August Sales

[RichardJensen]

Ford announced today that it's INCREASING production 6% in the fourth quarter

True, although last year's 4th quarter numbers were slashed to the bone, as Ford moved to get its inventory under control (note too, that this move was made by Fields and Ford ahead of the Mulally hiring).

[Pioneer]

Fusion is a great revenue generator, in fact I remember a bean saying it produced the highest margin out of any car. Trucks are still the profit center however, destroy that and it's game over.

 

I have a hard time believing that a Fusion generates more profit than a 2008 Taurus.

[Pioneer]

I see CD3 products accounted for over 28,000 sales this month - this is a very profitable platform.

Fusion, Milan, MKZ and Edge all pumping away making profit...

 

Don't forget the MkX.

[ANTAUS]

Why are people still continueing to say that our trucks are our most profitable products! that may have been true in 03' but at the last accounting the Fusion turned a profit and the trucks showed a loss despite their sales volume! You may wish to re-asses your prospective!

 

I haven't yet read any article by the media indicating that Ford is losing money on F-150 sales, if there is, point me to the way. I'm interested in seeing how they could possible lose money on such beasts which can top $60K, plus because of their BOF production, it's much more easier to build. Same goes with the Panthers where it's been publically stated that they make around $10K a piece in profit.

[jpd80]

Don't forget the MkX.

I'm sorry, forgot that one.

I'll rephrase that statement:

I see CD3 products accounted for over 32,300 sales this month - this is a very profitable platform.

Fusion, Milan, MKZ, MKX, and Edge all pumping away making profit...

Edited September 5, 2007 by jpd80

[LincolnFan]

I have a hard time believing that a Fusion generates more profit than a 2008 Taurus.

 

Pshh, out of all people you should know.

[Pioneer]

Pshh, out of all people you should know.

 

Yeah. All of us Electricians are invited up to the glass house personally by Mark and Bill every quarter to go over profit margins. :rolleyes:

[LincolnFan]

Yeah. All of us Electricians are invited up to the glass house personally by Mark and Bill every quarter to go over profit margins. :rolleyes:

 

The workers get paid much less than you do.

Edited September 5, 2007 by LincolnFan

[FordBuyer]

I haven't yet read any article by the media indicating that Ford is losing money on F-150 sales, if there is, point me to the way. I'm interested in seeing how they could possible lose money on such beasts which can top $60K, plus because of their BOF production, it's much more easier to build. Same goes with the Panthers where it's been publically stated that they make around $10K a piece in profit.

 

Ford makes about $10,000 profit on every Super Duty it sells. I hate it when analysts talk like the F-150 is all there is when talking about pickups. The Super Duty is the big profit generator. I don't think the F-150 makes anything close to $10,000/unit unless it's a King Ranch or HD. I believe Ford stated that Super Duty sales are up to almost 44% of total sales when usually they make up only about 40%tops. Around Metro Detroit I have noticed many landscapers are buying new Super Duties and they pay full price, no $4,000 rebates like with F-150. And don't forget, the Super Duties have 5 speed auto trans, not 4 speed like F-150.

[Pioneer]

The workers get paid much less than you do.

 

 

And the Taurus has higher transaction prices.

[NickF1011]

And the Taurus has higher transaction prices.

 

Can we agree that the profit margin is higher than the Focus then??

 

On another note -- I really have a hard time believing that Panther profit margin number anymore either....with the reduced production at St. Thomas, those margins have to have suffered.

[SVT_MAN]

People in this thread are proving why Ford should have never gotten involved in a cultural war like they did via their "homosexual marketing."

 

It causes controversy. What's the point? No matter which way you stand on the pro-homosexual stance Ford has taken in their advertisements, you can't deny that it was a poor business decision.

 

Think about it: If they stop the marketing, they lose some of the gay customers. If they continue it, they lose some potential AFA members.

 

They're stuck dead in the middle of a cultural battle they never had to enter in the first place. I personally think it's an insult to homosexuals that Ford used slightly vulgar and crude messages to target them. By doing this, their supposition is that homosexuals can't be marketed to without vulgar or crude messages like the rest of us. It seems a bit ridiculous. I don't see how a different sexual preference can lower your ability to purchase based on rational decisions. The advertisements I saw were pretty much aimed at making some sexual joke ...

 

I always hear .. "gays are people too." If that is true, they should respond to the same things that every other human being seems to respond to. That is, safety is important, residual values are important (or are gays stupid?), everything else that every other car buyer looks for - we just throw out the window and hope they respond to some sex joke?

 

I have never seen Ford advertisements for "straight people" with overtly sexual symbols or language - so why did Ford do it for "gay" people? To me it seems like a small pocket of a marketing team deep within the gallows of one of Ford's marketing departments failed to analyze the future ramifications of jumping on the bandwagon believing that these tongue-in-cheek borderline vulgar ads were the right way to go.

 

Again, these AFA protests have nothing against Ford products - they have something against Ford's cultural stance. That is something Ford could have easily avoided by, you guessed it, not getting involved in the first place ...

 

It's pretty easy to have a cultural stance. But, it's pretty hard to change it once it's out there without ticking off customers. And, Ford is proving it's pretty much impossible to win back those customers ..

Edited September 5, 2007 by SVT_MAN

[LincolnFan]

On another note -- I really have a hard time believing that Panther profit margin number anymore either....with the reduced production at St. Thomas, those margins have to have suffered.

 

IIRC a Crown Vic only costs 12K or 15K to make, there's no way labor or anything could eat the 5K ~ 7K (on the standard model) profit like that.

[RichardJensen]

I personally think it's an insult to homosexuals that Ford used slightly vulgar and crude messages to target them.

You mean like using sex to sell beer, hard liquor, gum, 'body spray', etc is vulgar and crude? I'm with you there, buddy!

[RichardJensen]

it seems like a small pocket of a marketing team deep within the gallows of one of Ford's marketing departments failed to analyze the future ramifications of jumping on the bandwagon believing that these tongue-in-cheek borderline vulgar ads were the right way to go.

You do realize that this was done by JWT in Europe, right?

 

I mean ads to that market in Europe are not going to get very close supervision by Ford VPs in Dearborn.

 

As to the AFA boycott---they need to find the list of all the businesses .... I'm not going to finish that sentence. Trust me the insult was extremely pointed, as the AFA position is the height of hypocrisy.

[ANTAUS]

Not to mention, many other car companies advertise in gay publications, they just happen to pick on Ford because it's easier to say "Well our boycott is working"...because it's not rocket science that the Big 2.5 have been, and will be losing market share for awhile...so to make themselves be viable, they chose to pick this company. I don't see them targeting VW. And really, I don't want bigoted people buying Fords anyways, so it's just as well..let them get stuck with a Kia LOL As it is I even forgot about that whole debacle, I guess thats how irrelevant it is.

 

And yes Ford does market to str8 people too. Actually just a few minutes ago I see some big titty blond chick spread over the hood of a Mustang with a cowboy hat saying "Yeeeha, I wanna ride this!!" Yeah talk about classy right there LOL Granted, thats a local dealers advertising, but it's not any different.

[Blueblood]

After last years dismal sales, it's almost hard to imagine it could have gotten worse, now I wonder, will next August be even worse than this August? What new product does Ford have coming? There is the Flex next summer, and that's it until 2009, Ford has 4 cars until the Fiesta gets here, it's funny how the new or significantly re-designed products are the ones with sales increases, you'd almost think people don't like old, stagnated models or something!

[630land]

The AFA will have to boycatt ALL car makers, especially imports, like BMW Subaru and VW, since they advettise to all people. The UAW has same sex partner benefits, GM and Mopar LLC are out. Looks like the old farts will have to buy Chinese cars! Their next target is unmarried hetero couples 'living in sin'. At that point then straight people will fight them back. So basically, they should mind their own business!

 

Anyway, despite what 'SysEng' predicted in 2002-04 here, the 'Panther revival' isn't happening.

D3 Taurus outsold CV!! With Mopar and GM coming out with new unibody RWD cars, I'd bet that there are plans for using the new Aussie Ford RWD for new 'Galaxies' in a few years.

[Furious1Auto]

GM has improved its share? Guess that's how Toyota has surpassed them this year in global sales? GM's incentive spending is through the roof. Their inventories are higher than Ford's. It's not all roses. If you don't recall or you are just blind, GM has had multiple double-digit sales declines over the past several years also, down as much as 25% in a single month if I do recall. Ford hasn't come close to that.

 

Ford's inventory levels are in check. Incentives are lower. Revenues are starting to stabilize. It's hardly picture perfect yet, but they are certainly laying the groundwork for a more realistic future than General Motors.

The numbers of vehicles they are selling are less important than weather or not they are becoming profitable! Who cares if everyone else sells more if they aren't making money! Toyota will make money even on low margins because of the currency exchange advantage, but I hope this does not last!

[Furious1Auto]

warrantys do NOT sell cars.......to buy a car based on its warranty is ass backwards Furious......

I don't know, I would never have dreamed of owning another Crystler after my tranny locked up in my Dodge D-150 with 80,000 miles! Without a lifetime warranty Their good looking junk!

[Furious1Auto]

I have a hard time believing that a Fusion generates more profit than a 2008 Taurus.

[bb62]

I can't believe some of the comments I am see here. Boy oh boy do we need a little Business 101.

 

This is the old GM model at work increased sales = increased profit

What they don't take into account is what you just said, eroding their profit margin for sales bragging rights.

Sales = Profit is so engrained in everyone's mind that it's near impossible to accept an alternative

philosophy: "Make less for more profit "

 

Most people think it's crazy to reduce production, but smart buisness people know when to and for how long.

 

Increased sales ALWAYS equals increased profit as long as one has a positive economic profit (the revenue of the vehicle minus the variable costs required to produce it).

 

The problem with aiming for high profit at low(er) volumes can mean two strategies: 1. That you are taking the Ferrari model of making very high revenue products, or 2. That you are in a market exit strategy that WILL ultimately reduce BOTH the size and profitability of the company (but by taking near term profits).

 

It is correct to say that reductions in production can lead to longer term profits, but this works only when you can BOTH avoid high marketing costs of sales and continue sales at levels near profitable volumes.

 

I have a hard time believing that a Fusion generates more profit than a 2008 Taurus.

 

I agree with this statement. Fusion is a design that was generated from the Mazda 6 platform. Many key components still come from overseas (like transmissions) that are far more expensive than the domestic produced parts. Fusion had a lower going in profit assumption, but was selected to minimize engineering effort on the part of Ford.

 

 

The numbers of vehicles they are selling are less important than weather or not they are becoming profitable! Who cares if everyone else sells more if they aren't making money! Toyota will make money even on low margins because of the currency exchange advantage, but I hope this does not last!

 

But you, and others here, are somehow making the assumption that high volumes are sale aren't necessarily tied to higher profits - they are. Higher volume spreads out the costs of the investment (Engineering, Tooling, Facilities, & Launch costs) to allow for greater accounting profit per vehicle produced. The incremental profit doesn't change (for the most part) with changing volume, but almost certainly, higher volumes of any product mean higher profits.

[Michael Reynolds]

Increased sales ALWAYS equals increased profit as long as one has a positive economic profit (the revenue of the vehicle minus the variable costs required to produce it).

 

How can you assert the above statement, insert 'always' and then add 'as long as'? 'As long as' negates 'always', due to the fact that you just caveated under certain conditions.

 

And BTW isn't labor cheaper in Mexico?

Edited September 5, 2007 by Michael Reynolds

[RichardJensen]

The problem with aiming for high profit at low(er) volumes can mean two strategies: 1. That you are taking the Ferrari model of making very high revenue products, or 2. That you are in a market exit strategy that WILL ultimately reduce BOTH the size and profitability of the company (but by taking near term profits).

This is a false dilemma.

 

The idea that aiming for higher profit at lower volume is a market exit strategy that will ultimately reduce the profitability of the company is a fundamentally flawed conclusion.

 

First of all, any company that is revising production downward is not in sound health to begin with. Likely, there is NO current profitability. The assertion that cutting production will reduce 'profitability' puzzles me. There is no current profitability whereas production cuts, properly done, provide profitability.

 

Therefore, I ask you, what 'ultimately' intervenes to 'reduce' profitability that isn't present to begin with?

 

The example I want you to refute is Boeing's commercial unit, which drastically slashed production in the wake of 2001.

 

Or do you assert that at some point in the future, due to Boeing's post 2001 actions, they will suffer from 'reduced profitability'?

[FordBuyer]

I can't believe some of the comments I am see here. Boy oh boy do we need a little Business 101.

Increased sales ALWAYS equals increased profit as long as one has a positive economic profit (the revenue of the vehicle minus the variable costs required to produce it).

 

The problem with aiming for high profit at low(er) volumes can mean two strategies: 1. That you are taking the Ferrari model of making very high revenue products, or 2. That you are in a market exit strategy that WILL ultimately reduce BOTH the size and profitability of the company (but by taking near term profits).

 

It is correct to say that reductions in production can lead to longer term profits, but this works only when you can BOTH avoid high marketing costs of sales and continue sales at levels near profitable volumes.

I agree with this statement. Fusion is a design that was generated from the Mazda 6 platform. Many key components still come from overseas (like transmissions) that are far more expensive than the domestic produced parts. Fusion had a lower going in profit assumption, but was selected to minimize engineering effort on the part of Ford.

But you, and others here, are somehow making the assumption that high volumes are sale aren't necessarily tied to higher profits - they are. Higher volume spreads out the costs of the investment (Engineering, Tooling, Facilities, & Launch costs) to allow for greater accounting profit per vehicle produced. The incremental profit doesn't change (for the most part) with changing volume, but almost certainly, higher volumes of any product mean higher profits.

 

 

Another point to consider is that higher sales means more people drive your product, and if they have good experience, they will often come back and buy again and have memebers of their family consider that product. As Ford sales keep dropping with no end in sight, Ford does have to consider how to get them back on their radar screen. A vexing problem to be sure. Maybe Toyota when Taurus was on top bought market share with the Camry knowing that if they could get people driving them, they would have them on next purchases. What else explains selling 50,000/month to Fusions 12,000/month. I know Ford is not in same position as Toyota was and is, but Ford needs some creative marketing approaches. I always like the one where Dealer (Ford backed) gives you extra money on trade-in if you buy their car. Something like blue book value plus bonus. I get stuff in mail all the time from Honda claiming they will give me blue book value plus $500 on my car and they know what I drive btw, if I buy a Honda Accord. It is tempting, but I'm a Ford guy and never bite. But I lament Ford never offers same, because if they did I probably would trade in my Taurus for new Taurus if they would give me even blue book value without bonus. So there is so much Ford could do to push people off the pot. I'm disappionted with Ford's marketing efforts locally and nationally.