Despite Ford’s surging stock price, new models and rising customer confidence there’s always been that one bone of contention which had divided peoples’ opinion: debt. $35 billion of it. Though they’ve tried to restructure it, selling new shares and raising cash throughout 2009, it’s still a problem. But apparently it’s becoming less of a problem. ABC news report that Fitch Ratings upgraded their assessment of the risk of Ford defaulting on its debt obligations, basing their optimistic view on a better economic environment, the company’s stronger margins, increased market share and cash position. Oh yes, and a small matter of $5.9b in federal DOE retooling loans [full Fitch release here]. Ford’s Credit unit also received a hearty slap on the back from Fitch because of its improving access to capital, as its rating was raised from “CCC” to “B-“. But let’s not get carried away. While this is a positive step in Alan Mulally’s vision of a sustainable Ford, the rating still qualifies Ford debt as non-investment grade.
Despite his genial, affable manner, Alan Mulally is a businessman and, by all accounts, a businessman not to be crossed with. One story goes, when he first started with Ford, he let them know, in the clearest possible terms, “Everybody says you can’t make money off small cars,” he said. “Well, you’d better damn well figure out how to make money, because that’s where the world is going.” Long protected from the brutal rationalisation of the global market, Australia might be about to get a taste of the man’s darker side as he attempts to drag Ford’s Australian ops into the 21st Century. (Read More…)
When the Ford Focus first went on sale in the US, it was a rare glimpse for the still-SUV-centric US market at how the rest of the world gets from the Blue Oval. Of course, as time went by, Ford eased away from the Euro-funk of the first generation, first blandifying the model with a mid-cycle “refresh,” before eventually replacing it with the current embarrassment to the nameplate. And it’s not just the current model’s Mighty Morphin’ Power Rangers-meets-Pep Boys look that makes it unworthy of the Focus name: the whole idea behind the original Focus was the dream of a world car, that would be sold, largely unchanged, in markets around the world. With the 2012 model, now being previewed before the Detroit Auto Show [press release here], Ford has gone back to the model’s original vision.
According to Detroit lore, Henry Kaiser once loudly threatened to throw one hundred million dollars in 1940s money towards the greater glory of Kaiser Motors, drawing a bemused chuckle from GM Chairman Alfred Sloan who quipped “give the man one chip.” Fast forward to 2009, and Coda Automotive, a firm hoping to sell Californians a $45k EV-ified Hafei Saibao Sedan, just scored $25m in funding reports Earth2Tech. That gives the firm a total of $74m raised so far, although the current round of funding won’t closed for another few months, say spokespeople. The latest money, from Aeris Capital, will be spent on “final safety certification testing,” as well as scaling up battery production. In short, Coda is almost-not-quite all the way to one chip in the car game… but that’s still only good for one roll of the dice. Even the weakest automakers have many multiples of that sum in their Treasury escrow accounts. And even the allegedly “bailout free” automakers get to raise debt with a little help from their government friend, TALF.
After registering a 33% increase in sales for December 2009 (albeit with a rumored 35 percent fleet mix), Ford aren’t letting the grass grow under their feet. industry.bnet.com reports that GM and Ford are to announce the updated versions of their in-car communications systems. Ford announced first that their “Sync” system is turning more towards Apple for new applications, despite the system being developed with Microsoft. Naturally, Microsoft is free to develop Sync-like features for others car makers. Doug Vandagens, director of Ford’s Connected Services Solutions Organisation justified this move at a press conference by saying that many Apple iPhone customers are customising their phones with Apple, therefore, Ford had to follow that trend. A clear indication of Ford marketing to towards younger customers, with the Fiesta being pushed at young, trendy types. GM will have an announcement tonight about their updated GM OnStar.
Ford has wrapped up some much-needed financial wrangling today, as it struggles with with its monstrous pile of debt. According to Automotive News [sub], Ford transferred $13.2b in debt and about $4b in cash to the UAW-run health care trust fund, completing a long-awaited liability consolidation. $1.4b of the transfer was a scheduled payment on a $6.7b note, while $500m more was a prepayment on that note. Ford paid $610m (cash) on another $6.5 billion note, transferred $620m from a temporary account and $3.5b from an internal VEBA fund and handed over warrants to purchase 362 million shares of Ford common stock at $9.20 per share. All together, the move reportedly adds $7b in debt to Ford’s balance sheet.
Why that car? My cousin was slightly amused at the sight of my 2004 Ford Taurus SES. A rental car seemingly loaded with penny-pinching mediocrity and cut corners. An unusual choice for the holidays. It had made the long journey from Northwest Georgia to Jewish Florida in a day’s time. The leather was cheap, but functional. The buttons were cheap, but functional. The price bought it for was very cheap…
Amid the cries of shock around the blogosphere at the sudden death of the Kia Borrego, another tidbit of more consequential Kia news remains undercovered. And it’s actually bigger Ford news than anything else. Ford had deal with Microsoft for exclusive access to the technology underlying its Sync system. But with Ford’s 18 month term of exclusivity expired, Kia is set to formally announce its Sync-alike at next Tuesday’s International Consumer Electronics Show. Shooting for the middle ground between Ford’s apt “Sync” brand name and Fiat’s asinine “Blue&Me” moniker, Kia has called the system “Uvo” (Short for “Your Voice,” believe it or not).
Not all too surprisingly, China’s Geely is planning to build a Volvo factory in China once the purchase of Volvo from Ford has closed, Bloomberg reports. The plant will most likely go up in Beijing, but just in case the Beijing government is not providing the adequate support, Geely has two other Chinese cities identified for the facility. (Read More…)
As predicted various times on TTAC, Volvo has finally been sold to China. Ford said in a statement that it had agreed to all substantial commercial terms in a deal to sell Volvo to China’s Geely Holding Group, parent of Geely Auto, Reuters has on the wire.
“While some work still remains to be completed before signing, Ford and Geely anticipate that a definitive sale agreement will be signed in the first quarter of 2010,” Ford said. Final closing on the deal is expected for Q2 of 2010. (Read More…)
Ford expects to resume profitability in 2011, and the consensus forecast is for per-share earnings of $1.13. The implied price/earnings multiple of 8.6 times doesn’t sound too demanding. But as Chris Ceraso of Credit Suisse points out, it translates to a margin of earnings before interest, tax, depreciation and amortization of nearly 10%, something Ford hasn’t enjoyed since the late 1990s.
It’s been a while since we’ve heard the word “buyout” echoing out of Detroit, as 2008 marked the year in which auto industry employees finally started to be fired like everyone else: without a hefty severance kiss-off. Ford, on the other hand, did not get a shot at free house-cleaning in bankruptcy court, so it’s bringing back buyouts. According to Market Watch, the Blue Oval is offering blue-collar employees a $50,000 lump sum payment and a $25,000 voucher for a new vehicle or another $20,000 lump sum, as well as six months of health insurance coverage. There’s even an extra $40k for workers of “a certain age.” But this being Detroit, employee benefits are either feast or famine. While Ford’s workers are being offered cash for their jobs, the former Ford parts division Visteon announced today that it is seeking to dump pensions for 21,000 retirees in bankruptcy, following Delphi into yet another stealthy yet popular form of indirect automaker bailout.
Unless all the reviews you’ve read about the 2010 Ford Mustang appear in publications like Mustang Monthly, you probably know that the car is (a) an evolutionary improvement of the hold-over SN197 chassis and (b) still far from perfect. After a conflicting afternoon with a beautiful Red Candy Metallic 2010 Mustang GT Convertible [not pictured], I feel compelled to say something about how the Ford Mustang is currently situated in both the market and in our minds. (Read More…)
Ford’s pointy-headed crew of sales forecasters have been compared to the original “Whiz Kids” and credited with a major role in Ford’s (relative) success in the last year. But you can’t calculate everything through statistical analysis, and it seems the models coming out of Ford’s Global Lifecycle Analytics Department failed to take irrational enthusiasm into account. Which is frankly, fairly understandable. The $37,000+ Taurus SHO starts at a full $12k more than a base model, making it a 365 hp halo more than a legitimate sales threat, and yet Ford’s forecasters seem to have underestimated demand for the turbocharged model, with at least one dealer reporting an 80 day wait on a sold order. “It’s a problem for our dealers,” Ford’s Jim Farley admits to Automotive News [sub], “we’re definitely catching up on the demand.” Mid-range SEL trim levels have also been underproduced, says Farley, along with F-150 double cabs. “If you don’t call it, you miss that opportunity and customers don’t see what they want to buy.”
If “the truth will set you free,” as both the Good Book and the founder of this website maintain, then I should probably take this opportunity to come clean: When it comes to trucks, I’m seriously prejudiced in favor of substance over style – which means that most modern trucks are, for my tastes, too light on the former and too heavy on the latter.
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