Ford’s profitability outstripped even yesterday‘s $1.37b estimate, coming in at a whopping $1.68b, as Ford made mad money in the North American market in the 3rd Quarter of this year, for a fifth consecutive profitable quarter. Global revenue was down by about $1b, but excluding Volvo from Q33 2009 results, revenue was actually up $1.7b. $1.6b of Ford’s profitability came from North America, as its most crucial market carried the company over weak overseas results. And with $900m in positive cash flow, Ford says its “automotive cash” will equal its debt by the year’s end, sooner than it had previously forecast. Ford paid of $2b of its revolving credit line last quarter, and plans to pay off the final $3.6b it owes the UAW VEBA trust in Q4. By the end of the year, Ford estimates it will have reduced its overall debt by $10.8b over the course of 2010. Hit the jump for a few key slides from Ford’s Q3 financial presentation.
About a year Editor-in Chief, Ed Niedermeyer, reported that GM and SAIC were discussions about co-operating in the Indian market. Then, in May, our overseas editor, Bertel Schmitt, reported how GM China was going to raid their Chinese line up and sell it in India. I dismissed the developments as the first step in GM being “China-centric”. But today Automotive World reports that Zhang Baolin, President of Chongqing Changan Automobile is having talks with Ford (their western partner in China) about extending their partnership from China to, you guessed it, India. “We have discuss with Ford to use their network to expand overseas, but have not yet come to an agreement yet,” said Zhang Baolin, via Bloomberg News. On the topics’ list are things like whose brand to use and what vehicles will be sold in India.
With Mercury going the way of Olds and Pontiac, Ford has made much of its intentions to turn its struggling Lincoln brand around. Ford has promised a $2b investment in Lincoln’s product line, and is pushing for the closure of 200 or so Lincoln dealers in order to concentrate the brand’s weak sales at its most successful dealers. But that’s not all. Ford is requiring the surviving Lincoln dealerships to invest heavily, as much as $2m per store, to stay on board the Lincoln Revival Express. But, according to Automotive News [sub], the Lincoln dealers are starting to wonder if they’re being asked for too much. One dealer tells the industry paper
They told us there would be no new products for about 24 months. I don’t know how the stand-alone Lincoln dealers are going to make it, especially those dealers who have to spend $2 million on their upgrades.
Ford has offered several Lincoln stores between $300k and $1.5m to give up ideally-located franchises that they refused to upgrade, but it seems that few dealers are simply rolling over. In fact, the dealer who was offered $1.5m rejected Ford’s offer, calling it “very low” for his profitable franchise. And that’s the polite response. A dealer who was offered less tells AN
“Insulted” isn’t a harmful enough word to describe it. It’s asinine. I’m getting my numbers together and going back. I’m not going to accept this.
Ford, for its part, says the “status quo is not an option,” a position that puts the factory and dealers in place for a nice round of brutal negotiations. And since Ford lacks to the tools to force its entire network to update, it will either have to pay up or live with at least a few remnants of the status quo. And as long as Lincoln’s products remain largely status quo, that’s probably the way it should be.
The Freep reports that Ford is allocating an extra 250 workers to its Dearborn plant in Michigan. Why? Well, because the Dearborn plant makes the F-150 and because sales are rising. Ford can’t make them fast enough. According to Autodata, Ford’s share of the pick-up market has risen 4.2 percent this year. This is great news, Ford is getting more Americans back into work, right? Not quite. Read More >
As we’ve noted before, Hyundai and Kia have been quick to exploit the weakness of the domestic auto industry by advertising their American-made cars as American-made cars. Now, they’re taking the attack to a whole new level, as Hyundai USA President John Krafcik tells CNN Money that his brand will build 80 percent of its vehicles in the United States by next year. If the Korean brand can actually achieve that goal, it would make Hyundai’s lineup the most American-built full line on the market. And though he insists that Hyundai doesn’t make decisions about production based on PR, Krafcik can’t help but twist the knife, saying
I’m going to build my three best selling cars in the US. Ford builds its best selling car in Mexico.
Ever since the China Automotive Technology & Research Center, a government agency that “assists the government in such activities as auto standard and technical regulation formulating, product certification testing, quality system certification, industry planning and policy research, information service and common technology research” started issuing monthly car sales numbers, we had our issues with them.
Month after month, they came out with data early, received headlines all over the world, and when the official CAAM numbers came out, they were totally different. There were attempts to explain that CATRC reports registrations, whereas CAAM reports deliveries to dealers. But the numbers were too far apart. In August, we yelped “Come on, guys. China is the world’s largest auto market. Why do we have to endure this rigmarole every month?” When we reported the September numbers, the CATRC was conspicuously absent. Now, we know why. Read More >
October sales in Japan most likely will be a nightmare. Everybody thought they would drop after the government withdrew its subsidies last month. But it will be much uglier than expected. Read More >
It’s a bit hard to sell millions of units with a luxury brand. But with the help of a country that has more than 1.3b people, and where an A6 (long!) is a sign of “here comes a party hotshot, get out of the way,” Audi can perform the rare fusion of volume and luxury. Read More >
America’s “jobless recovery” is a strange economic phenomenon: though businesses are returning to profitability, jobs are not trickling down to lift all economic boats. Though the causes and consequences of this economic conundrum are beyond the scope of a humble car blog, a snapshot of luxury/premium brand sales (via Truecar) show a similar dynamic at play in the world of car sales: luxury sales are recovering while year-to-date sales of mainstream standbys like Honda and Toyota are sitting flat (up 1.1% and 1.4% respectively). Of course the other dynamic at play in the first three quarters of 2010 is the recovery of domestic brands, but even among those successes, the luxury-premium brands are doing best (witness Cadillac sitting atop this chart, and Buick’s even faster recovery (up 57.5% YTD)). At least if you look at year-over-year percentage improvement rather than overall volume levels. Unlike past eras of economic and energy uncertainty, luxury cars, not spartan compact pickups and fuel efficient hatchbacks, are spurring recovery in the auto sector.
How things change. A few months ago, German dealers complained that the sky is falling, and that it’s the end of the car business as we know it – just because German cars sales had crashed from their Abwrackprämien-induced unnatural highs. Now, German car dealers have new reason to be worried: More buyers than cars! Rationing! Come back next year! Read More >
Toyota has been taken to task quite a few times over the past few months. But now it’s time for Ralph Nader to take his pot shot at them. Why so late?
Ralph Nader is no stranger to calling car companies out on their safety. He took GM to task over the safety of the Corvair. Claims which the NHTSA and Texas A&M University studied and dismissed, but were backed up by John DeLorean. But now Mr Nader has Toyota in his crosshairs. Read More >
The European Car Manufacturers Association ACEA has released its September numbers for Europe. A quick look at the chart will tell the trained eye: Things are getting back to normal. Keep in mind, we are comparing with a totally abnormal 2009, when some countries injected amphetamines into their car sales to drive consumption to all time highs, and where other less fortunate countries saw their markets crash. Usually, it was the markets without indigenous car production that saw little sense in propping-up the economies of Germany, France, Italy and some other minor countries with car production – EU commonness notwithstanding. In September registrations of new cars decreased by 9.6 percent compared to the same month of last year. However, over the three first quarters of 2010, registrations were 4.3 percent lower compared to the same period of 2009. And that’s the not so interesting part of the story. Read More >
OK, we get it. Ford’s all-new global Ranger is “90 percent of an F-150” and it would make as much sense to sell it here as it would for Toyota to sell the Hilux alongside Tacomas and Tundras. We may not completely buy the argument that Fiesta, Focus and F-150 make for an adequate replacement to a true compact pickup in the US, but having starved that segment for so long, it’s understandable that Ford would now leave it to die. After all, nobody’s offered a truly new compact pickup for so long, it’s almost impossible to say whether the consumers or manufacturers killed off the once-burgeoning segment of efficient, utilitarian trucks.
With Mahindra struggling to offer its diesel pickups to American dealers, we aren’t holding out much hope of anything compact pickup-related changing anytime soon. Sure, there are whispers of a GM compact pickup in development (and some promising talk from Nissan), but that’s strictly in “wild ass rumor” territory. Meanwhile, VW is trying to apeal to more American consumers, doesn’t have a full-size truck lineup to cannibalize, and yet refuses to send its Amarokstateside. If any of the automakers is going to take a risk on compact (preferably diesel) pickups, Volkswagen seems like the one to do it. Alternatively, Mazda has its own version of the new Ranger and no full-sizers to cannibalize. Someone step up here!
Possibly having caught word of the fact that Americans are all-too willing to spend up to $500 extra for hatchbacks, Hyundai-Kia are aiming a load of trunkless wonders at our shores. First up should be Kia’s Forte Five-Door (above), which will probably hit dealers next year, alongside a new six-speed automatic transmission and optional navigation. These new options and the Forte5’s subtly slick looks should help the nameplate keep up its sales momentum. Sometime after the Forte5 (actual name may vary) drops, Hyundai’s new Accent should be joined by a five-door version as well. It’s not yet 100% clear if that model is headed stateside, but at this point, we’d be surprised if it didn’t join America’s burgeoning hatchback party. And finally, Hyundai should bring out one of the strangest little hatches in the business when its “Veloster” (again, actual name may vary) hits the market, likely in the next year as well. Recently-captured photos of its weird glass access-door-cum-hatchback are almost as intriguing as its claimed target of 40 MPG highway, possibly out of a turbocharged version of Hyundai’s direct-injection 1.6 liter engine. In any case, if Ford is to be believed and hatchbacks are back, Hyundai-Kia will (once again) be poised to make hay on the trend. And as far as we’re concerned, it’s all good news: the hatchback has been wandering the desert for too long.
Recent Comments