Ford April 2012 Sales Figures

[RichardJensen]

And this one deserves a special post all on its own:

 

Ford quality.

 

It is interesting that two people who claim to be focused on Ford's present situation persist in referencing quality problems that have been resolved for over a year.

Edited May 4, 2012 by RichardJensen

[RichardJensen]

Or, to put it more succinctly:

 

There is no merit in being contrary for the sake of being contrary.

[akirby]

it is development cost divided by the expected number units produced.

 

lower volume means reduced PD budgets. I don't think Ford can afford to do a ground up redesign of the trucks, without ditching the standalone frame they use today. and going with F-series frame. this has a cascade effect that forces a redesign of the of the body as well, increasing PD costs.

 

I don't think for wants to commit to such a uncertain segment, but the longer they wait the more expensive it get to redesign them, because the F-150 keeps moving further and further away from the Expy/NAvi what could be an incremental step to maintina commonality will become a complete teardown job in a few generations.

 

while they could continue to produce the trucks unchanged for the foreseeable future, the more the truck loses in commonality with other models the more expensive it is to produce.

 

It's almost a given that if it survives it will be built off the F150 platform so it doesn't matter how long they wait - they'll just start with that platform whenever they decide to move ahead.

[akirby]

Share price, especially over time, is not a reflection of how the company is doing in comparison to others in that industry?

 

Of course not - where do you come up with this stuff? What happens if a stock is at $100/share and they do a split and tomorrow it's only $50/share? Did the company's performance go down 50%? Or a reverse split - did the company's performance double overnight?

 

You can have a company that's losing money but stock is $400/share. Why? Potential and more buyers than sellers.

 

Why do some stocks go down immediately after announcing great performance? Because the stock initially goes up on the good news and then a lot of people decide to take the profits and run so they sell causing it to drop.

 

If it was as simple as the stock price reflecting the company's performance then there would be a formula for calculating the stock price based on the company's annual report.

 

Stock price is driven by speculation - not facts.

[akirby]

And if Ford drops below $10, watch out as mutual funds and pension funds will drop it like hot potato.

 

Let's say all that happens - how does that affect Ford's vehicle sales and profitability?

 

Answer: not in the least.

[akirby]

And if Ford's profits are down 50%+ from 2011, market share down 1%+, quality at average or below, and share price in single digits, will Mulally and his minions deserve another pay raise plus increased bonuses? Or will the usual suspects still be cheerleaders for Ford as in they do no wrong. With that being said, I do expect 2013 to be a much better year for Ford, but I've pretty much given up for 2012 and see more lower expectations and profits at low end and more market share lost. And it's always much harder to gain than to lose, especially with the cutthroat competition out there.

 

Here's the thing - Ford can make all the right business decisions and still lose profit and market share because they don't control the overall market and economy and they don't control their competitors. You can't foresee every market shift nor can you predict accurately how every product will fare.

 

The key is whether Ford remains profitable and whether their core products are sound and being updated to remain competitive and whether their costs are remaining under control. If they're bringing out new vehicles that turn out to be duds or they stop updating important vehicles or they're losing market share because the vehicles are becoming uncompetitive or costs are out of control - then you should worry.

 

Don't forget that Ford is still investing heavily in Lincoln with virtually no sales to show for it yet.

 

All this unfounded doom and gloom is tiresome.

[aneekr]

How does Ford (the company) benefit from an increase in stock price or suffer from a decrease?

 

Changes in share price have commensurate impact on Ford's cost of equity, and as such on the company's weighted average cost of capital (WACC).

[jpd80]

Changes in share price have commensurate impact on Ford's cost of equity, and as such on the company's weighted average cost of capital (WACC).

But in reality has little effect on the day to day running of the company and its financial impact, positive cash flow and more cash on hand than debt

are other factors to consider along with Ford Credits customer based loans worth just over $100 billion ATM...

 

Some commentators keep nudging on the $15 billion shortfall in pensions but fail to mention the $75 Billion that's already there..

Edited May 4, 2012 by jpd80

[FordBuyer]

Here's the thing - Ford can make all the right business decisions and still lose profit and market share because they don't control the overall market and economy and they don't control their competitors. You can't foresee every market shift nor can you predict accurately how every product will fare.

 

The key is whether Ford remains profitable and whether their core products are sound and being updated to remain competitive and whether their costs are remaining under control. If they're bringing out new vehicles that turn out to be duds or they stop updating important vehicles or they're losing market share because the vehicles are becoming uncompetitive or costs are out of control - then you should worry.

 

Don't forget that Ford is still investing heavily in Lincoln with virtually no sales to show for it yet.

 

All this unfounded doom and gloom is tiresome.

 

It sure is a black or white world only with some on here. You can point out two positives, and one negative, and you are a doomer. If you are trying to be objective and not a cheerleader and defender of said company no matter what, then I think more light than not can be shed on Ford. Not everyone who is noticing Ford's market share loss, controversy over eliminating Ranger with no replacement, falling Fiesta sales with B Max not slated for U.S., falling share price, and on and on is all doom and gloom. They are just paying attention and asking questions and offering their opinions. Most of us also are smart enough to figure out that lots of stuff goes on globally that Ford has no control over like Euro economy and oil prices. That goes without saying. Who knows, maybe a lot of these questions are brought up at Mulally's weekly meetings and debated heatedly. Time will telll on who is right. All I know is that if you sell a certain model at let's say a 4% profit margin, you make more profit selling 150,000/year than 75,000/year. So if incentives remain under control, increased market share does lead to greater profits if you assume increased market share means selling more of something. If incentives go out of control, then yes, increased market share means little. I don't anyone sane on here wants to see Ford build two Focus plants for example, sell 50,000 Focuses a month offering $7,500 rebates, and then brag about market share gain like some do.

[RichardJensen]

Changes in share price have commensurate impact on Ford's cost of equity, and as such on the company's weighted average cost of capital (WACC).

I don't think WACC plays a significant role in how Ford decides to allocate vehicle investment, and assuming that it did, it would seem that a lower stock price reduces the WACC. If stockholders expect an 8% ROI, and assuming no dividends, then the greater the share price, the closer the WACC will be to 8% (assuming debt has a lower cost than equity), and the higher the total value of capital will be.

 

I mean, if we assume a zero debt company with a $1B market cap and an 8% WACC, then the ROI on a $200M investment will need to be 40% ($80M), but if the WACC is 8% and the market cap is $500M, then the ROI on a $200M investment would be 20% ($40M), more or less. Unless my understanding of WACC is off.

Edited May 4, 2012 by RichardJensen

[RichardJensen]

one negative

YOUR NEGATIVES MAKE NO SENSE!

 

You want to talk about a valid negative, talk about Europe. Talk about the difficulty of rationalizing production, the likely high cost of capacity reductions that Ford is likely to eat there. Talk about various implied state backstops for various other manufacturers in Europe that complicate Ford's operating environment. Talk about the difficulty of competing in a market that is, EU aside, a number of very small markets, each with one or two dominant players and a host of fringe players.

 

You want a negative looming over Ford's future, it's right there. Europe.

 

Don't come around wailing about increases in vehicle sales and high capacity usage, as though these were bad things (and essentially that's what you're doing every time you complain about Ford's NA ops).

Edited May 4, 2012 by RichardJensen

[jpd80]

Quoting that profits are down in isolation of what Ford is doing with its revenue is shortsighted indeed

and failing to comprehend the expense of roll out of new products and expenditure of new plant and

infrastructure in Asia, that a huge chunk of cash right there....Plus Ford's cash at hand is pretty good...

Edited May 4, 2012 by jpd80

[mettech]

We will see..

 

The "We didn't need a bailout honeymoon" has nearly ran its' course for Ford.

 

I hope the C-Max twins and the next Mustang are trouble free and are a big hit around the world.

 

The next three years should be interesting.

Edited May 5, 2012 by mettech

[Noah Harbinger]

Not picking a fight, but I’m not so sure it is that simple –

If my company typically sells 100k widgets in a given period and my competitors sell 80k widgets – then the market increases by 20k and I sell 105k widgets and my competition sells 95k widgets – I am not sure I could walk into the meeting and say we are doing great, especially if I have to speak to that line chart.

 

What if your chief competitor sold 120k widgets a few years ago but dropped to 80k widgets last year because of a major earthquake and nuclear meltdown? And nearly half of your competitors were in the same situation? And if everyone knew that and you looked like an idiot for thinking the last year was "normal" when clearly it was not?

Edited May 5, 2012 by Noah Harbinger

[jpd80]

We will see..

 

The "We didn't need a bailout honeymoon" has nearly ran its' course for Ford.

Wow, and here I was thinking that people buy new Fords because they are great vehicles

when all along it has been to punish GM and Chrysler...silly me.:shrug:

 

Edited May 5, 2012 by jpd80

[BrewfanGRB]

That analogy only works if all widgets bring the same profits, which in the case of the F-series and Ranger they did not.

 

It also is only valid IF the market is indeed increasing. There's no evidence the market for the mid/small truck is increasing. Nor can one assume it would increase if only the products offerings were better.

[BrewfanGRB]

LOL... I love it!

 

Laugh all you want and tell me I don't know anything... but just you watch... When the new GM SUVs launch next year the old Expedition and Navigator will collect dust and sales will trickle to a pace that is not sustainable until 2015.

 

And? Those vehicles are certainly a nice piece of a full-line manufacturer, but hardly critical to its performance. And there's nothing stopping them from bringing out a show-stopper (relative for this type of vehicle, anyway) in 2015...when the OTHER, truly critical vehicles have launched.

 

I don't understand why we're talking about an ALL-NEW Fusion, an ALL-NEW Escape, an ALL-NEW MKZ...and you're concerned about a vehicle in a class that has basically fallen off a cliff? Ford is smart. They focus on the vehicles that are most important in the overall market, making them extremely competitive and profitable. They can't do everything at once.

[Biker16]

It's almost a given that if it survives it will be built off the F150 platform so it doesn't matter how long they wait - they'll just start with that platform whenever they decide to move ahead.

 

It isn't that simple,if it were the 2012 focus would have been built at WAP where the 2011 focus was built. you cannot delay investment infinitely, the longer you wait the higher the costs are to upgrade facilities, suppliers, etc.

[jpd80]

While market share is a factor in Ford's continuing prosperity, they clearly choose quality and profit ahead of sales leadership.

So with those counterbalancing goals, it's obvious that some market share will be lost to achieve those goals.

It's something Ford has been showing us for the last six years, right sizing capacity to ttrue market demand.

 

GM and Chrysler are coming back with new strong products, that's whay Ford is spending so much on

continually rolling out either new or improved products to stay competitive and maintain not only

market share but to minimize losses in other places like Europe.

 

Perspective on quarterly losses,

While Ford Europe lost money last quarter, it's like someone earning $720 before tax, paying

all their weekly bills but borrowing $15 to get through. Same goes for South America and Asia.

[RichardJensen]

It isn't that simple,if it were the 2012 focus would have been built at WAP where the 2011 focus was built. you cannot delay investment infinitely, the longer you wait the higher the costs are to upgrade facilities, suppliers, etc.

I don't quite follow.

 

Akirby's suggesting that the Expy+Navi will be merged onto the F150 platform and assembled at a F150 facility and will basically piggy-back on the F150, it won't have much in the way of separate facilities or suppliers.

[akirby]

I don't quite follow.

 

Akirby's suggesting that the Expy+Navi will be merged onto the F150 platform and assembled at a F150 facility and will basically piggy-back on the F150, it won't have much in the way of separate facilities or suppliers.

 

Exactly.

[jpd80]

More than likely, the 5.4 V8 and 6-speed auto is within 1 to 2 mpg of the new F150 engines,

changing engines now versus bundling everything into a new vehicle in 18 months time?

It won't matter if Expedition/Navigator keep knocking out 3500-4000 sales per month.

[NickF1011]

Quoting that profits are down in isolation of what Ford is doing with its revenue is shortsighted indeed

and failing to comprehend the expense of roll out of new products and expenditure of new plant and

infrastructure in Asia, that a huge chunk of cash right there....Plus Ford's cash at hand is pretty good...

 

It's also somewhat ridiculous to complain that profits are down compared to one of the best years in the history of the company. They are still way up compared to 2010, 2009, 2008, 2007, 2006, 2005, 2004, 2003, 2002, 2001....

 

The 2011 profit levels were likely unsustainable given the glut of new investment that has been required so far thus year compared to last. Analysts likely took a lot of that into account a long time ago, which is why Ford's stock wasn't jumping through the roof all through 2011, despite it being a record profit year.

Edited May 7, 2012 by NickF1011