Ford’s El Presidente de las Americas has been out and about, doing the rounds, talking up the company’s prospects to the media. And Mark Fields has a good story to tell: Ford’s not Chrysler or GM. Thankfully, Bloomberg cuts through the chatter to ask the key question: at what point would FoMoCo tap into Uncle Sugar’s Blue Oval-shaped $9b bailout– I mean, line of credit? Fields said he’ll only proffer the begging bowl if “the economy continues to deteriorate well beyond our assumptions.” Define “well beyond.” Nope. Well, at least we get a look at Ford’s assumptions. “Ford Motor Co. is forecasting that this year’s U.S. sales of cars and light trucks may fall as much as 9 percent from 2008, when they reached a 16-year low. Industry sales will be 12 million to 12.5 million, with the first half weaker than the final six months.” “After the last couple years, we hope we’re at a bottom because it’s a pretty low level of activity for the industry,” Fields said. Again with the hope. Oh, and did I mention that Ford CEO Alan Mulally didn’t get the memo on the 12m bailout floor?
The Washington Post is reporting that Bloomberg TV reported that Big Al reckons that Ford “would definitely need to think about recapitalizing” if total industry deliveries slumped to 10 million. Hey, what’s two million sales between highly paid, former jet setting Ford execs?
What’s more– $4b more– it seems that bailout bill just got bigger. “If sales were to fall that far, Ford told Congress in December that it would likely need federal loans of as much as $13 billion to sustain all its operations.” Oh, all its operations. Gotcha.
Uh-oh. J.D. Powers’ mob just released their prediction for sales for ’09: a 13 percent fall, to about 11.4 million vehicles.
Far be it for a OCD pistonhead to contradict a building full of highly paid, well-respected, they didn’t see this coming did they sales analysts, but I reckon U.S. new car sales will sink even lower, and won’t show any improvement until the spring of that most magical of years, 2010. That’s if Chrysler and GM are “allowed” to disappear/downsize through bankruptcy.
The next question to ask them is what vehicle mix the 12M PA number represents. I believe we will see a strong move to smaller, more fuel efficient vehicles in the next few years; the ones the D3 can’t make any money on.
Ford could be stabilised immediately with the demise of Chrysler.
With regards the oft repeated 12m figure, I think all of the Bigish3 have looked at their structures and realised that 10m is death in 6mths (9 months for Ford). 12m might see them out to the end of 2010 even while burning all but the last dollar and most of the jobs. It’s the only story they can tell now….
Actually I was thinking along the same lines as PeteMoran but I put GM into the mix. Unlikely to happen now that Rick and Co have their snouts in the trough but it could happen that GM just can’t sell cars.
They can base 100 plans on 100 different assumptions if they want, but if the government demanded an honestly viable business plan showing 9.325M U.S. Auto Sales in 2009, would they be able to come up with one???
@ PeteMoran – taking an OEM or two out of the market fixes a lot of problems. Probably need to force a significant portion of the supply chain out of business while we’re at it, since the same overcapacity problem is spread throughout every level of the industry.
GM’s use of the 10.5M figure as the “downside” figure in its viability plan makes me think that this is probably a good baseline (if not a touch optimistic) for 2009 sales.
Ah, fun times.
If I could be a nitpicking dork for a minute…
It should be El Presidente de las Americas.
The word del is a contraction of “de el,” which is both singular and masculine. Since you’re talking of the both plural and feminine “Americas,” you need “de las.”
I don’t know, with GM offering 0% loans to everybody, again, Ford’s sales stand to be hurt even more so or they will be forced to take on the cost of those bad loans. They should’ve taken the money, at this point its looking like a huge competetive advantage for GM in the short term.
Whats more, the Taurus, MKS, Flex, and MKT are all set to bomb, again, still. The Fusion will do well but can’t be earning much profit as a NA only product, same with the Focus. The Edge and Escape will continue to pilfer each others sales, and F-150, Explorer, Expedition/Navigator will continue their epic decline. Add in the drain unsellable Volvo, absolute waste of space Mercury, and totally lost Lincoln are adding to the books, and I just don’t see a rosy picture for Ford without a serious capital injection.
The question I have that I think is critical to this discussion is: does anyone think that Ford could actually be perceived any different than GM and Chrysler. They have been lumped in (in the middle, usually) with the”Big 3″ for so long will the average consumer ever be able to separate them out, that they are different from the other two, regardless if their products are better or not? Or, will it continue to be that their (Big 3) fates are forever locked together?