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Ford 2015 Q2 Record Quartely Profit - $2.9B


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I doubt seriously that I have any competent way of reading the reports but I wonder if I can boil what I read into how much FoMoCo actually made on the sale to me of a $40,000.00 MKC assuming the reported 7.2% operating margin of all global activity

 

Does this mean $2880.00 from the sale to me is that simple or is their true "profit" some lesser amount due to things I simply do not understand

 

BTW on a purchase of this magnitude I have no problem with a company making a fair profit and staying viable and employing people.... $3000 "profit" does not seem unreasonable to me

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I guess my own assumption is wrong and perhaps your spitball may be way off also as I read your "averaged out over all of the volume"

 

I think we don't have enough information for a global 7.2% or NA 11.1% margin to say how much of any specific car is positive yield

 

Example from my stable of Fords... I can think for sure that the total cost of all components of my F350 4 door Long bed 4 x 4 King ranch at 7800 lbs wet is much more that all the components in my 4000LB MKC with very similar cost to buy ($40K+/-)...Thus I assume the "profit margin" on the MKC is more that the KingRanch

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I have to admit these are really good numbers.

 

any margin over 10% is impressive.

 

My concern is Ford is too dependent on the US market, there is only so far you can grow in an established market like North America.

 

post-2855-0-89205400-1438102553_thumb.png

 

as a whole Ford lost $220 million outside North America.

 

Ford's market share is down 400 basis points, and margins are down 400 basis points for the year.

 

overall not bad.

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You should assume, roughly speaking, that the margin percentage increases as the price of the vehicle increases. Vehicles that sell at prices higher than Ford's average revenue per vehicle have a higher margin than average as a percentage.

 

Also, the more optional equipment--as a general rule--the higher the margin, as a percentage.

 

Finally, trucks are generally believed to be more profitable than cars.

 

You should also recognize that materials cost is not the only cost associated with a vehicle. What would add significant cost to the MKC is the amortization for capital expenditures unique to that vehicle (tooling, any development costs that were cap-ex-ed), as well as parts that are more expensive for that vehicle because Ford purchases fewer of them from suppliers (which is the way suppliers amortize *their* expenses).

 

We don't have enough information to say anything with certainty.

 

But there is enough information out there to take a guess.

 

BTW: What year did you buy that King Ranch? AFAIK, you can't get that much truck brand new for $40k in 2015.

 

I guess my own assumption is wrong and perhaps your spitball may be way off also as I read your "averaged out over all of the volume"

 

I think we don't have enough information for a global 7.2% or NA 11.1% margin to say how much of any specific car is positive yield

 

Example from my stable of Fords... I can think for sure that the total cost of all components of my F350 4 door Long bed 4 x 4 King ranch at 7800 lbs wet is much more that all the components in my 4000LB MKC with very similar cost to buy ($40K+/-)...Thus I assume the "profit margin" on the MKC is more that the KingRanch

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So on the score card of GM vs Ford, this quarter goes to Ford, sold fewer cars, made more money, yeah money

IMHO this is not discussed enough. Ford sells fewer vehicles, has no Cadillac, pays execs more, pays white collar emp. more, pays blue collar emp. more and makes more total $$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$.

 

Market cap for F is 20% higher than GM so investors believe F is worth more than GM

 

Customers for F vehicles pay more than GM so the vehicle customers must believe the F vehicles are worth more than GM

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as a whole Ford lost $220 million outside North America.

 

First off: "Other" includes $167M in expense that is not "outside America". So Ford lost $53M "outside America". The 'other automotive' expenses should be taken off right before the bottom line calculations and offset against all profits, not just profits/losses from "outside America" (see p. 30 of the chart set above).

 

The biggest line item in "other" is interest expense, which--for instance--includes interest on Ford's loan to refit MAP.

 

Secondly, GM reported $500M in equity income from their China ops. Ford reported $411M in equity income from their China ops.

 

Given that GM reports 14% of the Chinese market, and Ford reports 4.7%, that represents a pretty staggering difference in booked income per unit.

Edited by RichardJensen
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RichardJensen

 

Good catch sir, yea the KR is older model so not a good apples to apples...I know there are a whole lot of factors that go into the cost of making any specific automobile and my example was much too simplistic.

 

Better would be the KR at 7800 lbs of components at $40K vs my 580lb Harley FXR at $18K

 

KR cost me $5.1 per pound

FXR cost me $31.0 per pound

 

Sorry guys way off track about what this thread is about... I sort of scratch my head sometimes trying to figure why some things are priced as they are.... of course I understand the notion of "what the market will bear"

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