Ford profit drops as auto post big loss!

[V00DOO]

DETROIT (Reuters) - Ford Motor Co. (NYSE:F - News), hurt by a steep loss in its North American automotive operations, on Tuesday reported a 19 percent drop in second-quarter profits.
ADVERTISEMENT


The second-largest U.S. automaker also warned that it expected no profit from its global automotive operations this year and said it would give no more quarterly earnings forecasts, although it affirmed its full-year outlook.

Ford's finance arm continued to carry results, while its auto operations posted a loss for the quarter.

Shares of Ford see-sawed between positive and negative territory in morning trade even though the second-quarter earnings were substantially higher than analysts expected.

Goldman Sachs analyst Robert Barry said the quality of earnings was poor.

"The better than anticipated result is due largely to tax and interest-related items rather than operational strength," Barry said in a note to clients.

The North American "operating performance was below our expectations and remains our primary concern," he said.

Ford's second-quarter net income fell to $946 million, or 47 cents a share, from $1.17 billion, or 57 cents a share, a year earlier.

Ford said other automotive financial results, primarily interest income related to tax refunds, contributed $398 million to second quarter earnings.

Excluding special charges, earnings were also 47 cents a share. On that basis, Wall Street analysts on average were expecting second-quarter earnings of 33 cents a share, according to Reuters Estimates.

Ford said charges related to a bailout of former parts subsidiary Visteon Corp. (NYSE:VC - News) and job reduction programs reduced earnings per share by 18 cents. But the charges were fully offset by a one-time adjustment in the company's taxes.

DRAMATIC SLOWDOWN

Lower earnings at Ford follow a 13-month decline in the company's U.S. vehicle sales, including a dramatic slowdown in sales of its profitable mid- and large-size sport utility vehicles amid high gasoline prices.

Ford and crosstown rival General Motors Corp. (NYSE:GM - News) are also struggling with higher costs and a cut in their credit ratings to "junk" status this year.

Ford and GM recently launched hefty discount programs to win back market share and reduce inventories of unsold vehicles. The discounts appear to be boosting Ford's sales for July, Leclair said.

Leclair said Ford is working to accelerate cost cuts and suggested that the automaker is also looking at ways to reduce excess production capacity.

Revenue of Dearborn, Michigan-based Ford rose to $44.54 billion in the second quarter from $42.87 billion a year ago.

Ford's auto operations posted a loss of $245 million before taxes and excluding charges, while its finance arm contributed a net profit of $740 million.

During the second quarter, Ford's key North American vehicle operations posted a loss of $1.21 billion before taxes and including special charges, compared with a pretax profit of $334 million a year ago. The company blamed lower sales and higher costs for the drop.

Excluding special charges, the unit posted a pretax loss of $907 million for the second quarter.

Ford's luxury brands, grouped under the Premier Automotive Group, posted a narrow profit of $17 million before taxes and excluding special charges, compared with a pretax loss of $347 million in the year-ago period.

Ford shares were down 3 cents at $10.90 in mid-day trading on the New York Stock Exchange.

The shares have taken a beating this year and now trade at about 8.24 times Ford's projected 2005 earnings. That is well below the average price-to-earnings ratio of 16.8 for components of the S&P500 index.

Link

 

[Kenazo]

And the CAW union here in Canada is going after the big 3 for a new CBA this september. That's going to hurt GM and Ford the most, methinks. Funny how DCX is the only one of the three pulling a profit these days.

 

[Fritzo]

I think this GM employee pricing will pay off for GM in about 2-4 years. People get very loyal to the brands they buy, and sales went through the roof on GM brands. A lot of those people will probably by GM again when they want a new car now. I know I never bought a GM before, but that pricing was too damn good to pass up! Got a Envoy for $17K off sticker

 

[dullard]

Originally posted by: Fritzo
1) People get very loyal to the brands they buy
2) Sales went through the roof on GM brands
3) Never bought a GM before

Doesn't #2 and #3 prove that assumption #1 is incorrect?

 

[Toasthead]

they need to make better cars!!!

 

[tfinch2]

Originally posted by: dullard

Originally posted by: Fritzo
1) People get very loyal to the brands they buy
2) Sales went through the roof on GM brands
3) Never bought a GM before

Doesn't #2 and #3 prove that assumption #1 is incorrect?

Unwritten #4 comes into play...

4.) Hot Deals rule over brand loyalty.

 

[91TTZ]

Originally posted by: dullard

Originally posted by: Fritzo
1) People get very loyal to the brands they buy
2) Sales went through the roof on GM brands
3) Never bought a GM before

Doesn't #2 and #3 prove that assumption #1 is incorrect?

No, it doesn't. If he said that people were 100% loyal to the brands they buy then it would be incorrect. But he only said "very loyal". That means they may still stray when a good deal comes along.

 

[dullard]

Originally posted by: tfinch2
Unwritten #4 comes into play...

4.) Hot Deals rule over brand loyalty.

Which is why in 4-5 years when these new GM owners are looking for a replacement, GMs tactic may backfire if other companies have hot deals at the time.

 

[91TTZ]

Originally posted by: dullard

Originally posted by: tfinch2
Unwritten #4 comes into play...

4.) Hot Deals rule over brand loyalty.

Which is why in 4-5 years when these new GM owners are looking for a replacement, GMs tactic may backfire if other companies have hot deals at the time.

Not really. As long as these current GM owners are *more likely* to buy another GM than another brand when they decide to buy a replacement, this deal worked out for them.

 

[dullard]

Originally posted by: 91TTZ
Not really. As long as these current GM owners are *more likely* to buy another GM than another brand when they decide to buy a replacement, this deal worked out for them.

But the "more likely" part is still unproven. So far the only evidence shown was that price trumps brand loyalty. Is there any evidence that if you buy one vechile you are suddenly loyal? The reliability of some GM models might even make them anti-GM after buying just one GM vehicle. If you do have proof of it, then feel free to post it.

 

[Kenazo]

Originally posted by: dullard

Originally posted by: 91TTZ
Not really. As long as these current GM owners are *more likely* to buy another GM than another brand when they decide to buy a replacement, this deal worked out for them.

But the "more likely" part is still unproven. So far the only evidence shown was that price trumps brand loyalty. Is there any evidence that if you buy one vechile you are suddenly loyal? The reliability of some GM models might even make them anti-GM after buying just one GM vehicle. If you do have proof of it, then feel free to post it.

Honda and Toyota sell like hotcakes around here, even though they are a good 15% more money than comparable domestics. I think that brand loyalty and perceived product differentiation is worth a lot.

 

[mrchan]

Originally posted by: dullard

Originally posted by: Fritzo
1) People get very loyal to the brands they buy
2) Sales went through the roof on GM brands
3) Never bought a GM before

Doesn't #2 and #3 prove that assumption #1 is incorrect?

first time car buyers?

 

[dullard]

Originally posted by: Kenazo
I think that brand loyalty and perceived product differentiation is worth a lot.

I'm just saying that the product differentiation is probably far more value than simply owning one vehicle of a brand.

Originally posted by: mrchan
first time car buyers?

Aren't most of thse people who have already driven multiple other brands of used cars?

Yes, some people are highly brand loyal. But that loyalty is usually developed for other reasons than the fact that they found one at a good price.

 

[Vic]

Originally posted by: Toasthead
they need to make better cars!!!

:roll:

 

[cHeeZeFacTory]

not that surprising, who's going to buy a car that goes into the shop 3+ times a year. Pretty much the same for all the other domestic manuf. I think i'll stick w/ my reliable boring japanese made car.

 

[iversonyin]

Ford should only sell mustangs

 

[iversonyin]

Originally posted by: tfinch2

Originally posted by: dullard

Originally posted by: Fritzo
1) People get very loyal to the brands they buy
2) Sales went through the roof on GM brands
3) Never bought a GM before

Doesn't #2 and #3 prove that assumption #1 is incorrect?

Unwritten #4 comes into play...

4.) Hot Deals rule over brand loyalty.

GM buyers are loyal to the employees deal, not to the brand.

 

[Kenazo]

Originally posted by: cHeeZeFacTory
not that surprising, who's going to buy a car that goes into the shop 3+ times a year. Pretty much the same for all the other domestic manuf. I think i'll stick w/ my reliable boring japanese made car.

Our sunfire had 190k km's on it and hadn't been in the shop for more than an oil change more than once. (odometer sensor kicked out or something) They really aren't as unreliable as import fanboys would want to believe.

 

[BurnItDwn]

Hmm ... this sounds like "NEWS" to me. I am suspicious.

 

[Black88GTA]

Originally posted by: Kenazo
And the CAW union here in Canada is going after the big 3 for a new CBA this september. That's going to hurt GM and Ford the most, methinks. Funny how DCX is the only one of the three pulling a profit these days.

That's because DCX is the only one innovating. Part of GM and Ford's problem is that they choose to sit back and see if the new styles / models from DCX (and others) sink or swim....if they prove successful, GM and Ford scramble to copy it, and come out with it years later (PT Cruiser and HHR, anyone?) But by that time, the model is "old news" and the sales boom from it has passed. Their new models are too conservative and stodgy to draw much interest (G6, GTO). Performance is where it should be, but is overshadowed by the fact that the cars look rather bland.

GM's attempts at being "cutting edge" have failed (Aztek, SSR), while Chrysler has the formula right (Magnum, Charger, 300C, SRT lineup). GM needs to fire a whole bunch of "bean counters" and put some "car guys" in positions where they'll make a difference - and LISTEN TO THEM for a change.

They also have new model strategies that could only be described as "retarded." GM especially puts most of their R&D efforts into new trucks / SUVs because they have been profitable in the past - too bad gas is approaching $3.00/gallon with no end in sight, and the SUV / truck market isn't what it was a few years ago. However, GM still seems to think that new trucks and SUVs are the way to go. The only thing GM's done right in the last couple years is the Solstice / Sky - but that is too little too late, IMO.

GM and Ford are also crushed to death by penny pinchers. Too few "car guys" and too many "bean counters," plus a healthy dose of "fear of innovation" means a bunch of cars that nobody wants. I bet GM's cheap interiors are 100% a result of some penny pincher somewhere along the way switching to cheaper materials or taking out insulation...etc. It has to be frustrating to the designers - I can almost guarantee you that the cars weren't designed that way.

A less-than-stellar interior doesn't bother me too much - I'm not a dash stroker at all, I care more about how a car performs. But people like myself are a minority. Many people say "Ooh, look at the pretty dashboard" and "OMG gas mileage" but don't care that their car is a slug that handles like a school bus. GM has to design accordingly. They've made the "performance" people happy, now they have to concentrate on other areas.

Fire the penny pinchers, bring on some real car guys, and design cars around quality materials and exciting designs, (and concentrate on things other than the fvcking trucks already) and maybe they could turn themselves around.

Not to mention all of their union issues. That's a whole other can'o'worms.

Just my opinion. Feel free to flame.

 

[Fritzo]

Originally posted by: dullard

Originally posted by: Fritzo
1) People get very loyal to the brands they buy
2) Sales went through the roof on GM brands
3) Never bought a GM before

Doesn't #2 and #3 prove that assumption #1 is incorrect?

No, because like myself, I looked at GM for the first time due to price. I've always bought Jeep/Chrysler/Dodge (Subaru once). Sales were high due to extremely low prices, and that will win customers for a good while.

 

[dullard]

Originally posted by: Fritzo
No, because like myself, I looked at GM for the first time due to price. I've always bought Jeep/Chrysler/Dodge (Subaru once). Sales were high due to extremely low prices, and that will win customers for a good while.

So if you buy a GM now, and prices rise, you are saying you will not go back to Jeep/Chrysler/Dodge/Subaru?

 

[MikeMike]

Originally posted by: Black88GTA

Originally posted by: Kenazo
And the CAW union here in Canada is going after the big 3 for a new CBA this september. That's going to hurt GM and Ford the most, methinks. Funny how DCX is the only one of the three pulling a profit these days.

That's because DCX is the only one innovating. Part of GM and Ford's problem is that they choose to sit back and see if the new styles / models from DCX (and others) sink or swim....if they prove successful, GM and Ford scramble to copy it, and come out with it years later (PT Cruiser and HHR, anyone?) But by that time, the model is "old news" and the sales boom from it has passed. Their new models are too conservative and stodgy to draw much interest (G6, GTO). Performance is where it should be, but is overshadowed by the fact that the cars look rather bland.

GM's attempts at being "cutting edge" have failed (Aztek, SSR), while Chrysler has the formula right (Magnum, Charger, 300C, SRT lineup). GM needs to fire a whole bunch of "bean counters" and put some "car guys" in positions where they'll make a difference - and LISTEN TO THEM for a change.

They also have new model strategies that could only be described as "retarded." GM especially puts most of their R&D efforts into new trucks / SUVs because they have been profitable in the past - too bad gas is approaching $3.00/gallon with no end in sight, and the SUV / truck market isn't what it was a few years ago. However, GM still seems to think that new trucks and SUVs are the way to go. The only thing GM's done right in the last couple years is the Solstice / Sky - but that is too little too late, IMO.

GM and Ford are also crushed to death by penny pinchers. Too few "car guys" and too many "bean counters," plus a healthy dose of "fear of innovation" means a bunch of cars that nobody wants. I bet GM's cheap interiors are 100% a result of some penny pincher somewhere along the way switching to cheaper materials or taking out insulation...etc. It has to be frustrating to the designers - I can almost guarantee you that the cars weren't designed that way.

A less-than-stellar interior doesn't bother me too much - I'm not a dash stroker at all, I care more about how a car performs. But people like myself are a minority. Many people say "Ooh, look at the pretty dashboard" and "OMG gas mileage" but don't care that their car is a slug that handles like a school bus. GM has to design accordingly. They've made the "performance" people happy, now they have to concentrate on other areas.

Fire the penny pinchers, bring on some real car guys, and design cars around quality materials and exciting designs, (and concentrate on things other than the fvcking trucks already) and maybe they could turn themselves around.

Not to mention all of their union issues. That's a whole other can'o'worms.

Just my opinion. Feel free to flame.

they just stayed with what they knew. parts bin ++

but yes, the loyalty is true if you get a car thats cheap, and reliable you will look into that brand again.

never had major problems with any GM vehicle we have had (many). my dads avalanche had the Catalytic Converter, and i believe a ball joint go at the same time, but thats with 80000 miles on it, first problem at all. Tahoe went 110K miles no problems.

 

[theGlove]

wasn't it FORD who a long time ago would fix their cars so that they would break after like a short time after the warranty expired?

 

[MasterAndCommander]

Originally posted by: iversonyin
Ford should only sell mustangs GT's

:thumbsup:

Fixored