If you’re looking for proof that shoppers are avoiding the auto industry’s bailout babies, here’s the final piece of evidence you need: Not only did Ford outperform GM and Chrysler during Cash For Clunkers, but it’s also weathering the post-clunker decline with a mere five percent September decline compared to GM and ChryCo’s 45 and 42 percent drops. Across every segment, Ford is proving resilience that cannot be explained by mere product comparisons. Perception feeds reality, and the perception that Ford has not received a federal bailout is clearly helping the Blue Oval move metal.
Ford-branded vehicles led the way for Ford’s “core” brands, with a mere four percent decline. Mercury (-16 percent) and Lincoln (-21 percent) followed with 5,443 and 5,980 units sold respectively. Volvo was the big surprise, actually increasing 16.3 percent to 4,716 units sold.
The new Taurus was the biggest Ford-brand gainer, enjoying a 60 percent sales increase and cresting 5,000 units sold. Fusion also increased, although by only nine percent. Still, that was enough to drive sales over the 10k mark. Mustang was up a flat .1 percent, while Focus slid 11.3 percent. Flex gained 3.8 percent, continuing that model’s steady growth. Escape was down only 5.1 percent while Edge dropped 32.5 percent. F-Series and Ford Heavy Trucks increased 3.5 percent and 4.5 percent respectively, with Ranger dropping 47.6 percent and Eonoline off 10.9 percent. Transit Connect kicked off US sales with 1,527 units sold.
Mercury saw Grand Marquis gaining 34.2 percent, but with only 2,146 units sold, the victory was purely Pyrrhic. Merc’s next-best competitor was Milan, down 5 percent. Otherwise, Mariner was down 32.3 percent, Mountaineer fell 36.8 percent and Sable tanked 88.3 percent to an anemic 92 units sold.
Lincoln was down across the board, with a 2.7 percent decline in MKZ sales the only number resembling a ray of light. MKX was down 13.6 percent, MKS dropped 27.5 percent, Navigator fell 31.8 percent and Town Car shed 54.5 percent, ending under 500 units.
Volvo’s relative increase was strong, but volume numbers tell the real story. S40 (+114 percent) was the top volume nameplate with 903 sales. XC90 (-20.3) hit 882 units, while the new XC60 cracked 828. S80 was down only 13.1 percent, but at 502 units, the volume was insignificant. XC70, S60, V50 and C70 all failed to reach 300 units. The C30 barely escaped that category by adding 19.6 percent to 317 units.
Ford’s non-Ford brands continue to struggle to make a case for their continued existence. In fact, the only thing you can say for them is how surprisingly stable they are, given all the turmoil in the luxury segment. On the other hand, stability at volumes of under 6,000 units per month is nothing to write home about. If Ford can keep making easy profit on these brands it will face no motivation to eliminate or significantly improve them. However, it will be sowing the seeds of its own decline once its bailout-free halo fades. With more premium Ford-brand products like the Taurus and Flex showing signs of strength, one imagines that either Lincoln or (more likely) Mercury will be phased out in the foreseeable future.
Taurus is up 201% in Canada. I scarcely know how that’s even possible.
Ford is up, way up, the 3rd straight month in Canada, 24% this time.
Ed, you forgot to mention that Ford is claiming this is their first quarter in four years where sales went up.
(Hyundai and Kia are also taking scalps up here as well).
Just out of curiosity how’s Toyota, Honda, and Nissan looking?
Taurus is up 201% in Canada. I scarcely know how that’s even possible.
It’s a really nice “large” car
reclusive_in_nature: It’s coming… patience!
“If you’re looking for proof that shoppers are avoiding the auto industry’s bailout babies…”
I’ve yet to understand the people who refuse to buy from GM or Chrysler simply because they took a bailout. I could understand not buying if you didn’t like their cars. But the bailout excuse makes as much sense as saying you’d never hire somebody that ever collected unemployment.
If you really hate the bailout that much, wouldn’t you want GM/Chrysler to recover to the point that our public holdings in them could be recouped?
It’s a really nice “large” car
I thought “large” cars were dead?
[/facetiousness]
I wish they made a good Lincoln again, like an LS, only updated for 2010. I understand it’s probably not feasible, but… What they currently sell under Lincoln brand is no your father’s Lincoln. I tried to give them any possible advantage when I was on the market a couple of months ago, but no matter how I fudged the numbers they just got nothing. So sad.
Waiting for P71’s comments on how the Taurus, Fusion, and Flex are failures… Mercury will be phased out at some point. I wonder how aware the public is about the intention of getting rid of Volvo…and if that plays into it’s lack of sales. As a boxy-Volvo owner, I’d rather spend my money elsewhere if I wanted a FWD/AWD Euro semi-lux car built on an image that is no longer relevant.
Of the Fords, I could see the Edge being phased out, it’s the most “orphan”-like vehicle in the lineup. Doesn’t fit the design language very well, still has the old green interior illumination, and isn’t priced much better than the Flex or Explorer. I’d pick one of those over the Edge any day, even consider the Escape if I just wanted 5-seats. I’m sure it was made to give the CX-7 a better business case.
Transit Connect did pretty well considering it’s very narrow market right now, and other than the internet…lack of any mainstream marketing.
Mikedt— if you don’t like the bailout, you want it to fail so that more people don’t start thinking businesses are entitled to government bailouts the way somebody gets unemployment until they line up a new gig.
It’s one of those things where the precedent you want set is that it was a very costly and immediate failure not just for the company, but also for the politicos that supported it, so that every big corporation doesn’t decide that they can be as stupid as the like, since the govt. will help ’em out if they faceplant.
The selective number reporting continues….
Ford said sales declined 5% from the prior year.
But buried lower in the story was the grim news….down 42% from prior month!
All spring and summer long, all the OEM’s told us….”don’t pay any attention to how we did in comparison with last year.” (translation: “Those numbers are too depressing…we just want to focus, and report, positive news.”) “Pay attention, instead, to the month-over-month improvement.”
Now Ford is saying, “Don’t pay attention to the month-over-month numbers, look at year over year, instead.”
So, which is it? Stop trying to have it both ways.
Now, Ford are heroes because they had less of a hangover from the C4C than GM and DCX?
I ain’t buyin’ the kool-aid. Less bad continues to be the new good, I suppose. But they still lost a ton of money. And the cash burn continues. And the calendar pages keep flippin’…..
Lincoln should have 2 sedans and 1 crossover/sport-ute. Keep the MKS and MKT, both Ecoboost only. Bring back an established Lincoln name (Continental? That’s about it…)
They’re both quite nice vehicles inside and out with elegant lines and very well finished interiors with excellent materials. I’d say their Audi-level (I don’t care for VAG products).
Upgrade/revise the Town Car, have it appeal to the same market it has always appealed to…fleet and highway cruisers. Keep it small, keep it niche, sell/service at Ford and that would diminish the need for lots of cars just to keep a brand afloat.
It looks like it still good to be Ford.
GM/Chrysler is suffering from bailout blowback and the product pipeline you would expect from a just fresh from bankruptcy manufacturer. Ford’s products are reasonably competitive and fairly fresh (especially once Fiesta and 2011 Focus arrive).
Of course, it’s better to be Hyundai, but I’m sure Ed will share with the group shortly:)
I wonder how much of this is anti-bailout backlash vs increased visibility for Ford? i.e. more people visiting Ford dealerships prior to making a purchasing decision helping ford sales, and the continuous string of pro-ford reviews and press in the MSM making Ford appear better than it actually is compared to GM/others.
Granted, it’s hard to see how this could add up to 5% vs 45% …. but it’s equally hard to see how a cash-strapped consumer in a recession would take some sort of moral high-ground over saving a few $k on a new car.
Anyone know what the new market share numbers are? Ford must be flying!!!
//dan.
Waiting for P71’s comments on how the Taurus, Fusion, and Flex are failures… Mercury will be phased out at some point.
They’re already down to two models. I think they’d like to save Mercury, but just can’t focus on more than two brands given their current situation.
If Mercury survives until 2012, and the Ford/Lincoln turnaround continues with good product, they may do something interesting with Mercury.
TTAC seems to be (finally) getting bullish on Ford. That’s good to hear.
I see the chances of my bargaining down the price of a new Ford diminishing rapidly.
In an ocean of bad news, Ford Canada’s headquarters must be an island of relative cheer these days.
Sorry to say that this article reads more like a FoMoCo press release and less like “The Truth about Cars”.
Well…they are ‘facts’ so I am not sure what the author is supposed to do?
mikedt :
October 1st, 2009 at 4:25 pm
I’ve yet to understand the people who refuse to buy from GM or Chrysler simply because they took a bailout. I could understand not buying if you didn’t like their cars. But the bailout excuse makes as much sense as saying you’d never hire somebody that ever collected unemployment.
Many employers refuse to hire somebody who stole money before.
—
If you really hate the bailout that much, wouldn’t you want GM/Chrysler to recover to the point that our public holdings in them could be recouped?
If the investors hate Madoff so much, wouldn’t they want Madoff to keep working to pay back their investments?
No. Because (1) Madoff/GM won’t be able to pay it back; (2) punishment is a deterrent for future scams.
Good news for those with Blue Ovals in their blood stream (ME!)
So if Ford look like they’re sitting pretty (relatively speaking) why is their share price sliding down… down… down…? I’m no financial analyst so someone point out the obvious please.
I’m not saying that Ford’s completely innocent, but compared to GM and Chrysler, they’re truly the lesser evil. Good for them, although I agree with the points regarding the non-Ford brands. Mercury has to go.
I’ve yet to understand the people who refuse to buy from GM or Chrysler simply because they took a bailout. I could understand not buying if you didn’t like their cars. But the bailout excuse makes as much sense as saying you’d never hire somebody that ever collected unemployment.
You don’t get why people won’t buy from a company led by inept leaders that perform their jobs so poorly that they need a government handout to get by?
Your analogy to someone who collects unemployment doesn’t quite work. Now if that person is unemployed due to poor job performance or embezzlement, now we’re talking. After all, other than a few models here and there, GM has been an epic fail for a long time, especially when it comes to customer experience.
Waiting for P71’s comments on how the Taurus, Fusion, and Flex are failures
Here goes.
Taurus – Not a failure…yet. But it is not that great of a car. It has Camry-esque blandness, and the interior leaves a LOT to be desired.
Fusion – Not a failure…but failing. With all of the cheerleading people did about this reskin, it’s sales are terrible. The Fusion was behind the (dated) Camry, Accord, and Altima in sales this past month. People don’t want it.
Flex – HUGE failure. Jimbo Farley said it would sell 100K units a year…It hasn’t sold 100K units YET!…and it’s been on sale for about 15 months. It’s on track to only muster 40K units this year.
Lincoln Taurus – Failure. Period. The Ford version of the car is overpriced…this Lincoln version is WAY overpriced.
And in a related story…Ford’s stock tanked yet again today.
zaitcev – If you’re looking for a 3 series competitor, no, Lincoln doesn’t have anything in the stable. If, however, you are looking at the Lexus ES or Audi A4, the MKZ compares very well on specs space and value, as does the MKX to the RX, and the EcoBoost MKS to the GS, Infiniti M, and Audi A6. Lincoln does probably need a small/midsize sports sedan and a full size RWD sedan sometime in the future, but right now the products they have, aside from the Towncar, are competitive, it’s just a manner of getting people to consider Lincoln as a valid luxury car option again.
If you’re looking for proof that shoppers are avoiding the auto industry’s bailout babies
I think we’re confusing cause and effect. GM and Chrysler took bailouts because their sales sucked, and their sales sucked because the had no good products. The above implies the reverse, which is much less likely.
They’re avoiding them because they have nothing that’s particularly worth buying in large quantities in a depressed market. Ford’s bread-and-butter ranges from “Decent” (Focus) to “Pretty Good” (Fusion, Taurus, Flex, etc) to “Wow” (Fiesta). GM is much more inconsistent, and what they have that is outright-stellar is, well, niche models. Chrysler is consistent. Consistently bad.
They’re not out of the woods, not by a longshot. Their best hope lies in a graceful wind-down of GM and/or Chrysler (which GM, in particular, seems to be actively trying for).
Don’t forget that Ford still has a large, motivated dealer network. People seem to keep ignoring this point.
Not to rain on the Ford cheerleading bandwagon, but a look at Ford’s balance sheet and current financial numbers would tell any sensible person that Ford will inevitable resort to asking for a massive government bailout, in whatever guise, in order to avoid going the way of GM & Chrysler.
Ford has about 16 billion of cash on hand (even though they’re technically insolvent if you do a simple and honest assets versus liabilities calculation), is losing money on each and every car it sells, truck and suv sales are slowing even more, and although Ford was able to slow its cash burn rate to 300 million a month from 1 billion per month (during the cash for clunkers fiasco), there’s absolutely no indication that such slowing of the cash burn rate is likely to continue in an anemic, overall automotive sales volume environment.
Also, a good chunk of Ford’s gain was due to inventory shortages at competitor lots, and I’d put house money on the fact that this will be rectified very soon.
mikedt, we do not support GM/Chrysler products because:
1) A bunch of arrogant, incompetent fools ran it into the ground and took our tax money. Those same bastards still work there and are going to make the same poor decisions again. Nothing said it clearer to me than when the GM folks kept talking about a perception gap.
2) They will do it again if we don’t kill the companies off quickly by boycotting them. I do not want to give them another bailout after they flounder for a few years.
By the way, Good Job Ford!
Good looking numbers for Ford as a whole, but there has to be a point where they admits defeat with the Flex and go back to the drawing board.
Even with its recent small monthly gains, everything it competes with is absolutely laying the pipe to it. Plus, I’m starting to see more of them on the Hertz and Enterprise lots.
@ P71_CrownVic: Calling the Fusion a failure because it doesn’t beat Camry in sales is a pretty idiotic criteria for failure. The Fusion is still a relatively new nameplate and sales have been growing overall, but it’s going to take alot more time for it to get to Camry-levels of sales. Ford spent too much time neglecting the midsize car segment for their ex-customers to come rushing back in the hundreds of thousands and, besides, success doesn’t always come overnight.
What you’re doing is like going back to 1985 and saying the Camry is a failure because it’s not the best-selling car in the country…
ohsnapback – Where do you get the idea that Ford loses money on every car it sells? I’ve heard that regarding the hybrids, but even then I am skeptical. As far as inventory goes, Ford has been just as strapped as anyone else, perhaps more strapped than Toyota/Honda/Nissan this past month. It has only been in the past week that we have gotten a halfway decent inventory of Focuses and Fusions again. Tauruses, at least down here, are nearly impossible to get. We had three come in last weekend, and all three were sold last weekend.
Aijla – I’m sure the Flex is going to get a less boxy design when it comes time for its mid-cycle refresh, which will bring a lot more sales. Other than the square outside, there is nothing wrong with it.
P71 –
Fusion – A huge success, outselling the Malibu and Avenger/Sebring by a healthy margin, and steadily gaining on the Accord/Camry. Nothing happens overnight, and it is ridiculous to think that any car will topple the market leaders right away, it is all about trends, and right now the Fusion is trending up.
Taurus – Offers a hell of a lot more than a Camry does, with a far nicer interior than that or an Avalon, and is selling as fast as they can make them.
Flex – Who cares how many Farley predicted they would sell, again, month on month sales are increasing, which means the buyers are impressed with the car and the word is spreading.
And regarding stock prices, all automakers saw their stock go down today, and a decline of around 3% is hardly plummeting.
Aijla – I’m sure the Flex is going to get a less boxy design
Wasn’t that the Taurus X?
IMHO, Ford ought to hold onto Volvo, their stake in Mazda, and frankly, they sold Jag way too early – Jag was starting a good rebound at the time. Dump Mercury and try to fix Lincoln. What’s the point of a Mercury now? What ever was the point of them?
Mullaly must be doing something right – Boeing likely regrets him leaving right now, too…
Where do you get the idea that Ford loses money on every car it sells?
The second quarter financials show that operating expenses during the first half of the year exceeded operating revenues, resulting in an operating loss. (There was net positive income, but that came from below-the-line items.)
So yes, for now, the company is losing money on car sales. That being said, it’s safe to assume that if volumes can be increased to a level that they can cover the overhead, Ford will be profitable again.
Ford sold Jaguar too early?? They sold them just in time. I don’t think they could give them away now.
IMHO, Ford ought to hold onto Volvo, their stake in Mazda
I agree, and doubly so about their stake in Mazda. It’s done them a lot of good over the years. Too bad they don’t try getting a Miata based Ford (or Mercury?) roadster out of it, but I can dream!
“Edward. Sorry to say that this article reads more like a FoMoCo press release and less like “The Truth about Cars”.”
The stuff about “reslience in every sector” sure was laughably wrong.
FOrd CARS outsold crossovers by 2:1 and SUVs by 3 or 4:1.
Among crossovers (so called), the old, aging tiny escape did twice or four times as well as the edge and the flex respectively. And given the Escape only sold 8,000 units, there is no way in hell Ford made a profit on the much smaller volumes of the Edge and the Flex.
Pch101 – Just because overall the company lost money doesn’t mean it loses money on each car it sells. To say that Ford loses money on every car it sells implies that the cost to manufacture the car is more than the cost for which it can sell it, which isn’t the case. As long as each car sold results in a profit, they are making money on every car sold, they just need to make more of it to cover certain fixed costs.
BDB – The Taurus X (and the Freestyle before) wasn’t a styling dynamo either, it reminded too many people of a station wagon (which is basically was). Though the Flex shares the same platform and basic layout, the interior is far nicer than that of the Taurus X, the ride quieter and more refined, and the space inside is far more usable. Alas, it seems that the exterior styling which gives way to that interior space just won’t fly, so it will get curve-ified ala the MKT, and much like the ’09 to ’10 Taurus transition, though it will lose some actual utility and interior space, it will sell much better.
“adonasetb :
October 1st, 2009 at 6:44 pm
September Sales: Honda Falls 20 Percent, Toyota Drops 13 Percent, Nissan Skids 7 Percent”
HOWEVER,
BMW was UP 4%, Hyundai was UP 26% (Hyundai AND Kia), Subaru was UP 1%, Porsche was UP 8%, and VW was down ONLY 1%!
“Don’t pay attention to the month-over-month numbers, look at year over year, instead.”
But this is reasonable, because month to month is obviously skewed by C4C.
But the bailout excuse makes as much sense as saying you’d never hire somebody that ever collected unemployment.
Unemployment is paid for by unemployment taxes on the companies themselves, and everybody can be eligible for it. Political favoritism to companies that have screwed themselves is not; it’s picking winners and losers, it’s thievery, it’s . I don’t bank at one of the big TARP banks, either. I’m not happy about having to bail people out because I chose to rent while they were betting everything on being able to keep flipping houses, but not much I can do there.
It’s a stupid lesson to teach, that if US companies just suck real bad but are electorally important, they’ll get bailed out.
If you really hate the bailout that much, wouldn’t you want GM/Chrysler to recover to the point that our public holdings in them could be recouped?
Unless you really hate the bailout because you think that nothing can save them, especially Chrysler, so taxpayer money is just creating zombies and dragging out the process, when that money ought to be going to developing new industries and companies in the US that will be competitive, and that’s better for workers too. “Saving” the UAW jobs means fewer (in the short run) and worse jobs for others, because they’re unproductive, inefficient jobs. And you think that another bailout is inevitable if people don’t make their displeasure clear.
Looks like the luxury marques did relatively better. Presumably that’s because their sales weren’t pulled forward by C4C.
toxicroach :
October 1st, 2009 at 4:36 pm
Mikedt— if you don’t like the bailout, you want it to fail so that more people don’t start thinking businesses are entitled to government bailouts the way somebody gets unemployment until they line up a new gig.
Uh…not to rain on the ideological parade here, but if these companies fail, then we taxpayers lose our money, and all the people who work for these companies lose their jobs and end up on the government dole.
What’s the point?
Shouldn’t we want them to succeed instead? Or is it more important to make a rhetorical point?
wsn :
October 1st, 2009 at 4:52 pm
Many employers refuse to hire somebody who stole money before.
Are you implying that people who are on unemployment are theives?
Good for Ford!
P71_CrownVic :
October 1st, 2009 at 5:12 pm
Taurus – Not a failure…yet. But it is not that great of a car. It has Camry-esque blandness, and the interior leaves a LOT to be desired.
Is it difficult wishing failure on people? Just curious.
Has no one picked up on the fact that a big part of the reason why Ford dropped only 5% year-on-year is because they had a really, really bad September 2008 (down about 20% from August 2009)?
You are overestimating the amount of people who will not buy GM or Chrysler because of the bail out. The main reason that Ford is beating both GM and Chrysler is that at this point their new products are better than what GM or Chrysler has to offer. Better in terms of what the buying public wants. Ford has captured the imagniation of car buyers right now. When Gm and Chrysler do the same they will return the same kind of numbers that Ford is. It is not rocket science.
th009 :
So how does that compare to September 2008 for all the other manufacturers? Were they all doing really well relative to Ford?
Just because overall the company lost money doesn’t mean it loses money on each car it sells.
Errr, how else do you suggest it be measured?
I think what you’re suggesting is Ford have perhaps done more work than others (domestics at least) on a per unit basis. That maybe so.
It’s a race to the bottom now however.
Maintaining market share while the others slip has to help, but is it enough?
5000 a year for Taurus is a failure. 60,000 units per year won’t recover cost by a long shot. Also, sales will probably decline after the newness wears off. Ford makes no money on cars, only trucks. Ford is dead.
Matt51 :
Let’s give Ford a few more months on the Taurus. They’ve only just hit the lots and still aren’t available in quantity (at least where I am).
Pete – I suggest that money made or lost per car be measured on a per car basis. If it costs $20,000 to make a car and Ford sells it to dealers for $24,000, that is $4000 made per car, if it costs $25,000 to make a car and it is sold to dealers for $24,000, that is $1,000 lost per car, both figures after any current manufacturer incentives, of course.
Matt51 – I agree, 5,000 a year would indeed be a failure, thankfully, sales aren’t even close to being that slow. 60,000 per year on the other hand could very well be profitable and a success. The D3 platform is shared amongst a number of vehicles, and the original tooling is likely paid off several times by now.
@Bancho,
I don’t have all the 2008 numbers handy, but for GM, August and September were the best months of the year (20% above average) as GM was running the 100th-anniversary sale those months.
@NulloModo,
60K units per year is pretty low for a platform to get any sort of economies of scale.
For example, VW builds about 200K cars on the Touareg/Q7/Cayenne platform, BMW build 240K 5-series, Ford makes 170K Mondeos and GM builds 130K Insignias in Europe alone (all figures from 2007).
And that’s not even comparing to real volume models. VW builds close to 2M cars on its compact PQ45/PQ46 (Golf et al) platforms.
FreedMike
A lot of us want GM to succeed, but feel that if they had went the normal bankrupt route they would be better off and the taxpayer would be better off. With a normal filing MORE people would end up being employed.
I think there is one thing that everyone is missing. Is Ford making money? How much cash do they have left? How long until they are begging for cash too?
Just because overall the company lost money doesn’t mean it loses money on each car it sells.
You have it backwards. Ford lost money on operations, i.e. building and selling cars.
Ford was profitable in the first half because of below-the-line additions. It was not from car production. If you don’t believe it, then look at the financial statements and show me how I’ve misstated it.
I have heard quite a few people say they will never buy a vehicle from the 2 government-owned/controlled car companies. This is a values issue for many conservatives, and most will avoid Chrysler and GM.
I have seen a couple new Fusions lately, and they really caught my eye. They look pretty polished, and I know Consumer Reports loves them.
mfgreen40 :
October 1st, 2009 at 9:51 pm
FreedMike
A lot of us want GM to succeed, but feel that if they had went the normal bankrupt route they would be better off and the taxpayer would be better off. With a normal filing MORE people would end up being employed.
IF the filing could have been normal, sure. But this company had $180 billion in debt. If GM had gone BK without the bailout, it would have simply been dissolved.
Flex – Who cares how many Farley predicted they would sell, again, month on month sales are increasing, which means the buyers are impressed with the car and the word is spreading.
Umm…no. Not by a long shot. Here’s a dose of reality:
Flex sales in:
September 2009 – 2,033
August 2009 – 4,151
July 2009 – 3,631
June 2009 – 4,784
May 2009 – 4,305
April 2009 – 3,190
March 2009 – 2,971
February 2009 – 2,352
January 2009 – 2,459
December 2008 – 2,685
November 2008 – 2,203
October 2008 – 2,017
So, as you can tell, month over month sales are NOt increasing and this has been the Flex’ worst month since October 2008.
As for the Taurus…we don’t know how many were dumped a lot into fleets (probably 1/3 or so) and we don’t know how many were the 2009 version. So the Taurus numbers are skewed…A LOT.
Yes the recently reskinned 2010 Fusion outsold the ‘on-sale in 2007’ Malibu…by a whole 355 units…but how could the Fusion sell HALF the units that the Camry did if it’s supposedly so superior?
And a decline of 3% is huge when your stock is a pitiful $6.97.
I think there is one thing that everyone is missing. Is Ford making money? How much cash do they have left? How long until they are begging for cash too?
They’re not. With the billions Ford wasted on their recent reskins/new (well…rebadged) vehicles, and the lackluster sales, Ford is in the red. The D3 platform is money pit that will bleed Ford dry.
Ford cannot sustain this reckless behavior too much longer. They really need to do some research on what people want, they need to be honest in their marketing, they need to back their products (if they are going to tout their paid-for quality studies…they should back the claims up with a decent warranty), and they need to introduce vehicles that are interesting, good looking (not bland like the Taurus), and something people want.
Ford has a long, LONG way to go. Time is not on their side and they have already taken 5.9 billion from the tax payers…with the other 9 billion they secured not far behind.
th009 – You can’t compare figures from 2007 with figures from 2009, the world economy was in much better shape back then. In fact, if you combine the D3 platform vehicles, Taurus, MKS, MKT, Flex, and S80, extrapolating 12 months from September ’09 sales, the platform sells over 100,000 units in the USA alone, far far above combined US sales of the Touraeg/Q7/Cayenne or the 5 series (not sure what else BMW puts on that, I am guessing the X5 and X6 perhaps, but even with those they are well under 100K units annual).
Pch – I am not arguing if Ford overall lost or made money, or even if car sales overall lost or made money when looking at the big picture. All I am saying is that Ford does not lose money on each car sold. If you take away economies of scale, having to sell a certain number of vehicles to pay off salaries/benefits/overhead/etc, and just look at the bottom line, cost of production for a vehicle vs selling price of a vehicle, Ford makes money on each car it sells, but just needs to sell more of them overall to cover the other stuff.
P71 – The Flex is improving month over month compared to the previous year, taking away irregularities from C4C. There are virtually no 2009 Tauruses left on any lots, so practically all of those sales are 2010 units, and very few are being dumped into fleets, Ford has stated they are going to keep the fleet sales below 10%, and right now with the factory going full steam just trying to meet dealer demand, I’d wager only a couple percent if that were fleet sales.
As far as the stock goes, both Toyota and Mercedes also dropped by around 2%, and I expressed the number as a percentage rather than a dollar amount because that is the most transparent way to state it when the share values differ as much as they do.
Right now Ford has the products people want, and they are buying them. You can’t expect a huge improvement year over year when the entire industry is in the dumps, but a net improvement compared to Toyota, Honda, GM, Chrysler, and Nissan isn’t a bad thing. Also, sponsored studies aren’t anything new in the industry, and independent tests have shown the same reliability ratings, so your insinuation that Ford paid off for rigged results comes off as nothing more than sour grapes. As far as warranty goes, it is the equal of Toyota, Honda, and other quality manufacturers. Ford has been honest in both advertising and warranty, not like GM which threw up a 100,000 mile warranty and then slid a huge lits of caveats in a few weeks later.
NulloModo, thanks for the comment. I am sure my preferences do not explain the whole picture of Lincoln’s sales, they only give a small data point. I’ll have an opportunity to give it another go in a couple of years or so.
P71_CrownVic: You seem to have a personal grudge visa-vis Ford. Did they do something to you?
Pch and snapback . . .
You’re both twisting the meaning of ‘lost money on every car they sold’ way outside it’s norm. Didn’t you ever hear the joke “we lose money on each one, but make it up in volume”? If you didn’t get it, the joke is that the dufus is losing more money by selling higher volume because he loses money on each one he sells.. Note the definition of that phrase that makes the joke funny. And a joke that most everybody understands. So . . . will Ford lose more money if they sell more cars? Obviously not. So by the common use of the phrase, Ford is certainly not ‘losing money on every car they sell’.
Also, and on a similar note. Regardless of any GAAP definition, the amount of interest a company pays on it’s loans should not be considered when speaking of the profitability of its operations. If materials plus labor plus some amortized F&T and some overhead is less than the product revenue . . . then the product makes money, i.e., the company makes money on the product. They just then turn around and lose that money (and more) on the financing.
Now I haven’t just studied the latest financial statement, but I know that 1) Ford is close to making a real profit; and 2) they also pay a shitload of interest. Therefore, I think it’s safe to assume that neglecting interest, they would be profitable and therefore have profitable ‘operations’.
And that’s not motherhood, since a company could certainly fail to earn back materials plus labor plus F&T plus overhead. Ford is not in that bad place. Don’t falsely imply they are.
@ John Horner: I’ve wondered for the longest time P71’s deal was about Ford but he always ignores that particular question…
+1 for insight into the psyche of P71. But I’m not holding my breath.
Overall the trend of the past few months looks good for Ford. In addition to the relative freshness of their product line and the lack of bailout stigma, it looks like the company managed its inventory better than Chrysler or GM did.
That said, the Sept numbers are not as encouraging as they look at first blush. Ford’s ’09 number are measured relative to a disastrous month for the company in ’08, when it posted a 36% decline relative to the year before. GM, in contrast, was in the middle of a sales event and had a very strong Sept ’08 month.
Look at the absolute numbers. Toyota outsold Ford (all brands) by nearly 12,000 units. Despite that dramatic 45% decline, GM outsold Ford by more than 40,000 units, or more than a third, and Chevy outsold the Ford brand.
Unknown factors: I haven’t seen figures on fleet sales so it’s hard to tell how much that is distorting the results. And who knows if Ford is making money on the Taurus at a 60K annual sales rate? I don’t, and I don’t think anyone else here does. After getting burned with the Flex, Ford has been pretty careful not to make official sales projections for the new Taurus, but informally I haven’t heard anyone expecting that it would break the 100K barrier. Hey, it’s outselling the Toyota Venza. That’s not bad.
What a strange discussion this one is. I really shouldn’t but here goes.
dkulmcz, interest is not being considered. What you wrote is the exact opposite of what Ford is experiencing.
“If materials plus labor plus some amortized F&T and some overhead is less than the product revenue . . . then the product makes money, i.e., the company makes money on the product.”
Yeah, well they don’t. That would be the operating loss pch is talking about.
“They just then turn around and lose that money (and more) on the financing.”
There are other income/expenses besides that and ironically in this case, it covers the interest.
back to losing money on every car sold…
nullmondo, sounds like you are talking about gross margin. If that’s negative, then Ford’s toast. You would have a point if pch said Ford loses money on each car it makes.
snapback, what you are describing is not a gross margin or even a manufacturing margin. You are only considering variable cost of goods sold. No one would ever consider if such a narrow concept of prifitability is positive or negative. It better be positive.
“So . . . will Ford lose more money if they sell more cars? Obviously not.”
But they have and may yet. Sell another car for a 2K profit and lose 2.5K in rebates. Incentives would do it and non-manufacturing expenses, overhead, or whatever you want to call them are not all fixed costs.
So the question is how much more volume do they need to make an OPERATING profit. Needless to say, I don’t know and typing is tiring.
I too have always wondered and asked repeatedly why P71 has this irrational hatred of Ford but he goes strangely quiet when asked so assume we will never find out. Pity.
Despite his bizarre comments about the share price, I bet we all wish we had invested in Ford stock when it was at $1.01 a few months ago. As one of the best performing stocks on the 500 this year, I think I trust the marketplace more than I do P71! I invested at $1.54 – happy days indeed.
Ford is clearly the winner across all the major marques. GM and Chrysler are rapidly receeding in the rear mirrors and Ford has rightfully targetted VW, Toyota and Honda as companies to go after and with what they have now and what they will have in 2010, they are beautifully positioned.
It must be reminded that Mulally has publicly stated that Ford will be profitable in 2011. Not sure if any of the competitors have made such bold statements, but Mulally has yet to get anything wrong, so I know where my money is!
FreedMike :
October 1st, 2009 at 7:23 pm
Uh…not to rain on the ideological parade here, but if these companies fail, then we taxpayers lose our money, and all the people who work for these companies lose their jobs and end up on the government dole.
What’s the point?
Shouldn’t we want them to succeed instead? Or is it more important to make a rhetorical point?
I’m of the firm belief that GM and Chrysler are both doomed and that we will never see our money anyway. So avoiding their products is just my little way of saying don’t do this again. And it looks like (I know appearances can be wrong) that others feel the same way.
So the question is how much more volume do they need to make an OPERATING profit.
Exactly. That is the question. It does seem that Mulally is making an effort to create pricing power, but whether it is enough at reasonably expected volumes is hard to say.
And as you noted, operating profit is the equivalent of EBIT — Earnings **Before** Interest and Taxes. I don’t know why some posters keep going on about debt service, when that isn’t included in the operating income figure at all.
I’ve wondered for the longest time P71’s deal was about Ford but he always ignores that particular question
It’s simple: He’s a Panther devotee, and he’s seriously pissed off about its demise. I personally don’t quite understand the love of the Crown Vic, but I guess it made somebody happy…
“Flex sales in:
September 2009 – 2,033
August 2009 – 4,151
July 2009 – 3,631
June 2009 – 4,784
May 2009 – 4,305
April 2009 – 3,190
March 2009 – 2,971
February 2009 – 2,352
January 2009 – 2,459
December 2008 – 2,685
November 2008 – 2,203
October 2008 – 2,017”
yOU can get a better picture of the UTTER FAILURE of the flex, when you observe that in Sept 09 the ESCAPE, an OLD, OLD and Very boring design, sold FOUR TIMES what the obese Flex “minivan with lipstick” sold. AND these 8k Escape sales were HALF of what the CR-V sold!
I believe P71 is a police officer in the Twin Cities… but his personal car is a Silverado. So, probably a little butt-hurt that GM is doing much, much worse than Ford is doing right now.
Personally, I don’t agree with him at all but I enjoy seeing his arguements/banter.
I’m seeing more Fusions and Flexes around Boise, and that says something as this town is a truck, SUV, and Subaru market. Hey, we have mountains and lots of unpaved roads.
Autosavant :
The Flex is a large premium vehicle ( and cost 2x) the escape is a economic, small CUV. In this economy, or any month really, wouldn’t you expect to see the corolla outselling the avalon?
If people are going to make arguments, please make arguments that atleast make sense are have something substantial behind them other than just the negative feelings generated from being molested as a child by your uncle the ford employee (that’s my theory atleast).
So, all of the dire predictions about nose-diving Ford sales for September, post C4C, were a tad inaccurate.
FreedMike :
October 1st, 2009 at 7:26 pm
wsn :
October 1st, 2009 at 4:52 pm
Many employers refuse to hire somebody who stole money before.
Are you implying that people who are on unemployment are theives?
—————-
I was comparing thieves to GM/UAW, not unemployed people.
GM/thieves did/would get money from me without my consent.
Unemployed people didn’t get anything from me. So, I am not against them.
wsn: They get unemployment and welfare…paid for by you.
@NulloModo,
First of all, US (or any other region) sales are irrelevant for platform economics, only global production (or global sales) matters.
My point was that Ford’s D3 numbers are well below those of premium platforms like the ones I mentioned. Looking at mass market plaforms, VW’s Passat platform alone is produced at a rate of over 400K units per year, even in 2009.
A mass-market platform that is produced in five different models but not much more than 100K units per year will give you only limited economies of scale.
Yes, but VAG uses the Passat platform on several models and marquees and I would gander, in several more countries than where Ford offer’s the D3-cars. I don’t know if that is a fair comparison.
yOU can get a better picture of the UTTER FAILURE of the flex, when you observe that in Sept 09 the ESCAPE, an OLD, OLD and Very boring design, sold FOUR TIMES what the obese Flex “minivan with lipstick” sold. AND these 8k Escape sales were HALF of what the CR-V sold!
The Escape is cheaper and does what more people need, and the CRV outsells it because it’s simply better. You’ll note Toyota sells more RAVs than Highlanders (and Honda more CRVs than Pilots or Oddys), largely for the same reason. I don’t think that makes the Flex a failure per se; I think they need to make a version that’s about $3-5K cheaper in order to get people who need two rows of seats but can’t swing the Flex’s (much higher than a minivan) price.
I do think it puts a big, fat question mark on the future of the Edge, as well as wisdom inherent in the upcoming unibody Explorer.
P71_CrownVic: You seem to have a personal grudge visa-vis Ford. Did they do something to you?
Not at all. I see Ford without the blind cheerleader bias. So while my truth may seem extreme to you, it’s only because the cheerleaders are so far off the deep end.
I am also frustrated that Ford…an American company…sells their best products everywhere but AMERICA. Here we get Toyota-like bland appliances while Europe gets the Mondeo, Kuga, Focus, and the Falcon from down under. Even the world-wide Ranger is far superior to the appliance we get here.
Yes, we are getting the Transient Connect…which is pointless. And the Fiesta is just a horrid looking car…inside and out. I have never liked the Fiesta.
This article helps to provide some context:
http://www.automotive-fleet.com/News/Story/2009/10/Ford-Fleet-Sales-Up-in-September.aspx
@TEXN3: Yes, but VAG uses the Passat platform on several models and marquees and I would gander, in several more countries than where Ford offer’s the D3-cars. I don’t know if that is a fair comparison.
The current Passat platform is used for exactly three cars: VW Passat, VW Passat CC (if you count that as a separate model rather than a bodystyle) and Skoda Superb. Additionally, there are the VW Sharan and SEAT Alhambra minivans, which I forgot about (and which add about 40K of annual volume). That’s no more models than the Ford D3. Selling in more countries? Well, that’s up to Ford and VW, is it not?
The point really is that the D3 does not fully benefit from platform economies of scale, whereas the Passat does. (Notably VW’s new MQB architecture will cover over 3M cars per year …)
What Marchionne wants to achieve for Fiat is VW-style platform volumes, not what Ford gets with the D3.
I will note here that the new Focus platform (once unified on a single platform again) should see volumes close to 1M units per year, so it will not suffer from the D3 platform’s high costs.