Interesting News

[FordBuyer]

Ford expects to report another deep slide in car and truck sales of at least 40% when March figures are disclosed by auto makers Wednesday. But George Pipas, Ford's sales analyst, said the company also expects to post its largest retail market share for a single month in more than two years.

 

The auto-supply industry serves multiple car manufacturers but operates on thin profit margins that could evaporate if one of the auto makers stopped paying for components under bankruptcy or went out of business.

 

"The collapse of one of our competitors would have a severe impact on Ford and our transformation plan, because the domestic auto industry is highly interdependent," Ford Chief Executive Alan Mulally warned late last year in testimony before the U.S. Senate. "It would also have devastating ripple effects across the entire U.S. economy."

 

 

Alan Mulally

Even without a bankruptcy, some Ford officials fear that the uncertainty surrounding the car makers over the next few months could keep shoppers from considering a vehicle from a domestic maker.

 

"I think the Obama announcement is a near-term depressant on auto sales and the economy," said one Ford official Tuesday. "It introduces uncertainty and confusion among most consumers. And it's the uncertainty that's driving consumers into the cave."

 

To reassure jittery customers, Ford on Tuesday introduced a plan that will cover car payments for up to a year if a customer loses his or her job. Under the program, , Ford also is offering 0% financing on some vehicles. The job-protection program started at Hyundai Motor Co. and was quickly matched Tuesday by GM.

 

To be sure, Ford has been able to move much further and faster in trimming costs and debt than its two domestic competitors, which are propped up by $17.4 billion in U.S. loans approved in December. And it also has started to see some promising sales trends, with more consumers gravitating from the other car makers toward Ford's vehicles.

 

"I think it's more important that in the last 60 days, we've gotten more consideration for our new products." Ford sales chief Jim Farley said in an interview Tuesday, downplaying the potential impact of a GM or Chrysler bankruptcy on his company. "There's concrete research around this."

 

He cited CNW Marketing research that shows in the first two months of the year, 19% of consumers who had planned to buy a GM car instead bought a Ford, Lincoln or Mercury. And some 15% of people who set out to buy a Chrysler or Dodge in January instead switched to one of Ford's brands.

 

Ford has also been able to continue to invest in new products. A person familiar with the company's plan confirmed Tuesday that its Chicago assembly plant has been selected to produce a new version of the Explorer sport-utility vehicle for 2011, which will lead to the callback of hundreds of laid-off full-time workers.

 

Ford's healthier prospects were the principal reason the United Auto Workers union approached Ford months ago in the hopes of setting a floor that would be matched by agreements at GM and Chrysler, according to people involved in the talks.

 

Union members reopened their Ford contract to make concessions in cost-of-living increases, vacation, overtime and the so-called jobs bank, which paid laid-off workers. The union also agreed earlier this month to let Ford use stock instead of cash to fund up to half its future obligations to a retiree health-care fund.

 

Ford says those givebacks will reduce its average hourly labor cost, including benefits, to $55, putting the auto maker on a clearer path toward competitiveness with foreign makers that build vehicles in the U.S., which have total labor costs of about $49 an hour.

 

Ford estimates the savings to be as much as $375 million this year and $500 million or more in subsequent years.

 

Ford's finance arm doubled the size of one part of a planned debt buyback to $1 billion after seeing significant investor interest. Ford announced the buyback in early March in an effort to retire up to $10.4 billion in debt through a combination of cash and stock.

 

Ford on Wednesday will offer buyouts to all 42,000 of its U.S. hourly workers. But company officials expect a relatively low take rate because workers worry it may be difficult for them to find other jobs.

 

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Most interesting to me was Pipas saying that March will be BEST retail month in two years. Ford dealers around here have been too busy for Ford to have a horrible March. I have noticed that more cars than usual in Ford dealer parking lots are GM and Chrysler cars. Ford is picking up market share from GM and Chrysler. Something is going on here and there is a subtle movement to Ford taking place IMO. That will accelerate more with GM getting closer to bankruptcy and Chrysler situation looking hopeless in many ways. Ford dealers are going to get new business. The new Fusion should do well and new Taurus will bring some excitment also. It certainly will be my next new vehicle. Notice also that Chicago definitely has the new Explorer and it will be a 2011 model.

[Anthony]

He cited CNW Marketing research that shows in the first two months of the year, 19% of consumers who had planned to buy a GM car instead bought a Ford, Lincoln or Mercury. And some 15% of people who set out to buy a Chrysler or Dodge in January instead switched to one of Ford's brands.

 

Glad it is Ford picking up those sales. That's good news.

[TomServo92]

It's funny that just awhile ago, my wife and I were talking about how the Obama announcement is suppressing auto sales for GM and Chrysler and that Ford should pick up market share.

 

I guess we're psychic!

[Mark B. Morrow]

I think bailout fatigue is setting in. People are looking at Ford who might not have before and they like what they see. I have heard from diehard Toyota/Honda owners who are looking at Ford for the first time. Whether it is patriotism or appreciation for Ford's self reliance people are giving Ford a chance to earn their business.

[7Mary3]

Here's more:

 

http://online.wsj.com/article/SB1238542435...mp;mod=yahoo_hs

 

The real question at this point is what does a restructured, possibly post backruptcy GM look like? GM could very well end up in a more competitive position than Ford with more favorable agreements with bondholders and the UAW. Not to mention little debt as well.

[TomServo92]

Here we go again....

[Mark B. Morrow]

Here's more:

 

http://online.wsj.com/article/SB1238542435...mp;mod=yahoo_hs

 

The real question at this point is what does a restructured, possibly post backruptcy GM look like? GM could very well end up in a more competitive position than Ford with more favorable agreements with bondholders and the UAW. Not to mention little debt as well.

 

 

The bond holders don't have any faith in GM. They won't fare well in bankruptcy since the U.S. Government loans will take priority over the bonds.

[mrbowler92]

It's funny that just awhile ago, my wife and I were talking about how the Obama announcement is suppressing auto sales for GM and Chrysler and that Ford should pick up market share.

 

I guess we're psychic!

lol. Im only 17. my Father works for fords and he was recently moved to WAP help wit the "shutting down". The once the new product comes into MAP he will go back. Now I watch the auto industry prob;y as much as you do. I knew that ford would gaine Share. Now but when does this good news go to far. Based upon the problem that if GM+ Crystler go out of business, that would put a huge strain on the suppliers. And eventually they would go out of business. But I do belive that The market share incress is a wonderful thing. And now that Ford has "thined" itself, we can now make vehicles in the USA. Witct means more jobs or no lose of jobs. Witch is good.

[FordBuyer]

The bond holders don't have any faith in GM. They won't fare well in bankruptcy since the U.S. Government loans will take priority over the bonds.

 

Ford is offering cash to its bondholders and GM is offering only worthless equity. That is the problem. GM bondholders do not want GM stock, they want cash. Ford has already wiped out one/third of its long term debt. I doubt very much if GM will win better deal from UAW than Ford. And even if it does, Ford will expect the same deal.

[RichardJensen]

GM could very well end up in a more competitive position than Ford

Not likely. Even if they get 5-10% 'better' deals with bondholders & the UAW, consider what they'll have to go through to get them, and how little patience the general public will have with them by then.

Edited April 1, 2009 by RichardJensen

[7Mary3]

Not likely. Even if they get 5-10% 'better' deals with bondholders & the UAW, consider what they'll have to go through to get them, and how little patience the general public will have with them by then.

 

That's a good point. But where I am (Southern California) many people that I have been talking to are not differenciating between Ford and the other two. The facts that Ford has not asked for money yet (and of course may not have to) and Ford's better financial position seem to be falling on deaf ears. The mentality is that they are 3 of the same thing. I doubt Ford has picked up much if any market share here. As for GM, I think Wagoner's (and the Board's) ouster are viewed as positive moves here. How positive and what effect on sales I don't know.

[7Mary3]

The bond holders don't have any faith in GM. They won't fare well in bankruptcy since the U.S. Government loans will take priority over the bonds.

 

If they didn't have any faith they would take whatever offer is on the table right now. The bondholders and the UAW are holding out for the best deal possible.

[7Mary3]

Ford is offering cash to its bondholders and GM is offering only worthless equity. That is the problem. GM bondholders do not want GM stock, they want cash. Ford has already wiped out one/third of its long term debt. I doubt very much if GM will win better deal from UAW than Ford. And even if it does, Ford will expect the same deal.

 

Good point. Read the article, it says exactly that. However, in order for Ford to get the same deal as GM or Chrysler, they will have to go back to the table with the UAW, and convince them that they are in the same position that GM and Chrysler is currently in. See what a complicated game it is? Ford can't really run around and say how much better shape they are in than the other two. People are listening. Also remember that by addressing 1/3rd. of their debt, Ford may be able to get government loans quickly should they need to. The bottom line is Mulally fears a GM backruptcy for a host of reasons. I do as well.

[Noah Harbinger]

We need a rule: No topic titles that don't tell you what the title is about. "Interesting News" - "From WSJ" - BANNED!

 

At least in my little universe.

[rmc523]

I think bailout fatigue is setting in. People are looking at Ford who might not have before and they like what they see. I have heard from diehard Toyota/Honda owners who are looking at Ford for the first time. Whether it is patriotism or appreciation for Ford's self reliance people are giving Ford a chance to earn their business.

 

I talked with some people at a gas station a few days ago who owned a Murano and an RL before that. They absolutely loved my Flex, but said they had never even considered an American car before, let alone a Ford. I let them look at it, and they seemed very impressed. Perhaps it'll translate into a sale (or at least consideration) in the future. IIRC, I tried to explain how Ford had improved it's quality greatly and how they didn't take gov't bailouts. Just trying to to my part to support Ford (outside of buying more cars).

 

We need a rule: No topic titles that don't tell you what the title is about. "Interesting News" - "From WSJ" - BANNED!

 

At least in my little universe.

 

Yessir.... :bowdown:

 

I do agree though, it'd be nice to have a title related to the article.

[RichardJensen]

But where I am (Southern California) many people that I have been talking to are not differenciating between Ford and the other two.

Yeah, but to look at things from that standpoint is not unlike the alcoholic's rationalization that 'well so-and-so is sober, and he beats his wife, at least I don't do that.'

 

You can't look at the worst examples out there and base your business decisions on them.

 

You can bet that whatever concessions GM gets, they will not benefit the company as much as Ford has benefited by staying off the gov't dole.

 

The discussion, IMO, is over the =nature= and the =extent= of the benefits, not their existence.

Edited April 1, 2009 by RichardJensen

[Ford Jellymoulds]

Ford don't seem to seem to be to interdependant or that bothered in Ireland, Fords suppliers Visteon just laid 600 workers off who got just 6 minutes notice as the plant closed.

http://news.sky.com/skynews/Home/Business/...415252624?f=rss

 

 

 

[old_fairmont_wagon]

Just remember that there are suppliers to the import transplants in the US as well as to the domestics. Ford, by this point, should have seen the writing on the wall for GM and Chrysler with respect to supplier issues if either or both go bankrupt. By this point, they should have "arrangements" with alternate suppliers out there that can assure them that they won't cease operations if Chryco or GM goes belly-up. A sudden bankruptcy before all this uncertainty definitely would have shattered the supplier base, but, by this point, the companies have had at least half a year to make worst case scenario arrangements.

 

So, IMHO, Ford will not have "major" problems if either or both of their domestic competitiors ceases operations suddenly. There will be changeover issues in some cases, but, I have to assume that alternate arrangements have already been made wherever possible.

 

The only worry I'd have is if a post bankruptcy GM gets to resume operations completely unencumbered by legacy costs and competes with Ford. I don't fear Chrysler so much do to their smaller size and lack of product that fits the market. Fiat doesn't have a mountain of cash to plow into them in a hurry either, so, they won't be "revolutionizing" their operations any time soon. Its GM I fear. There is a possible world that has the gov't helping GM get to a point where they can produce the volt without having to saddle it with any legacy costs, only cost of production and materials. IT would sell for a price that is competitive with the Fusion Hybrid at that point and make a compelling case against it, assuming that the public perception of GM remains positive.

[goingincirclez]

lol. Im only 17. my Father works for fords and he was recently moved to WAP help wit the "shutting down". The once the new product comes into MAP he will go back. Now I watch the auto industry prob;y as much as you do. I knew that ford would gaine Share. Now but when does this good news go to far. Based upon the problem that if GM+ Crystler go out of business, that would put a huge strain on the suppliers. And eventually they would go out of business. But I do belive that The market share incress is a wonderful thing. And now that Ford has "thined" itself, we can now make vehicles in the USA. Witct means more jobs or no lose of jobs. Witch is good.

 

Just when things seem like they could be looking up, posts like this make me lose faith for the future of this country all over again.

[soupy]

That's a good point. But where I am (Southern California) many people that I have been talking to are not differenciating between Ford and the other two. The facts that Ford has not asked for money yet (and of course may not have to) and Ford's better financial position seem to be falling on deaf ears. The mentality is that they are 3 of the same thing. I doubt Ford has picked up much if any market share here. As for GM, I think Wagoner's (and the Board's) ouster are viewed as positive moves here. How positive and what effect on sales I don't know.

 

I know I don't really mean this, but I read that post and think of a earth-quake dumping So-Cal into the Pacific and say to myself.....so what.

'7Mary3', pack-up the band and move inland!

[RaZor]

Just when things seem like they could be looking up, posts like this make me lose faith for the future of this country all over again.

+1

[rmc523]

Just when things seem like they could be looking up, posts like this make me lose faith for the future of this country all over again.

 

lol....yeah...he needs spell check at least :lol:

[Critic]

lol....yeah...he needs spell check at least :lol:

 

No, actually that's text speech and it's so cool. Until they hit the job market and then it's another rude awakening.

 

Kids! Leave home now, while you still know it all!

[twintornados]

lol. Im only 17........

........ Witch is good.

Which witch is which???

[LSFan00]

Ford CEO says gov't involvement at present=uncertainty=depressed market. Pretty much sums it up in a nutshell. NOOOOOO, we can't just let a broke company go bankrupt. We have to "help" for another 90 days.