The Ford fusion has been a popular U.S seller. Photo courtesy of the Ford MC
Monday November 2nd. Ford cautiously announced today that they would be “solidly profitable in 2011” thanks to a net income of $1 billion in the third quarter which sets them on the road to reach their business plans this year, under a new structure.
The achievement was welcome news for the auto industry in general, which was on its knees last year during the fuel crisis and collapsing global economy which has yet to show the true colors of a bounce back. The 1.1 billion pre-tax operating profit was a $3.9 billion improvement from a year ago, and Ford’s first operating profit since the first quarter of 2008.
Ford cited a variety of reasons for the success, in particular, highlighting what the company called “reduced automotive structural costs.” These included lowering “manufacturing and engineering costs”, raising productivity through benefits, “personnel reduction actions primarily in North American and Europe”, and “progress on implementing its common global platforms and product development processes.” In the first nine months the company achieved cost reductions of $4.6 billion, exceeding its total year targets.
“Our third quarter results clearly show that Ford is making tremendous progress despite the prolonged slump in the global economy,” said Ford President and CEO Alan Mulally. “Our solid product lineup is leading the way in all markets. While we still face a challenging road ahead, our One Ford transformation plan is working and our underlying business continues to grow stronger.”
Part of the success was also attributed to a strong product lineup, which created greater market shares in its Ford, Lincoln and Mercury brands both in the U.S and globally. Ford products continue to shine in Europe where lines like the Ford Fiesta contributed to a 10 percent market share in September alone.
(A Fiesta seen here against a Shanghai back drop in China is a top seller in Asia and Europe. Photo courtesy of the Ford MC)
Additionally, products like the Fiesta have enjoyed record growth in new markets like China where their third quarter share apparently jumped 63 percent. World wide sales of the Fiesta have topped 470,000 units and the car has yet to make it to showroom floors in North America - that will happen in 2010.
Part of the success might also be attributable to American consumers turning to Ford products in anger at the bailouts of GM and Chrysler, who like other companies leaned on government support to stave off out-and-out bankruptcy. The bailouts were of course fundamentally out of line with the general call of the populace and it’s difficult to gauge how many new customers turned to Ford as a result.
What is clear is that Ford anticipates spending around $5 billion in capital to meet the consumer demand for new products which meet a higher standard. This is reflected in the 2010 Ford Taurus and Lincoln MKT both earning IIHS “Top Safety Pick” awards this year and the success of the new F-150 SVT Raptor which earned “2009 Pickup Truck of Texas”. As well, a GQRS study of new vehicle quality, Ford, Lincoln and Mercury vehicles in the US had the fewest “things gone wrong” amongst all automakers. www.government-fleet.com/News/Story/2009/07/Ford-Tops-Toyota-in-Latest-Quality-Study.aspx
Ford enjoyed success in the “Cash for Clunkers” programs, the Focus and the Escape being among the top trade-ins under the program. Ford claims more than 60 percent of Ford Fusion hybrid sales came from non-Ford owners and it has earned $886 million in loans from the U.S. Department of Energy for the development of more fuel-efficient vehicles.
In short the company has worked hard on shedding a significant amount of dead weight and globalized both its business outlook and operational systems to produce a sharper overall unit. Couple that with some hot products, like the aforementioned Fusion, Taurus, Escape and F150, and it explains why the North American market earned a $357 million profit compared with a $2.6 billion loss last year.
On this basis we can expect to see more and better Ford products in North America, especially in the area of fuel efficient cars, where it has enjoyed success with it's eco-boost engines. It's encouraging news for the US auto industry.
Nathan can be contacted at pricklyhedgehog@yahoo.com and welcomes your comments and suggestions, or you may post below.
For more info: www.ford.com http://www.examiner.com/x-7226-Electric-Car-Examiner~y2009m11d2-Ford-turns-profitable-last-quarter-posts-1-billion-profit
Comments
The more I hear about how well Ford is doing, the more I hate GM/Chrysler. I understand the need to save them from bankruptcy, but aren't we just postponing the inevitable death of GM?
It may be how a lot of people feel, Matt. I wouldn't rule out the other two just yet...GM announced Monday that they have every intention of paying back the money the tax payer loaned them, but there isn't a strong enough return on the investment...it may be years, who's to say?
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