 22CY they produced 1,032,000 vehicles - in June 21CY it was only 764,000. Think increasing production 35% may have had something to do with that year over year increase? That's probably a big reason why the margin jumped from 3.9% in June 21CY to 9.3% for June 22CY. For June YTD, production went from 1.83M units (2021) vs 1.99M units (2022.) The June YTD margin went from 7.9% (2021) to 8.1% (2022.) The volumes and margins are similar from year to year.

You can't just look at total bottom line from a couple years ago vs now and make the assumptions on that. There are lots of things that can make it an apples to oranges comparison. (Especially how companies account for taxes, depreciation, etc.) What would be the proper analysis is looking at THIS YEAR's profitability at current production/incentive levels vs what it would have been with "normal" production. Unfortunately none of us can do that as that is not public info. But those I know inside the company will freely admit they would have done a lot better this year with normal production levels, even if incentive levels were the same as they were a few years ago.

Don't know what to tell you - company wide that isn't true. (This is coming from a Ford Finance Manager who's job is to consolidate/report this info. He's one of my best friends and I've known him for 20 years. We started at Ford together and worked next to each other for a couple years in the Marketing & Sales Division.) Profits from vehicle sales is lower that it was a few years ago because the loss of profits from production volume is greater than what has been saved in incentives. Are there some exceptions on a few specific vehicles? Maybe...but overall they are down big. And my friend believes this most recent round of layoffs isn't to fund Electric vehicles, it's to help offset these losses from the lower production volumes.

I don't believe that to be true in many cases. Called my buddy who works in Finance and he looked up some #'s. June TYD F-Series sales volume has been this in the last few years: 2019 = 448K 2020 = 367K 2021 = 362K 2022 = 299K So from 2019 to 2022, in the first half of the year, they lost nearly 150,000 units of sales - mostly due to production issues. Even eliminating all variable marketing has still resulted in a huge profit reduction on F-series from "normal times" due to volume reduction. Roughly speaking 2019 vs 2022 would look like this: 2019 = 448K sales x $8,250 avg variable profit (before fixed costs) per unit = $3.7B 2022 = 299K sales x $10.100 avg variable profit per unit = $3.0B (OEM Incentives have done down about $2,000 per unit) Net reduction in variable profit = $700M

You can't use a new player in ramp-up mode (Tesla) as the example for how the industry will be. When they mature their production capacity will exceed demand at certain times which leads to a different type of behavior. Car volumes are far more erratic than production volumes which are typically constant. Plus, Tesla has a more well-off/higher-tech clientele who has a higher order rate (vs buying out of stock) anyway. The guy in that video seems oblivious to a couple key points: 1) You **CAN** build to order from a "franchised dealer" now and always have been able to do that. He talks like they can't do that at all. Talking about discounting a car because it's the wrong color....c'mon, man, that's the oldest trick in the book. 2) He fails to address the opportunity cost of those "higher profit" build to order cars - the massive loss an OEM takes when you slow/cut production. Will they make a few more bucks PER UNIT when they don't have to incentivize cars like today's marke - sure - but their overall gross profit is down when they only make 75% of what a plant can produce. Bottom line is until auto plant capacity nationwide is at or below demand **someone** is going to have excess inventory. That someone will then discount cars and steal buyers away from those who may custom order due to the big price difference. Round and round we go. Annual production capacity has to be lower for this to work and while everyone including Ford is talking a good game, none of them are actually reducing production. Plus, plant capacity nationwide is actually increasing with more and more startups (like Rivian and VinFast in additon to Tesla) adding production capacity when annual demand isn't really increasing. So yes, everyone wants to increase the number of custom orders being done, but I don't see a big shift in this happening on the ICE side. With electrics, if production capacity is still below demand then yeah, you'll see more of it in the short-term, but 20 years from now when all plants are producing XX% more electric vehicles than is demanded, then what? There will be excess electrics on the ground to sell then, too. So I don't expect the business model to be all that much different with the legacy OEM dealers going forward. I can see them having less inventory on the ground but not 75% less. I also think the pure electric companies may have to start stocking vehicles at some point, too, once the demand starts to become lower than their production capacity. That may be a while, though, but there is room for stock vehicles AND customer-order vehicles. It won't be all one or the other.

Currently the auto industry still has more annual capacity than average demand. It's easy to build to order when demand is greater than production capability, but that isn't always the case, though, so when the demand curve inverts the OEM has 2 choices: 1) Shut the plants down to control supply 2) Start throwing incentives around to "encourage" dealers to keep ordering (with the right incentives, the dealers are happly to comply and pay a little floorplan if needed) I'm pretty sure most OEM's will choose option #2. I'm not a believer that a build to order model will be the norm when things return to normal. Will there be more of it? Sure.....but I still think selling out of stock will represent at least half of the annual sales. (Until a couple years ago, I think that # was close to 75% for Ford.)

It's up to the consumers to determine that. They have to learn to order and WAIT for their ordered vehicle to arrive. For the most part, the US consumer - who has very little patience - has not been that type of buyer when it comes to motor vehicles. We'll see if the madness of the last couple years helped changed some mindsets. I think we'll definitely go back to dealers having stock again, but to what extent we shall see. Keep in mind for consumers, less inventory on the ground means fewer deals, too, given a lower number of motivated sellers.

Everything you are describing was done when there was Car vs Truck group, or Car vs Truck vs SUV groups, etc. They didn't need to be separate "divisions" to do that. That's all I'm trying to say....the whole separate Division thing is simply a talking point for Wall Street - nothing more. They were going to have some different processes, already, given the inherent differences on how you design/test/manufacture an ICE vehicle vs a BEV. All that was already in process prior to announcing this separate division thing....

I don't know about this yet. My counterpart that handles our Ford Dealerships has said they haven't really communicated anything about this yet. Upper management is a hard NO on a separate IPO for Ford E. If they do that, then they can't massage the #'s like they want. Separating them would mean the divisions would REALLY have to stand on their own, not like how it is now where this "separation" is just all talk, in reality. If they ever do an IPO for Ford-E, I suspect it will be years down the line when the ICE business is towards the end, and if they were smart they'd do that then use a bankruptcy proceeding to unwind "Blue" and escape from all the remaining liabilities. Yes this would be a crappy thing to do to the creditors, but US law allows it so they could do that if they wanted to. They won't, though, because the Ford family is dead set against the "B" word being associated with their family.

Investment is done vehicle line by vehicle line. Each vehicle line stands on its own. It doesn't matter whether that vehicle is part of Car, Truck or Model E, in reality. The one reason this may help Model E vehicles, initially, is there are only a couple of them so the financials can be scrutinized a little bit more. Ford will less willing to dump certain fixed cost allocations there to pump-up those #s. As time goes on, though, and more vehicles get added to the mix, all of them will blend together and mask the "good" vs the "bad" and more corporate allocations can be tossed in there. A lot of games can be played here, and still comply with GAAP rules.

"Splitting" Model-E is nothing more than smoke and mirrors. Every vehicle line is a separate business unit and has their own P&L - they just never reported it that way. (It was reported in groups like "car" and "truck.") So you can pick and choose what vehicles are in each grouping fairly easily. So this whole "separate" battery electric division is nothing more than "selling it" to Wall Street. It's just a game played to satisfy investors who don't understand the business. That doesn't mean I think this is bad in any way - it's pretty meaningless in the grand scheme of things and doesn't really help or hurt the real product.

Now I didn't address whether meaningful change is occurring right now or not. That is still possible, as there have been some things in the works but I'd classify them as minor changes. We'll see what else gets done in the coming months..... I'd still argue that changing policies is not the biggest issue. In fact, some stability and simply sticking to whatever policies are currently in-place is probably a more effective route IMO. As one of the previous posters mentioned, stop moving the goalposts all the time!

The problem is there is nowhere to go in many cases. There are only so many suppliers in the world, and many of them aren't open to taking on new clients. (Ever heard of Keiretsu? It's still alive and well in many cases.) When I was on F-150, we were mandated to change our offshore sourcing from 2% to 10% for my program. That meant we had to fire North American suppliers and get a replacement from Asia. OH-MY-GOD that was painful as hell and a miserable experience. I still can't walk by an 2009-2014 F-150 and stop myself from swearing at the antenna because re-sourcing that was one of the most miserable experiences I had. Cannot count how many hours I spent on that for a freaking $10 part. What happened was the A/B-Tier suppliers refused to do business with us, so we ended up dealing with C/D-Tier suppliers (think startups) to satisfy our offshore sourcing requirement. We did save a few bucks, but I know the quality was worse - no doubt about it.

So much mis-information in this post. Wow...... Again, as I said in my prior post, bean counters do not force cost reductions on anything. The Chief Engineer/Program Manager are in charge of that. Just because the bean counters give them the reports showing how far over cost they are doesn't mean they are telling engineers to shave dollars off their parts. For starters, they don't know enough about vehicle mechanics/engineering to have those conversations. Oh, and bean counters don't get bonuses like that, either. (Before I was a Program Manager I was a bean counter - so I know how it goes.) Product level bean counters don't really get involved in plant assembly. That's an entirely different crew and ergonomic engineers drive the bus on all of that. As far as the door keypad/rear tailgate stuff, again not a bean counter decision but if Marketing says those are things that will not incur any additional revenue or the incremental revenue is below cost then why do it? Think about it for a second - is the keypad on the door nice? Of course....I love it. But would I buy a Ford over something else because of it? No. I do agree with you on the mass exodus from engineering. That's been a longtime problem. Those jobs are rough......they are less designers (which is what they want to be) and more paperwork pushers, and they have to deal with suppliers all the time which sucks.

Those 3 things are not the biggest problem when it comes to vehicle quality. The #1 issue, by far, is supplier component quality. This is partly why the supplier relations with the "Big 3" have been so controversial over the years. In a nutshell, Ford would pay 10-20% more for their components versus what the Asian brands pay, and those components were lesser quality, too. Uh-oh..... To address your concerns: 1) Bean counters NEVER push for lower cost suppliers. NEVER. That's not how it works. (Speaking as a former Ford Product Development Program Manager for the F-150.) Those bean counters simply rack-up the data on where the cost of the vehicle stands compared to the budget given by the Board of Directors/Upper Management. (Marketing management provides revenue assumptions.) At that point, if the cost/revenue balance is not where it needs to be then the Chief Engineer/Program Manager decide together where costs need to be trimmed, and the finance folks help with that given they control the cost data for every part on the vehicle. 2) There are some issues in Ford engineering. Main issue is we had a product development playbook - FOLLOW IT. Do not let half the team move on past a checkpoint if the other half hasn't finished yet. That was the biggest issue I saw in my 15 years at the company. Then you have all these different groups (chassis vs powertrain vs electrical, etc) doing different things at different times for the same truck and things get off-kilter, teams waste time working on old, or duplicate, assumptions, etc. Left foot and right foot must work together here. The other "issue" with engineering is packaging. Sometimes the way the pieces fit together just doesn't work as intended. (Maybe a harness rubs against something when we thought there was enough space there.) 3) Production issues rarely matter when it comes to long term durability. Plants are so dummy-proofed these days. Generally speaking warranty repairs under 90-days are scrutinized to see what went wrong, and some are plant-related issues and some aren't. Only about 25% of these issues is due to something done wrong during final assembly. After 90-days, a high majority of those warranty claims are due to component failure of some sort - not due to how an operator at the plant put it on.

Ironically, enough, we got my wife a Bronco Sport Badlands in January and the 2.0L/8-speed combo is awesome. The trans shifts great no matter how you drive it. I like driving in Sport Mode which turns off the auto start/stop, and it's very quick off the line and when passing. It probably feels faster than it really is, which is not a bad thing.

Interesting info..... Ironically I just got a recall notice this week for my Fusion's shifter cable. I haven't had an issue with mine yet, though. I have 2 vehicles, my company car is a 2013 Fusion that I've had since Oct 2012. Mine was one of the very first of the new bodystyle. It's a Titanium FWD and now has 120K miles on it. The car has been wonderful. I've had ONE issue, when a check engine light came on one day, but the car drove fine with the light on. Took it to the Ford dealer the next day and one $250 sensor later it was done. This happened about a year or two ago ~ 90K miles. That has been my only repair. I never had to get anything fixed under warranty, either, aside from a recall or two. I do agree on the transmission - seems this engine needs an 8-speed badly. With my 6-speed, it does lurch from 1st to 2nd and 2nd to 3rd sometimes during medium throttle. If I'm easy with it or floor it then it seems fine and shifts smoothly. MPG's for me are around 22-24 city and 31-33 highway. I'd say that's ok at best, but my other car certainly is more efficient given it has a 420HP twin-turbo V6 with an 8-speed tranny and gets about the same fuel mileage. (22-23 city / 30-31 hwy on that car.) If I had to be nitpicky and complain about some things: My driver armrest now has a 1-inch tear in the vinyl, there are some flakes in the inside pockets of my wheels, and I cannot stand the plastic chrome exhaust tip covers. They look good, but are too tightly wrapped / too far away from the main exhaust pipes so black soot gets all over them. I am constantly cleaning them. I feel like the pipes should have extended further into the chrome surrounds to help the soot exit without grabbing onto the plastic tips.

That's not really true, in reality. A majority of these "problems" are things people complain about but aren't necessarily things that require trips to the dealer. For instance, many of the "problems" are infotainment related and because some old geezer can't figure out how to pair the bluetooth, they mark it as a "problem" on the survey. JD Power is a very reputable firm and does a much better job with these quality surveys than Consumer Reports who are frauds, but all of these studies need to be taken with a grain of salt. The sample sizes on these surveys are so small that's why you get a lot of variability from year to year as well. I spent several years of my Ford Motor Co life in Product Development and also Marketing Analytics where we went over these surveys with a fine tooth comb. Needless to say the info was interesting, but it was more of a customer satisfaction survey as opposed to really telling us what was a real defect. These surveys on our own vehicles also had no correlation to warranty repairs, either.

Which SD are you referring to? 114SD or 122SD? (Which are completely different cabs.) This will clear itself up in the next few months as the 122SD will be discontinued at the end of this year. The X-Series (47X/49X) will now be the flagship "Premium Vocational" truck for DTNA. The 114SD will still be available but the cab is different than the X-series. The 114SD is the "Budget Vocational" model - The 47X cab is much nicer and stronger. The other differences are: - Engines: The 114SD can only get L9/X12/DD13 engines just like the 47X. If you want bigger power (DD15/DD16/X15) then you need to buy a 49X. Without the 122SD, there will be no Freightliner equivalent to the 49X. - Configurations: Relative to the 114SD/47X, there will be far more options available on the 47X such as twin steers and other specialized options. Lastly, as far as Western Stars winning bids, they will never be lower priced than Freightliner. The only time Western Star typically gets bid wins is when there is no Freightliner dealer submitting a bid and/or the bid gets written specifically for Western Star which is pretty easy to do. (One way to rig it is to put in the bid docs "must have a BBC at 112-inches or less and must have a Detroit engine." That eliminates everyone but Western Star.)

The AALA data is garbage because of a massive loophole in how subassemblies are treated. Some of you may remember discussing this last year. That makes the entire report junk - simply a way to throw something out there to get your company's name out there. Thanks, Cars.com for the worthless report.... To summarize what I mean, if a company brings in 50 parts from China to build something like a seat, and they have that seat assembled together at a supplier's location or offside subassembly park, that complete seat assembly will count as 100% domestic content even though all the parts are Chinese. (Simply because those Chinese parts were assembled together on domestic soil BEFORE going into the assembly plant.) If those same parts were shipped directly into the final assembly plant and put-together there, the entire value of that component would be foreign. So due to that, the AALA data is complete and utter garbage. The #'s can be manipulated big-time, and the asian brands in particular have been experts at doing this by using ventures like this: Avanzar Interior Technologies — San Antonio | Adient "The Company came about in anticipation of the economic growth opportunities of auto manufacturers purchasing complete assemblies rather than components."

4700, 4900 and 5700 are dead. They will not be produced after this year. The WST X-Series is not the same cab as the FTL. Does it look the same and have the same dimensions......yep....but they are constructed differently. (More steel reinforcement in the WST cabs.) This is a fantastic truck.....still strong enough to do whatever but fixed all the issues with the old WST cab.

So I was curious about this and reached out to a couple of my friends still at the company, one who actually works in the design studio. The short answer is Hackett was not very involved in anything with interior design. He was not a car guy and could not really speak the language if you know what I mean. They rarely even saw him in the studio or anywhere in the Product Development buildings for that matter. That does not really surprise me because historically the CEO's have never gotten too big into design details. That's what the Design and Engineering managers are for and there are plenty of them as it is. If the CEO had to be hands on with design that just meant the Design and Engineering managers were not good at their jobs.