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Ford Motor Company August 2014 Sales Results


atomcat68

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I remember reading somewhere that Ford's current NAFTA manufacturing capacity is based on 16 million annual US new car sales. Alan Mulally thought the US car industry was over capacity, which was true, and that it will never return to the heyday of 16+ million annual units, which is wrong, as 2014 is now selling at 16.5 million unit pace so far.

 

So this is why Ford is bumping up against its capacity and cannot add volume quickly. Richard's point about maintain revenue and profits and optimize its volume is all true but the premise of that is of course that Ford cannot take part in the overall market lift if annual sales goes over 16 million units. The unexpected strength of US markets this year probably also ended the previous plans to expand Fusion exports to Asia.

 

If you look at Ford's product portfolio in North America now, I think they would love to have another C1/CD4 flex plant to add Transit Connect to local production, and more Escape volume.

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I have my doubts about the sustainability of this annual sales rate, given the margins at GM and especially Chrysler.

 

I don't know to what extent the Japanese and Korean makes are dumping product in the US at suboptimal margins in order to offset soggy demand in their home markets.

 

I do know that transaction prices have been eroding this year in a few segments, and that doesn't seem indicative of robust demand for >16M vehicles annually.

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The only 'trouble spot' at Ford right now is Focus/C-Max volume (MAP), and I don't have enough data on that to discern what the problem is on the Focus side.

 

I have a guess. A car that's getting stale and for some reason they keep pushing the launch for the new one back farther and farther. It's all the way in December now, when sales trends have been going down all year.

 

Combine that with the fact that when you compare the Focus with just about every other car in its segment, It lacks a lot of the features and has a drastically underwhelming engine/transmission range. I'm not even convinced the '15 Focus is that much better. For as much that was invested in the C segment a few years ago, Ford has really dropped the ball and fallen way behind its competition.

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This is not a sport. It's not a race.

 

 

I get that its a business - oddly enough the auto industry invokes emotions like a sport - I am guilty of it. On the other hand, professional sports are not entirely sports, they are just as much a business - therefore the metaphor from an old fan point of view while you elaborated with 'moneyball' analysis.

 

Every month you post the capacity constrained comment - and we know its real. Question begs, did they underestimate the market when setting capacity? Not the worst problem to have but perhaps a missed opportunity - no?

 

Ford tuck engine line up is awesome! I am questioning retail consumer perceptions, not the actual performance of the engines.

Edited by Kev-Mo
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Every month you post the capacity constrained comment - and we know its real. Question begs, did they underestimate the market when setting capacity? Not the worst problem to have but perhaps a missed opportunity - no?

 

Ford tuck engine line up is awesome! I am questioning retail consumer perceptions, not the actual performance of the engines.

 

I don't know that Ford underestimated the market, given the weakness in the market right now. If they did, there's not much justification for a new plant until you get to like 17.5M units, unless Ford picks up massive market share.

 

Retail customer perceptions of the F150 engines are fine. The vast majority of F150s *sold* are sold w/V6s and 5.0Ls.

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Well, clearly, feature content is part of the issue.

 

But I don't know to what extent packaging & reputation are at issue--and those problems are a bit tougher to fix.

 

Also, is this an area where Ford isn't willing to put as much money on the hood as, say, GM?

When you compare the Cruze to the Malibu, the Cruze is clearly a better buy. I truly believe that this is a big reason behind the Malibu's lackluster sales.

 

I don't think that the Focus has the same "pull" on potential Fusion buyers.

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Is it lack of features or a price war between GM and Toyota (and possibly others)? GM is targeting sub-prime loan candidates with special offers on Cruze (and advertising it).

 

Nothing wrong with Focus except front leg-room and it's not terrible. That's a cut throat segment right now and Ford has already shown that it would rather cut production and maintain profit margins on fewer vehicles than get caught up in a price war just to maintain volumes.

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I don't know that Ford underestimated the market, given the weakness in the market right now. If they did, there's not much justification for a new plant until you get to like 17.5M units, unless Ford picks up massive market share.

 

The last thing Ford wants to do is invest in additional capacity that might be short-lived. They've saved billions by closing plants and consolidating production. And they still have capacity left in some places. You can make just as much money selling 300K vehicles/year with a single full factory as you can with 2 factories each running at 60%. Adding a plant is a huge increase in fixed costs and is not something that can be easily liquidated if it's no longer needed.

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This is not a sport. It's not a race.

 

Ford is capacity constrained at Louisville, KCAP (truck side), DTP, HMO, CAP (on two shifts), KTP. Plants with declining volume are MAP, OAC and OHAP. Of those three, two (OAC and OHAP) are getting new product. The Transit side of KCAP is ramping up. The only 'trouble spot' at Ford right now is Focus/C-Max volume (MAP), and I don't have enough data on that to discern what the problem is on the Focus side. FRAP is transitioning to the new Mustang and may be due for a major refit in the future, I don't know what the utilization is there, given that there are two final lines and only one body shop.

 

There is minimal room for Ford to achieve 'double digit increases' without building new factories. Given the cost of Ford's labor force and the cost of building new factories in the US, this is not an undertaking to be entered into lightly.

 

Also, where Ford is capacity constrained, they have better leverage on price.

 

Ford is healthier if they extract more revenue per unit than their competitors, giving them more money to reinvest in their product range.

 

The bottom line is that Ford's products need to be able to stand on their own vs. the competition, but Ford, the company, needs to optimize its volume, revenue and profits based on its own circumstances, not based on what some other company is doing.

 

---

 

And one more thing: With the vast majority of Ford trucks being V6s and 5.0L V8s, I really don't think they're going to miss any customers when they drop the 6.2

eco 3.5 is direct replacement for the 6.2, so lineup isnt missing anything barring the usual "diesel" argument....

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Is it lack of features or a price war between GM and Toyota (and possibly others)? GM is targeting sub-prime loan candidates with special offers on Cruze (and advertising it).

 

Nothing wrong with Focus except front leg-room and it's not terrible. That's a cut throat segment right now and Ford has already shown that it would rather cut production and maintain profit margins on fewer vehicles than get caught up in a price war just to maintain volumes.

I would guess its more of features. Ford's pricing seems to be right in line with the others (at least in the case of the Focus), the problem is what does that money get you? GM and Toyota for sure, probably Honda too offer way more for the money

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I would guess its more of features. Ford's pricing seems to be right in line with the others (at least in the case of the Focus), the problem is what does that money get you? GM and Toyota for sure, probably Honda too offer way more for the money

 

CRUZE LS Automatic hatchback 1.8L engine - $17,530

 

Focus SE Automatic 2.0L engine - $19,545

 

Base versions, no options. Price includes current rebates.

 

That's a huge price discrepancy. I'm sure Corolla is similar.

Edited by akirby
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CRUZE LS Automatic hatchback 1.8L engine - $17,530

 

Focus SE Automatic 2.0L engine - $19,545

 

Base versions, no options. Price includes current rebates.

 

That's a huge price discrepancy. I'm sure Corolla is similar.

?...I just googled and came up with Focus at $18615, and Cruse LS @ $18705...sedans...obviously the Hatch adds $1000.....couldnt even find the Cruze hatch, but is it base, Fords hatch doesnt have a base its got a good level of equipment, its sedan does have a strippy....

Edited by Deanh
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CRUZE LS Automatic hatchback 1.8L engine - $17,530

 

Focus SE Automatic 2.0L engine - $19,545

 

Base versions, no options. Price includes current rebates.

 

That's a huge price discrepancy. I'm sure Corolla is similar.

 

Is that for the sedan or hatchback focus? Hatchback adds a premium of about $1500

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?...I just googled and came up with Focus at $18615, and Cruse LS @ $18705...sedans...obviously the Hatch adds $1000.....couldnt even find the Cruze hatch, but is it base, Fords hatch doesnt have a base its got a good level of equipment, its sedan does have a strippy....

That's more like it.

 

Also, You couldn't find a Cruze hatch because it doesn't exist.

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Wow, honestly the Explorer is doing great! I thought it would be an under 5k a month vehicle from now on. The days of decent Explorer sales were long past us. I am pleasently surprised here.

still doing relatively well, getting in need of an MCE though...cant help but look at land Rovers new LR4 and think LR stole some secret MCE Explorer drawings...

Edited by Deanh
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I don't know to what extent the Japanese and Korean makes are dumping product in the US at suboptimal margins in order to offset soggy demand in their home markets.

When your home country's government is always there as a financial "crutch" for you without any negative consequences, you can do as you mentioned above endlessly. An unfair advantage that Ford will always be up against in the marketplace.

 

Don't get me wrong, Hyundai and Kia make a couple of vehicles that I do like, but I keep this fact tucked in the back of my mind, it sits right on the shelf next to my jar of "Volkswagen Accounting Practices."

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CRUZE LS Automatic hatchback 1.8L engine - $17,530

 

Focus SE Automatic 2.0L engine - $19,545

 

Base versions, no options. Price includes current rebates.

 

That's a huge price discrepancy. I'm sure Corolla is similar.

 

Correction - The Focus SE sedan automatic 2.0L is $19,045. Still a sizable discrepancy.

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