As compelling as Ford’s executive paycut for Easter Monday holiday “compromise” is, there are still plenty of stormclouds brewing around Dearborn. For example, Ford’s supplier spin-off Visteon is tanking, telling Automotive News [sub] it “cannot assure that it will remain in compliance with the terms of its outstanding debt instruments.” The firm’s $328m fourth-quarter loss is being blamed on a billion dollar revenue drop and “asset-impairment charges” of $200m. This coming from a firm that has never turned an annual profit. Amid growing rumors of bankruptcy filings (and 13 cent stock price), Visteon’s only other choices are asset sales or government bailout. Meanwhile, inquiring minds (OK, MSNBC) are beginning to wonder when Ford will succumb to the siren song of the federal bailout.
Himanshu Patel of JP Morgan has begun to argue that “Ford is only nine to 12 months behind GM.” He says the Blue Oval will be down to $9b by year’s end, “roughly the minimum” Ford needs to survive. And all this just in time for a new USA Today/Gallup poll (via The Freep) saying only one in four Americans support bailing out the auto industry. Good times.
Ford’s future is going to depend heavily on what happens with GM and Chrysler in the next six to twelve months.
If/when GM and Chrysler go completely bust, Ford could pick up what Robert calls the “dead cat bounce” and increase market share. Alternatively, their brand image, associated with GM and Chrysler by virtue of being American, could be obliterated. On the other hand, GM and Chrysler might limp along on life support and Ford will find itself at the Congressional trough asking for money.
The only thing I can say confidently is that trying to predict Ford’s future at this point is like trying to hit a moving bullet with another bullet.
I’m not sure how many TTAC readers would agree with me, but I think Ford is the only company that deserves to stay around in its current form. They seemed to catch the idea that they need to improve their vehicle quality before Chrysler or GM did.
It’s all going to come down to how well the 2010 model blitz sells in the coming months. With the media darling 2010 Fusion Hybrid, the much refined regular 2010 Fusion/Milan/MKZ, the Flex outside the box Lincoln MKT, the insane Taurus SHO along with its more sedate no longer rental carish brethren 2010 Taurus, and the ‘finally looks as good on the inside as the outside’ 2010 Mustang all landing within the next 1 – 4 months, Ford sales have the chance to dramatically increase.
Will it be enough to offset the downturn everyone is facing in the economy? Maybe, maybe not. However, if no one is making any money in the economy, I don’t see any shame in taking some bailout money. It’s one thing to do it while some automakers are still profitable, but quite another when nobody is making anything and you just need a little help to make it till the upturn.
@ Rusty Brinkley: I agree completely. Ford has shown that they get it; unlike GM and Chrysler they’ve started to kill the rot and implement a new corporate culture, they have a strong lineup and increasingly excellent quality, and their upcoming products are more promising than perhaps any other carmaker.
The refreshed Fusion should help Ford, and the new Taurus/SHO and the Fusion Hybrid in particular will be huge image boosters. But they won’t save the company, and the real game changers, the Fiesta and the next-gen European-developed Focus, are still a year away. By then it could very well be too late.
What I like about Ford is that they seem to be proactively taking steps to fix the problem, while GM and Chrysler seem to grudgingly cede ground with no real goal in mind.
I always thought Ford is the worst manufacturer, but they seem to have made some effort in the recent years (which can’t be said about the other two). If we have to bail out one company, it should be Ford. Not because they deserve it, but because it would be the least pain and not all wasted.
But how it goes with siblings, the one who screws up (aka Chrysler, GM) the most gets the most of the parents attention and support.
unfortunately we already wasted billions on weakening Ford (aka subsdidizing Chrysler and GM). We should have had them collapse on their own, and eventually supported suppliers that are important to Ford and the Japanese companies producing here. With the additional sales Ford would be better off now and might not even need our money. But well, what do I know, apparently congress is filled with experts…. now we will have to support 3 large companies and the suppliers (and maybe the Japanese go away when we keep bailing out the 2.2).
Ford has a bunch of great cars. Unfortunately Mazda sells them. Why the hell Mazda and Volvo get the newer Focus platforms before Ford can only be explained by sheer idiocy.
Then again, every US car company has the same recovery plan every time. Spend a ton of money on making a model competitive, then fail to update it for at least 7 years, then bitch about how they can’t compete.
akatsuki: Ford reputation is so bad that they couldn’t sell a Mazda-like vehicle at a good price. they maneuvered themselves in the Kia corner with their older products. It takes decades to get a good reputation. With the reputation they have it’d be easier to create a strong brand from scratch.
BTW: Ford owns Volvo 100%, but only 13% of Mazda. they cooperate and develop together, but in no way is a Mazda a Ford. I own 2 Mazdas and love them and would by a Mazda again, but it will take 20 years of very good Fords on the street before I even would consider them.
I really hope Mazda is not too small to survive. They really would be missed. Having an almost Acura car at a Honda price, having very European cars without the German repair trouble, having hatchbacks,… all what I want (and can afford) is represented by Mazda.
My, end-of-January, back-of-the-envelope, calculation had the Ford money-box getting empty in July.
@ Rusty Brinkley- I agree with you. They have a clear class structure of cars and not as many brands. All of their products make sense except the Blackwood but that is still good. I just want them to bring over their sub compacts from Europe and I will be happy.
@ Justin Berkowitz
Your post is the crux of the issue. Ford needs GM/Chrysler to go away to have a chance. Actually true for the rest of the industry really.
Also, Ford’s international reputation (certainly in Europe) is quite good.
It’s the domestic blow-back they have to work on, and it would seem they’ve made most of the right moves, but at a hellva’ risk I guess.
There was an MKZ parked in the office parking lot today, and it attracted quite a bit of attention. I think it’s a decent step forward – build something palatable, and market the living hell out of it.
Also, <3 Mazda, especially now that Honda’s gone green/scared/bloated/strange (referring to Acura w/ that last one). Fun, lightweight, quirky cars. I hated them for not giving us the rest-of-the-world Mazda6 with the hatchback and wagon but if they can make more money off the US-only Mazda6, hopefully that’ll bankroll their development of other funky stuff.
Oh, and I want the hardtop MX5. With a Cosworth supercharger.
Ford owns Volvo 100%, but only 13% of Mazda. they cooperate and develop together, but in no way is a Mazda a Ford.
That’s not quite true. Until last year Ford owned the controlling interest of Mazda until they sold off shares to drop them down to 13%. Ford appointed their own management to run the company, including Mark Fields as CEO. You can believe what you want, but from 1997 through most of 2008, Mazda was part of Ford.
Also two Mazdas (the Tribute and the B series truck) are 100% Fords. A good portion of the rest of the lineup uses Ford engines as well (as does Ford use Mazda engines). The 2.3 and 2.5 liter 4s, and the 3.5 and 3.7 liter V6s as well as the transmissions that go with them (or at least most of them) are shared designs. Ford builds some, Mazda builds some, and there are some minor tweaks on each one (different intake manifold on the 3.7 in the 6 vs the same engine in the CX9) but in the end they are pretty much identical powertrains. The rotary in the RX-8 is Mazda’s only completely in-house unique powerplant.
“Ford’s supplier spin-off Visteon is tanking, telling Automotive News [sub] it “cannot assure that it will remain in compliance with the terms of its outstanding debt instruments.” The firm’s $328m fourth-quarter loss is being blamed on a billion dollar revenue drop and “asset-impairment charges” of $200m.”
Yeah but, you don’t want to forget that the most unprofitable parts of Visteon were spun off into a whole new company, ACH-LLC, which is funded by Ford. It included something on the order of 13 plants. I know that a few have been sold or shut down but have not heard any news on the others…
I feel more sorry for ford than GM. However, after reading about their new lincoln products, I see that they are not bad cars but not up with the leaders in the industry. The Japanese with their syrupy engines and fit and finish have again leap frogged further away from the competition. The Germans with power and driveability continue to take higher price sales away from competitors. How many magazine articles will show you a Pontiac or mustang V8 and say is this the car to dethrone BMW? The answer is always the same, no. A used BMW brings more respect and cash than a new ford or pontiac, a used Honda or toyota will do that to any ford or gm product. Thirty years is a long time to fall behind in any industry.
I’ve always been a Ford fan and hope they succeed. My first new car was a 1987 Mustang GT and I purchased 2 more new Ford products after that. They all did ok by me. However, as soon as I had the money, my new cars have been imports. A Mazda 6 wagon (ford?) and an XC90. My only other new purchase was a G35x that I bought for the wife’s dd. It’s been a great car at almost 5 years old.
My point is, I read last night that the new SHO is going to start @ around 37k. If I’m in the market for a 40k mid-size sport sedan do you think I’m buying a Ford or another Infiniti?
If Ford had started selling the Ka, the Fiesta, the Mondeo and the Kuga (pictured vehicle) in North America, actually just about any European Ford product, IMO we would be talking about Ford in the same context as Honda and Toyota, not GM and Chrysler.
In fact, I would have probably bought the Kuga instead of Mrs. Monty’s Focus. Really, I would even buy it now. Hot, hot, hot.
Were it not for the economic meltdown in the last year, Ford, unlike GM and Chrysler, would have been looking at profits for 2009. They’re soooooo very tantalisingly close to becoming the American version of Toyota. Which is ironic, because Toyota is the Japanese version of what used to be Ford.
What does Visteon manufacture?
If I recall correctly, Visteon is Ford’s equivalent of Delphi – namely, the corporation’s parts-making branch spun off as a distinct company.
The original “Ford 6006” radio in my -03 Focus is a Visteon if i remember correctly. The in-dash changer would randomly jam when i hit a pothole or bump and not play cds at all, and then suddenly start playing again days and sometimes weeks later. It has been sitting in the garage for five years.
ford is making many good vehicles.
the focus, f150 and taurus are really top in their class, and name me another offering that comes as close to the taurus other than the avalon.
and the mks, although often bad-mouthed on this sight, is really a bargain. help me again by giving another vehicle that offers what the mks does and in its price. purchased one in november fully loaded for 41k.
nothing came as close with the options.
the new turbos coming, along with the new euro sizes will be helpful…but americans really still love the mid-size car above all others.
the new mkz looked awesome at the chicago show…like a mini-mks. had everything at thousands less.
purchased ford stock this week…
couldn’t help it! it was sooo low. it was like buying penny candy again.
geeber
Correct, Visteon makes injectors, wiper motors, alternators, etc. I used to visit the Rawsonville plant when I lived in Detroit. They had some equipment from the company that I worked for.
the perfect move for mustang
is it me, or wouldn’t mustang really be great at half its size.
and stop fooling with the pretend rear seat crap.
make it the two seater it wants to be. if it were only the size of a solstice or s40 with the look of today’s stang.
it might be me, but i feel it didn’t age along with me.
and today a car needs to focus on being specific…and the mustang wants to be big, but small…new, but old…sporty but roadster…musle car but sports car and macho yet hip.
come on ford…make it no larger than the focus or better, the size of the solstice.