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April Sales down 7.2% - Cars down 21%


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With cars YTD sales down -24%, and SUV flat at 2.5% and trucks flat at 1.6%, does not look like Ford car customers are moving to Fords SUV or Trucks. Is Ford losing this consumer to the competition, or are they just not buying?

 

We talked about this in the March sales thread. Ford is walking away from marginal sales because they are not profitable. So rather than keep the factory going and then try to move the cars with rebates (e.g. what Toyota and GM are doing), Ford just decided to not build them.

 

There is a new car subprime loan bubble in the US and a plummeting used car residual value crisis in the US happening at the same time. Car companies with sophisticated fiance operation (e.g. Ford and BMW) are cutting back on risky loan and lease exposures while other with rudimentary finance units are still out there trolling for subprime buyers.

 

12% of subprime car loans are going into default! Ford's default rate is much much much lower than industry.

 

morgan-auto-2.png

 

Ford Credit is making less on reselling lease returns now so no reason to keep subsiding leases. Note - these two charts does not show Ford Credit is losing money on leases. They just show that the auction value now is below the estimated residual that Ford Credit came up with 3 years ago when they bought the car to lease to Joe Car Buyer. Ford Credit (and obviously Ford) likely still made profit on the entire transaction because interest rate is still very low.

 

evercore-isi-there-was-a-sharp-deteriora

 

 

Deep subprime is taking a bigger share of the subprime auto lending market

 

morgan-stanley-the-securitization-market

Edited by bzcat
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What is impacting the used car market pricing? More available product driving the prices down?

 

I would think so.

 

The exceptionally low production years of 2008-2011 are starting to age out of the used car market, thus I would imagine the overall stock of used cars is going up faster than demand, given that vehicles from those years are being replaced by vehicles from 2013-16.

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Another factor may be the weight of cars in the used vehicle market vs CUVs / SUVs / Trucks. The car decline only occurred in vast amounts in the past couple years, before all the lease returns of the past quarter were originally leased. (ie. Cars were more popular a few years ago when they were originally leased. Now they are being returned and they are not as in favor, creating a bit of a glut of unwanted stock.)

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Another factor may be the weight of cars in the used vehicle market vs CUVs / SUVs / Trucks. The car decline only occurred in vast amounts in the past couple years, before all the lease returns of the past quarter were originally leased. (ie. Cars were more popular a few years ago when they were originally leased. Now they are being returned and they are not as in favor, creating a bit of a glut of unwanted stock.)

 

yeah, that's probably another component, you're seeing cars purchased in the $3+ gas years being sold into the low $2+ market

Edited by RichardJensen
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There is no way they can make 450,000+ units out of that plant. I think it tops out at ~330,000 units. which would be about 28K a month of the Escape and MKC.

I'm sourcing Ford's production figures form Autonews' data base.

March Production:

Escape...34,251

MKC.........5,870

Total........40,121

 

Year to date

Escape...96,710

MKC........13,732

Total......110,442

 

 

Combined Production

2015...,,,421,079

2016......388,438

 

Clearly Ford is controlling output, that is why Escape appears production constrained

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I'm sourcing Ford's production figures form Autonews' data base.

March Production:

Escape...34,251

MKC.........5,870

Total........40,121

 

Year to date

Escape...96,710

MKC........13,732

Total......110,442

 

 

Combined Production

2015...,,,421,079

2016......388,438

 

Clearly Ford is controlling output, that is why Escape appears production constrained

Do those include Escapes made in other plants that are not sold in US/Canada, or are their number off? That would be a line speed of 55 cars an hour for 30 days, 24 hours a day -- that isn't going to happen.

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That plant runs very fast, it wouldn't surprise me if they do run 55/hr

 

Actually 55/hr is a little slow... that's only 550 on a 10 hour shift. We get 605+ after 10 hours at MAP. Average about 60 an hour but it runs a little faster to accommodate for potential stops. We've run close to 70 an hour a few years ago when small cars were actually selling. Would not shock me if LAP runs that fast now, I know DTP and KCAP 1 run ~70 (minimum) an hour regularly.

Edited by fuzzymoomoo
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That plant runs very fast, it wouldn't surprise me if they do run 55/hr

 

Actually 55/hr is a little slow... that's only 550 on a 10 hour shift. We get 605+ after 10 hours at MAP. Average about 60 an hour but it runs a little faster to accommodate for potential stops. We've run close to 70 an hour a few years ago when small cars were actually selling. Would not shock me if LAP runs that fast now, I know DTP and KCAP 1 run ~70 (minimum) an hour regularly.

I just did quick math on those numbers, 55 was figured out at 24hours a day for 30 days straight -- no assembly plant can do that, you will always have downtime. To hit those number they would run have to run 70/hr for 21hr a day for 28 days. I guess it is do able, however it really explains a lot in the quality department.

Edited by jasonj80
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Do those include Escapes made in other plants that are not sold in US/Canada, or are their number off? That would be a line speed of 55 cars an hour for 30 days, 24 hours a day -- that isn't going to happen.

That is the production for Louisville only, there are no other Escape plants in North America.

I'm pretty sure that Louisville went to three shifts when it began MKC production...

 

I'm told the vehicles come off final trim with less than a minute gap between them.

I think you'll find that it's your assumptions that are wide of the mark, Ford now works

some of its key plants very hard with absolutely no margin for error....

 

You can see how fast the line is running in the back of thos video, it's a lot faster than one car a minute....

 

https://www.youtube.com/watch?v=NAtEDJfUr1w

Edited by jpd80
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That is the production for Louisville only, there are no other Escape plants in North America.

I'm pretty sure that Louisville went to three shifts when it began MKC production...

 

I'm told the vehicles come off final trim with less than a minute gap between them.

I think you'll find that it's your assumptions that are wide of the mark, Ford now works

some of its key plants very hard with absolutely no margin for error....

 

You can see how fast the line is running in the back of thos video, it's a lot faster than one car a minute....

 

https://www.youtube.com/watch?v=NAtEDJfUr1w

I was just doing it by the math and how hard a plant would need to run to hit those numbers, I guess that they do work them that hard. Which honestly explains why they have the fit and finish and quality issues of late they do. They must just build them and if they discover an issue move it to be fixed after, or let the dealer do it at delivery or as a warranty claim. If 9/10 customers don't care and buy it, don't have it fixed they make better profit than if they made each of those units at a slower rate.

Edited by jasonj80
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I was just doing it by the math and how hard a plant would need to run to hit those numbers, I guess that they do work them that hard. Which honestly explains why they have the fit and finish and quality issues of late they do. They must just build them and if they discover an issue move it to be fixed after, or let the dealer do it at delivery or as a warranty claim. If 9/10 customers don't care and buy it, don't have it fixed they make better profit than if they made each of those units at a slower rate.

 

Oddly enough my wife's 2017 Escape has been more or less flawless outside of us getting rear ended by a Hyundai Santa Fe Saturday afternoon...she didn't even make the second payment yet!

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Oddly enough my wife's 2017 Escape has been more or less flawless outside of us getting rear ended by a Hyundai Santa Fe Saturday afternoon...she didn't even make the second payment yet!

 

I saw that on Facebook the other day.....that sucks man, sorry to hear that!

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I was just doing it by the math and how hard a plant would need to run to hit those numbers, I guess that they do work them that hard. Which honestly explains why they have the fit and finish and quality issues of late they do. They must just build them and if they discover an issue move it to be fixed after, or let the dealer do it at delivery or as a warranty claim. If 9/10 customers don't care and buy it, don't have it fixed they make better profit than if they made each of those units at a slower rate.

again, 55/hr isn't all that hard, it's relatively slow for most plants.
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Oddly enough my wife's 2017 Escape has been more or less flawless outside of us getting rear ended by a Hyundai Santa Fe Saturday afternoon...she didn't even make the second payment yet!

If you it makes feel a lil' bit better, I had a friend who drove her first brand new Saturn out of the dealership, she turns out into the street, and proceeds to the first red light and wham she gets rear ended by an Eclipse. And of course it's Miami so the guy didn't have insurance. Luckily it was nothing more than just the bumper cover cause he ended up sliding under her car, and here I am behind the Eclipse just watching it in slow motion :(

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Chevy's "all new" Malibu isn't making sales records, so even if a new Fusion was out, it wouldn't get 1992 Taurus numbers. Buyers are walking past 'trunk-backs' and getting into taller vehicles. Have to face reality, the 90's are long over.

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If my memory serves me correct, LAP line speed is approx 86 units an hour. With out the gate time being 95 units. Back in days Explorer would hit over 100. As in any facility, constraints are always in the eye of the beholder. Always remember suppliers have so called constraints, especially when OEM's start pressing on those cushy profit margins

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again, 55/hr isn't all that hard, it's relatively slow for most plants.

The last 12 months production before Broadmeadows closed down, falcon and territory were built at just 86 vehicles a day..

They had that much time to build each car and that was reflected in the increased build quality.

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If my memory serves me correct, LAP line speed is approx 86 units an hour. With out the gate time being 95 units. Back in days Explorer would hit over 100. As in any facility, constraints are always in the eye of the beholder. Always remember suppliers have so called constraints, especially when OEM's start pressing on those cushy profit margins

Thanks for addin in that color on build rates. Looking at the videos, I was amazed at just how quick the

final trim line was running although, the limiting factor was usally how many shells the body plan could supply.

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I'm gonna think out of the box here and say that the sales people are not so motivated about making sales.

My recent experience was 50-50. Some sales agents just don't care too much about potential sales which means they are demotivated and people seek out the competitors.

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