rperez817 Posted April 15, 2020 Share Posted April 15, 2020 37 minutes ago, silvrsvt said: Having assets and equity isn't the same as having cash on hand, nor is market cap a great indicator of health either. If VW was in such great shape they wouldn't be having Ford design their next gen pickup or vans either. We are far from that point right now. VW Group balance sheet showed about 26 billion Euro in cash and cash equivalents as of December 31, 2019. Total current assets were about 187.5 billion Euro. With the Covid-19 situation, all global automakers are hurting. However, companies like Ford that were weak prior to that will need to explore merger and/or partnership possibilities like what Jim Collins described in the Forbes article. It's a matter of survival. Quote Link to comment Share on other sites More sharing options...
jcartwright99 Posted April 15, 2020 Share Posted April 15, 2020 That article is a lot of speculative connecting of the dots, all based on one paragraph. Since this is a Ford site, we tend to focus only on Ford. However, I think we need to change our view on this to a more global perspective. If things keep spiraling out of control with Covid 19/recession/etc, I think we need to think of it as, "Which automaker is going to drop first, and potentially start a domino effect?" Was Ford in a great position? No. Was Ford the worst? Nope. Just off the top of my head Nissan, Mitsubishi, and Tesla (despite it's share price) are in a much more precarious situation if this continues. How good is FCA or GM? This has shades of the housing crisis recession because if one goes, then some suppliers will go. Suppliers go and supply chain explodes. Then worst case scenario for pretty much every automaker. 3 Quote Link to comment Share on other sites More sharing options...
mackinaw Posted April 15, 2020 Share Posted April 15, 2020 28 minutes ago, jcartwright99 said: Was Ford in a great position? No. Was Ford the worst? Nope. Just off the top of my head Nissan, Mitsubishi, and Tesla (despite it's share price) are in a much more precarious situation if this continues. How good is FCA or GM? This has shades of the housing crisis recession because if one goes, then some suppliers will go. Suppliers go and supply chain explodes. Then worst case scenario for pretty much every automaker. Morgan Stanley and Deutsche Bank have already said that GM is in the same boat as Ford. Both will run out of money by mid-August. Quote Link to comment Share on other sites More sharing options...
silvrsvt Posted April 15, 2020 Share Posted April 15, 2020 7 minutes ago, mackinaw said: Morgan Stanley and Deutsche Bank have already said that GM is in the same boat as Ford. Both will run out of money by mid-August. How are they defining running out of money? If sales keep at the current levels or what? Quote Link to comment Share on other sites More sharing options...
ausrutherford Posted April 15, 2020 Share Posted April 15, 2020 All of the car companies will be in the same position in a few months no matter what company you are talking about. 2 Quote Link to comment Share on other sites More sharing options...
mackinaw Posted April 15, 2020 Share Posted April 15, 2020 43 minutes ago, silvrsvt said: How are they defining running out of money? If sales keep at the current levels or what? I should have offered more detail. If things stay as they currently are, factories pretty much all shut down, both Ford and GM will run out of cash by mid-August. Car companies book sales when a vehicle leaves the factory, not when a dealer sells a car/truck. All car companies have enormous fixed costs, and with no income coming in, their cash reserves are dwindling. This is a worst scenario, but shows you why both companies are taking steps to add to their cash reserves. Quote Link to comment Share on other sites More sharing options...
jpd80 Posted April 15, 2020 Share Posted April 15, 2020 2 hours ago, mackinaw said: I should have offered more detail. If things stay as they currently are, factories pretty much all shut down, both Ford and GM will run out of cash by mid-August. So you're saying that GM and Ford will burn through $30 billion a piece in the next four months? Quote Link to comment Share on other sites More sharing options...
mackinaw Posted April 15, 2020 Share Posted April 15, 2020 (edited) 1 hour ago, jpd80 said: So you're saying that GM and Ford will burn through $30 billion a piece in the next four months? Adam Jonas (Morgan Stanley) figures both GM and Ford are burning through 4 billion dollars a month. So yes, if the factories stay closed through August, both companies combined will have burned through about 30 billion dollars. But this is a worst-case scenario assuming no vehicle production through August. If the factories reopen in May (my guess is they will), and vehicles start rolling off the line, manufacturers will start booking revenue. That then, changes everything. Edited April 15, 2020 by mackinaw typo Quote Link to comment Share on other sites More sharing options...
jpd80 Posted April 15, 2020 Share Posted April 15, 2020 (edited) 19 minutes ago, mackinaw said: Adam Jonas (Morgan Stanley) figures both GM and Ford are burning through 4 billion dollars a month. So yes, if the factories stay closed through August, both companies combined will have burned through about 30 billion dollars. But this is a worst-case scenario assuming no vehicle production through August. If the factories reopen in May (my guess is they will), and vehicles start rolling off the line, manufacturers will start booking revenue. That then, changes everything. Each company now has around $30 billion in liquidity, more than enough to last roughly to the end of the year if that $4 billion a month cash burn rate is accurate...... Just on that, Adam Jonas made that estimate as a worst possible case, I suspect that both companies cash burn will be much less, Mr Jones is throwing those numbers out in the hopes that GM and Ford will either confirm or refute those claims, my guess is that both companies won’t respond to that goading. Adam Jonas basically weaponised his prediction to get people to take notice of him, that and down rating stock is the only way he can “punish “ GM and Ford for not taking him seriously. Edited April 15, 2020 by jpd80 Quote Link to comment Share on other sites More sharing options...
mackinaw Posted April 15, 2020 Share Posted April 15, 2020 1 hour ago, jpd80 said: Each company now has around $30 billion in liquidity, more than enough to last roughly to the end of the year if that $4 billion a month cash burn rate is accurate...... Just on that, Adam Jonas made that estimate as a worst possible case, I suspect that both companies cash burn will be much less, Mr Jones is throwing those numbers out in the hopes that GM and Ford will either confirm or refute those claims, my guess is that both companies won’t respond to that goading. Adam Jonas basically weaponised his prediction to get people to take notice of him, that and down rating stock is the only way he can “punish “ GM and Ford for not taking him seriously. I'm not a big Adam Jonas fan, but he is one of the more well respected Wall Street automotive analysts out there. Plus, Deutsche Bank agreed with Morgan Stanley on Ford and GM's cash drain. But this is worst case scenario. Even Adam Jonas says so. The odds of every Ford and GM factory remaining shutdown through August is slim. Once they resume production, both companies will start to generate revenue and the doomsday scenario goes out the window. 1 Quote Link to comment Share on other sites More sharing options...
ausrutherford Posted April 15, 2020 Share Posted April 15, 2020 If GM and Ford are burning through $4 billion a month, can you imagine how much VW, Toyota, or RNMA are burning through? 1 Quote Link to comment Share on other sites More sharing options...
rperez817 Posted April 15, 2020 Share Posted April 15, 2020 42 minutes ago, ausrutherford said: If GM and Ford are burning through $4 billion a month, can you imagine how much VW, Toyota, or RNMA are burning through? FT reported Volkswagen is burning through 2 billion Euro every week. https://www.ft.com/content/26e4cb7c-f588-4cdf-ae50-0a834e8ea57f 1 Quote Link to comment Share on other sites More sharing options...
jpd80 Posted April 16, 2020 Share Posted April 16, 2020 (edited) 1 hour ago, mackinaw said: I'm not a big Adam Jonas fan, but he is one of the more well respected Wall Street automotive analysts out there. Plus, Deutsche Bank agreed with Morgan Stanley on Ford and GM's cash drain. But this is worst case scenario. Even Adam Jonas says so. The odds of every Ford and GM factory remaining shutdown through August is slim. Once they resume production, both companies will start to generate revenue and the doomsday scenario goes out the window. As I just showed GM and Ford won’t be running out of cash by August Adam Jonas and Deutsche Bank are erring in the side of pessimism because they have a responsibility to their investors, Ford and GM’s first responsibilities are to their own companies survival which is normally at odds with what investors want to see. plus Adam and all the other ratings companies completely missed the repackaged subprime lending going into the market back in 2008, you don’t come away from something like that without a lot of nervousness when things go bad..... We just need to be a bit level headed here and look past the dire warnings to a recovery phase. Edited April 16, 2020 by jpd80 Quote Link to comment Share on other sites More sharing options...
probowler Posted April 16, 2020 Share Posted April 16, 2020 Can someone explain to me the math how Ford could possibly be burning over even just a billion dollars a month? Salary, rent, utilities, certain employee benefits, site security/minimum manning, vehicle storage, advertising, debt payments, etc? I'm just wondering what could possibly be so expensive happening behind the scenes? If ford isn't building cars, they're not buying parts and materials, but even if they are paying for that shit still, that is money they won't spend later. If everything is shut down, there should be very little moving or happening. Obviously there are certain fixed costs and bills that still come due every month but still... some of these numbers being thrown around are staggering. Quote Link to comment Share on other sites More sharing options...
fuzzymoomoo Posted April 16, 2020 Share Posted April 16, 2020 7 hours ago, probowler said: Can someone explain to me the math how Ford could possibly be burning over even just a billion dollars a month? Salary, rent, utilities, certain employee benefits, site security/minimum manning, vehicle storage, advertising, debt payments, etc? I'm just wondering what could possibly be so expensive happening behind the scenes? If ford isn't building cars, they're not buying parts and materials, but even if they are paying for that shit still, that is money they won't spend later. If everything is shut down, there should be very little moving or happening. Obviously there are certain fixed costs and bills that still come due every month but still... some of these numbers being thrown around are staggering. There's still a large number of engineers, designers, and IT people working from home if they can. Quote Link to comment Share on other sites More sharing options...
jpd80 Posted April 16, 2020 Share Posted April 16, 2020 (edited) 17 hours ago, probowler said: Can someone explain to me the math how Ford could possibly be burning over even just a billion dollars a month? Salary, rent, utilities, certain employee benefits, site security/minimum manning, vehicle storage, advertising, debt payments, etc? I'm just wondering what could possibly be so expensive happening behind the scenes? If ford isn't building cars, they're not buying parts and materials, but even if they are paying for that shit still, that is money they won't spend later. If everything is shut down, there should be very little moving or happening. Obviously there are certain fixed costs and bills that still come due every month but still... some of these numbers being thrown around are staggering. That’s why I was really questioning where the $4 billion/mth came from, Q1 was a massive turnaround from 2019 going from +$2.4 billion to -$600 million, that $3 billion is a big hit considering that it includes two uninterrupted months of production and selling..........so I have to wonder if Ford has an early write down to Covid-19 or were other cost issues raising their head? Perhaps someone who has read through Ford’s Q1 presentation could enlighten us...... Edited April 16, 2020 by jpd80 1 Quote Link to comment Share on other sites More sharing options...
ausrutherford Posted April 16, 2020 Share Posted April 16, 2020 Looks like KTP is set to re-open on May 4th to what I read today. Quote Link to comment Share on other sites More sharing options...
02MustangGT Posted April 16, 2020 Share Posted April 16, 2020 31 minutes ago, ausrutherford said: Looks like KTP is set to re-open on May 4th to what I read today. *Tentatively https://www.wdrb.com/news/fords-louisville-plants-could-restart-may-4-union-leaders-say/article_1984da1e-8011-11ea-abb5-a7d388acfbe8.html Quote Link to comment Share on other sites More sharing options...
mackinaw Posted April 17, 2020 Share Posted April 17, 2020 19 hours ago, jpd80 said: That’s why I was really questioning where the $4 billion/mth came from, Q1 was a massive turnaround from 2019 going from +$2.4 billion to -$600 million, that $3 billion is a big hit considering that it includes two uninterrupted months of production and selling..........so I have to wonder if Ford has an early write down to Covid-19 or were other cost issues raising their head? Perhaps someone who has read through Ford’s Q1 presentation could enlighten us...... Looks like Ford actually loss 2 billion dollars in the first quarter. https://www.freep.com/story/money/cars/ford/2020/04/17/ford-losses-first-quarter-2020/5151287002/ Quote Link to comment Share on other sites More sharing options...
snooter Posted April 17, 2020 Share Posted April 17, 2020 When ford borrowed 16B the spin started quickly...the losses are going to mount for ford..mich guv is doing her best to destroy michigan as well.... Quote Link to comment Share on other sites More sharing options...
gmancanplay Posted April 17, 2020 Share Posted April 17, 2020 $2B loss in Q1 - that is not a small number Quote Link to comment Share on other sites More sharing options...
mackinaw Posted April 17, 2020 Share Posted April 17, 2020 Ford stock actually rose today (Friday). The reason? Wall Street figured Ford's losses would be greater. https://www.fool.com/investing/2020/04/17/why-shares-of-ford-are-rising-today.aspx Quote Link to comment Share on other sites More sharing options...
jpd80 Posted April 17, 2020 Share Posted April 17, 2020 22 minutes ago, mackinaw said: Ford stock actually rose today (Friday). The reason? Wall Street figured Ford's losses would be greater. https://www.fool.com/investing/2020/04/17/why-shares-of-ford-are-rising-today.aspx Buisness and Wall Street have never experienced a global shut down like this before, all of their modelling is based on an underlying monetary failure prior to commercial collapse, that didn't happen with covid-19, the important part here is how the government supports people and business until a restart happens. Quote Link to comment Share on other sites More sharing options...
Radunska Posted April 17, 2020 Share Posted April 17, 2020 56 minutes ago, gmancanplay said: $2B loss in Q1 - that is not a small number Impressive for sure Quote Link to comment Share on other sites More sharing options...
snooter Posted April 17, 2020 Share Posted April 17, 2020 Wall street and business has experienced global market turmoil before.... Quote Link to comment Share on other sites More sharing options...
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