Ford Motor Company (F)

In response to record gas prices during the summer of 2008, Ford announced plans to begin producing some of its european models (such as the Mondeo and european version of the Focus, both of which are far more efficient than Ford's current American offerings) in the United States. This offers the advantage of quickly bringing highly demanded fuel efficient cars to the U.S. market without having to invest the money and time to create an entirely new automobile.^[1]

It expects sales of small cars to increase as it tailors its North American offerings to follow its European models. “Ford already delivers the best small cars in Europe,” said Mark Fields, Ford’s president of the Americas, in a speech at a conference in Traverse City, Michigan, Reuters reported. “Now it’s North America’s turn, and we intend to deliver these small cars profitably.”

International sales of Ford products have increased since 2000. Ford further cemented its earnings with impressive international sales numbers and news, including:

• Pre-tax profits soared 237% in Europe (from $219 million to $739 million)
• Pre-tax profits went up 127% in South America (from $113 million to $257 million).
• Pre-tax profit in the Asia/Pacific region was $1 million pre-tax profit in the Asia/Pacific region compared to a $26 million loss last year.
• Ford introduced the Ford Fiesta, an all-new global small car, at the Geneva Motor Show. It’ll be "sold in virtually all of our major worldwide markets by 2010."

"Particularly impressive was the continued strength in Europe," Calyon Securities analyst Mark Warnsman said in a research note, Reuters reported. "The outstanding result in Europe would have meant little, however, if North America had not pulled itself back to close to breakeven."

Mulally trumpeted Ford’s international sales, which he sees as an indication of future profits. "We remain committed to our key business objectives, including our goal of reaching North America and overall automotive profitability in 2009 despite the challenging economic conditions," he said.

New CEO Alan Mulally has already observed several inefficiencies in Ford's operations. Ford could save over $15 billion if it could duplicate GM's fixed cost per unit of $6,060 compared to $8,400. He has aggressively cut costs by $1.7 billion, including $1.2 billion in North America.

All totaled, Ford has cut 46,300 jobs in North America in the past two years, Reuters reported. And last year, it negotiated a new contract the United Auto Workers union. The company could make even more progress in the second quarter, because it won’t have to worry about a one-time $416 million charge that reflected money Ford spent just to reduce expenses. Also the company expects to close its $2.3 billion sale of the Jaguar and Land Rover brands to Tata Motors in the next three months.

Ford Motor Co. (F) said in March 2009 that it has reduced its automotive debt by $9.9 billion, or 38%. The debt reduction will trim more than $500 million from the carmaker’s annual cash interest expense, Reuters reported.

With GM and Chrysler on the government handout line with no end in sight, Ford is the only independent manufacturer left. Not taking money from the government will allow Ford to manage its business more nimbly with fewer restrictions or conditions imposed by the government. Furthermore, around 70 percent of Americans have expressed hesitancy in purchasing a new vehicle from a government owned car company, clearly a condition that should bring crowds of new buyers into Ford's showrooms.

In testimony to Congress given in late 2008, CEO's of GM, Ford, and Chrysler each submitted and explained their bailout requests from the Federal Government. GM reported that it will have to cease operations unless it gets $4 billion immediately, and $18 billion in longer term financing.^[1] Chrysler is in a similarly dire state, claiming to need $7 billion before year end. Ford appears to be in a relatively better position, claiming that it will not need to draw on government support unless business conditions deteriorate further.^[2] Nevertheless, Ford is still requesting $9 billion in loan guarantees as a hedge.^[3]

Similarly, while Ford's sales fell 31% in November 2008, GM's sales fell 41%, Toyota's dropped 34%, Honda's 32%, and Nissan's a whopping 42%. In relative terms then, Ford's aggressively updated line-up seems to be holding its own against domestic and foreign competitors.^[4]

Ford Motor Co. (F) said an agreement with the United Auto Workers Union will save an estimated $500 million per year in operating savings. The deal will also cut average wages and benefits to about $55 per hour in 2009, Reuters reported.

2010 Taurus to be a big hit in the market. Great design and all the toys.

Ford is building better cars that last much longer. While cars are being improved they need to build fewer cars unless they can regain market share lost to Japan. They need to cause a major buying frenzy in the U.S. with a must have car. The first company to kill the gas powered car will come out on top. Michigan should take the lead from CA and be the first state to go green with a Hydrogen powered car. The jobs created during the change to Hydrogen would help bring Detroit back as the worlds MOTOR CITY.

Great long term outlook with innovative changes with tight focus and dynamic leadership. 10 bagger at the very least from here

Ford is making 2 concerted push for Asia.

1. On 10/22/09, Ford unveiled a new low-cost small car specifically developed for Asia that will be built at a newly expanded Indian plant. The vehicle, called the Figo (pronounced fee-go), will be sold in India and exported to other countries in the Asia-Pacific region
2. On 10/24/09, Ford announced plans to open its third assembly plant in China. 

The two moves will increase Ford's production capacity in the fastest growing region in the global auto industry, and will give the company a new car that is priced and sized for buyers across Asia.

References

"Ford Makes Push to Boost Asian Presence" Article from Wall Street Journal

Ford has a good chance of gaining share on domestic automaker GM. They must use aggressive tactics to do this, but it is a very acheivable goal. According to Deutsche Bank, the earliest GM could turn profitable would be 2011, giving Ford plenty of time to pull ahead in the market. Deutsche Bank also said that Ford could reach a break-even point as early as later in 2009 if it maintained its current pace in reducing costs and gaining market share. The company has already narrowed its operating loss by two-thirds in the second quarter of 2009 from a year earlier, far better than forecasted, to $638 million (21 cents a share) from 63 cents a share in the year-ago quarter.

Ford was the only Big 3 US government automaker which did not take government bailout money. Its internal forecasts breaking even in 2011, for the first time since 2004.

Shoppers are becoming aware of improved quality and value. They are drawn to the improved choices of fuel efficient, attractive vehicles with proven quality. Media recognition and reviews are far more positive now

By avoiding the route of it's North American rivals - a state sponsored bankruptcy - Ford's business operations are not at risk of being subjected to political interference. Ford does not have the luxury of shedding it's inconvenient liabilities a la Chrysler and GM; however, it does not have to answer to an "Auto Task Force". Obviously, this bullish justification is contingent upon Ford's ability to avoid further financial troubles down the road.

FORD went to the commercial loan well in 2006 and "hocked" their very soul and borrowed approximately $26 BILLION to POSSIBLY be profitable in 2011.

Is it me or should I wait till mid-2010 to buy FORD?