Ford 1st Quarter Sales

[jpd80]

5 minutes ago, snooter said:

Trying to spin all of fords issues with the beerflu....fords going to take taxpayer money this time so best to get out in front and blame the the beerflu....

 

 

 

 

 

 

Betcha they don’t as Ford has just drawn down $16 billion on its revolving line of credit.

they now have enough money to see them through.

[mackinaw]

1 hour ago, jpd80 said:

Betcha they don’t as Ford has just drawn down $16 billion on its revolving line of credit.

they now have enough money to see them through.

 

Maybe, maybe not.  Deutsche Bank figures both GM and Ford will have liquidity problems in 16 weeks, if this current shutdown lasts much longer.

[jpd80]

1 hour ago, mackinaw said:

 

Maybe, maybe not.  Deutsche Bank figures both GM and Ford will have liquidity problems in 16 weeks, if this current shutdown lasts much longer.

This time last year some folks were painting Deutsche Bank as the next Lehmann Brothers.

If the problem extends for longer than a couple of months, corporates will be lining up for

financial relief with things like suspension of loan payments.

[jcartwright99]

If this goes on much longer, big banks and credit grantors will be the ones to start to crumble first. If anyone thinks that Tesla will somehow make it through this unscathed, think again. Their house of credit cards will be the first to explode, awesome IP or not.

[mackinaw]

3 hours ago, jpd80 said:

This time last year some folks were painting Deutsche Bank as the next Lehmann Brothers......

 

Morgan Stanley had the same cash drain warning a few weeks back.  According to Adam Jonas, GM and Ford are burning through 4 billion dollars/month.  Anybody who things are going back to "normal" when this is over, is kidding themselves.  

[jpd80]

1 hour ago, mackinaw said:

 

Morgan Stanley had the same cash drain warning a few weeks back.  According to Adam Jonas, GM and Ford are burning through 4 billion dollars/month.  Anybody who things are going back to "normal" when this is over, is kidding themselves.  

That was only true in an extreme cash burning scenario which wasn't fully explained in that statement (Jonas said could not will)

I suspect that the true figure is much less with much lower fixed costs. People are still buying vehicles even though the industry

is shut down which means they're working down inventory. This is different to the GFC, companies have cash and ready to go.

Edited April 13, 2020 by jpd80

[ice-capades]

Per FoxBusiness.com Ford expects coronavirus losses to reach $600 Million in for the first quarter.

 

https://www.foxbusiness.com/markets/ford-coronavirus-first-quarter-loss

[jpd80]

4 hours ago, ice-capades said:

Per FoxBusiness.com Ford expects coronavirus losses to reach $600 Million in for the first quarter.

 

https://www.foxbusiness.com/markets/ford-coronavirus-first-quarter-loss

It will be much greater for Q2 and Q3, how much is anyone's guess but certainly not looking at a $16 billion wipeout.

[mackinaw]

Even losing "only" two to three billion (a guess) will have dramatic effects on the company.  No doubt Mr. Hackett and the Board of Directors have several contingency plans in place.  

 

I remember reading this 35 years back.  The recession of 1981 and 1982 was a bad one.  Ford lost three billion dollars from 1980 to 1982 (eight billion in today's dollars).  One worst-case contingency plan was to shut down all car production in the U.S. and only make trucks.  Ford of Europe was very successful in the 80's and they would continue to make cars.  None of this happened of course, but it shows you what the Board was considering.  I imagine the same thing is going on now.

[snooter]

The biggest concern for ford is what becomes the new norm in regards to buying habits...with no product outside stang being "fun" that may be the least of fords problem...ford is in no position finicially if buyers balk at atp pricing structure...the foreign guys will dump product for a loss and eek out small profit with volume...while the ford product is not "poor" it is less than what the other brands have and that may be most difficult for ford to address with dimished cash flow...saving coin on interiors was a fools decision by ford marketing/execs 

[akirby]

1 hour ago, snooter said:

The biggest concern for ford is what becomes the new norm in regards to buying habits...with no product outside stang being "fun" that may be the least of fords problem...ford is in no position finicially if buyers balk at atp pricing structure...the foreign guys will dump product for a loss and eek out small profit with volume...while the ford product is not "poor" it is less than what the other brands have and that may be most difficult for ford to address with dimished cash flow...saving coin on interiors was a fools decision by ford marketing/execs 

The last recession people didn’t flock to cheaper vehicles - those that lost their jobs stopped buying new vehicles altogether.  I expect the same thing to happen here but on a much smaller scale.

[jpd80]

1 hour ago, akirby said:

The last recession people didn’t flock to cheaper vehicles - those that lost their jobs stopped buying new vehicles altogether.  I expect the same thing to happen here but on a much smaller scale.

The people with no savings and small incomes will be affected the most, so I suspect that the “more affordable models” could be hit the hardest.

Its all a crap shoot until we see some figures, right now everything is a write off.

Edited April 14, 2020 by jpd80

[silvrsvt]

Heres another issue to deal with:

Fear of an Impending Car-Price Collapse Grips Auto Industry

[snooter]

Leasing and how it is tied to ford's sales business model (aka atp)....it could bite hard.....thanks for posting that article up

[snooter]

Double post

Edited April 14, 2020 by snooter
Duh

[jpd80]

3 hours ago, snooter said:

Leasing and how it is tied to ford's sales business model (aka atp)....it could bite hard.....thanks for posting that article up

It will bite others harder, those with inflated residual prices that are about to come off leasing.

Again, this will most likely hit the affordable vehicle segments harder than others.

[rperez817]

20 hours ago, ice-capades said:

Per FoxBusiness.com Ford expects coronavirus losses to reach $600 Million in for the first quarter.

 

https://www.foxbusiness.com/markets/ford-coronavirus-first-quarter-loss

 

It will be interesting to see Ford's 1Q 2020 results on April 28.

[bzcat]

The nightmare scenario for Ford is fleets stop buying trucks and Transit. Then it is game over since Ford apparently makes no money on selling cars or CUV in the US. 

 

 

[rperez817]

47 minutes ago, bzcat said:

The nightmare scenario for Ford is fleets stop buying trucks and Transit. Then it is game over since Ford apparently makes no money on selling cars or CUV in the US. 

 

Yes sir bzcat. Ford makes no money selling cars or CUV in all regions outside North America, also. The Ford 2019 year end financial report showed 0 or negative EBIT for automotive operations in South America, Europe, China, Asia Pacific, and Middle East & Africa.

 

Trucks, full size BOF SUV, Transit, and Ford Credit shoulder almost the entire load for Ford Motor Company's earnings. 

Edited April 14, 2020 by rperez817

[jpd80]

1 hour ago, rperez817 said:

 

Yes sir bzcat. Ford makes no money selling cars or CUV in all regions outside North America, also. The Ford 2019 year end financial report showed 0 or negative EBIT for automotive operations in South America, Europe, China, Asia Pacific, and Middle East & Africa.

 

Trucks, full size BOF SUV, Transit, and Ford Credit shoulder almost the entire load for Ford Motor Company's earnings. 

And there  lies the reason why Ford does not pursue compact/mid-sized utility sales volume like GM or Toyota.

There is certainly lots of sales and profit being left on the table, the reason for that is down to Jim Hackett's

insistence that Ford North America maintain that 10% return on revenue, all the vehicles and trims that make

say, 5% are stopped because they drag down the 10% figure (even though the 5% add more total profit)

The focus is clearly on replacing those 5%ers with new vehicles that make more profit per vehicle,

we just don't see them because Ford has taken forever to transition Mexico production and even then,

there's no guarantee that those vehicles will be anything more than minor sales players.......

Edited April 14, 2020 by jpd80

[akirby]

18 minutes ago, jpd80 said:

Jim Hackett's insistence that Ford North America maintain that 10% return on revenue, all the vehicles and trims that make

say, 5% are stopped because they drag down the 10% figure (even though the 5% add more total profit)

The focus is clearly on replacing those 5%ers with new vehicles that make more profit per vehicle,

we just don't see them because Ford has taken forever to transition Mexico production and even then,

there's no guarantee that those vehicles will be anything more than minor sales players.......

 

This isn't exactly true and is misleading.

 

Hackett never said that every vehicle has to bring a 10% margin.  He said he is targeting a 10% margin overall.  I''m sure F series brings in way more than that.

 

He also did not say we should stop building vehicles with low margins.   What he said and is doing is simply looking at the portfolio of current and future products and prioritizing them based on profit margin potential.   So you have future BEVs, PHEVs, Bronco and Bronco Sport which anyone can see has a higher profit margin potential than a commodity item like midsized sedans.

 

Now it would be a completely different story if Ford didn't have those other new things to develop and they were simply getting rid of anything that didn't return 10% and pocketing the cash.  That would be stupid.  But I guarantee you that Ford is spending as much today on R&D as they did 5 or 10 years ago - it's just going to different products now.   But that's all people want to focus on (pun intended).   The problem as you state is that we haven't seen many of the new vehicles yet.

[jpd80]

32 minutes ago, akirby said:

 

This isn't exactly true and is misleading.

 

Hackett never said that every vehicle has to bring a 10% margin.  He said he is targeting a 10% margin overall.  I''m sure F series brings in way more than that.

 

He also did not say we should stop building vehicles with low margins.   What he said and is doing is simply looking at the portfolio of current and future products and prioritizing them based on profit margin potential.   So you have future BEVs, PHEVs, Bronco and Bronco Sport which anyone can see has a higher profit margin potential than a commodity item like midsized sedans.

 

Now it would be a completely different story if Ford didn't have those other new things to develop and they were simply getting rid of anything that didn't return 10% and pocketing the cash.  That would be stupid.  But I guarantee you that Ford is spending as much today on R&D as they did 5 or 10 years ago - it's just going to different products now.   But that's all people want to focus on (pun intended).   The problem as you state is that we haven't seen many of the new vehicles yet.

Jim Hackett did not have to say openly that every vehicle must make 10% but it is clear that low profit vehicles are making way for high profit ones,

look at every other region around the globe and it's clear that where Ford doesn't have F Series and larger SUVs, their profit margins are dreadful

and I think I'm being generous mentioning 5% return when those vehicles barely cover development and manufacturing costs....

 

Cancelling San Louis Potosi was the signal that Ford was not entertaining higher volume production out of Mexico and,

regardless of what products Ford originally planned for Mexico, it's now limiting volume to 400k/yr max coming from there.

 

When Ford talks about choosing vehicles with higher returns but not building new plants, they have effectively stopped making

vehicles with lower profit percentages, you can't do one without doing the other.

 

 

 

Edited April 14, 2020 by jpd80

[grbeck]

Ford doesn't make money selling Edges, Explorers, Corsairs and Nautiluses? I find that hard to believe. 

Edited April 14, 2020 by grbeck

[rperez817]

34 minutes ago, akirby said:

But I guarantee you that Ford is spending as much today on R&D as they did 5 or 10 years ago - it's just going to different products now.  

 

Mobility services too, such as autonomous vehicle services like robotaxi and goods delivery, first/last mile personal and shared mobility, microtransit, etc.

[akirby]

29 minutes ago, jpd80 said:

When Ford talks about choosing vehicles with higher returns but not building new plants, they have effectively stopped making

vehicles with lower profit percentages, you can't do one without doing the other.

 

Ford has 2 choices in order to pursue those new higher margin vehicles.   1 - expand product development resources and expand factory resources (very very expensive, add a lot of fixed overhead) or 2 - reprioritize existing resources.

 

Where would Ford be today if they had hired 25% more staff and built 2 more factories last year and are now having to deal with all that fixed cost?

 

Hermosillo alone can do 350K vehicles - maybe more.

 

So yes, given Ford has chosen option 2 it means killing some lower profit margin vehicles - temporarily at least.    To make it simple, they're replacing Fusion and Focus and Fiesta with Bronco, Bronco Sport, Ranger and a new trucklet using the same amount of resources.  No additional overhead but hopefully a lot more net profit.   As a consumer who loves cars it sucks but as a business plan it's pretty sound assuming the new products are as good as expected.

 

What Ford needs to do and what it hasn't done the last 20 years is get these new powertrains, platforms and vehicles out the door and get into a much simpler cadence of minor updates and regular refreshes and new tophats.   Developing all new vehicles, all new powertrains and all new platforms is expensive and a huge resource drain.  Maybe then they can bring back Focus and Fusion in some fashion.