$7.75
0.30 (+4.03%)
Ford Motor Company (F)
CAPS Rating:
A producer of cars and trucks combined. The Company's business is divided into two segments: Automotive and Financial Services.
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Ford is so far behind the 8 ball it esn't even funny anymore. Let's take a look at why....
As the oil age begins to wind down, they have nothing, but absolutely nothing in their pipeline in terms of alternative drivetrains. They continue to buy/lease old Toyota patents in terms of their two mode Hybrids. A massive amount of their revenue comes from big trucks, and with oil prices ever increasing, coupled with a housing collapse, adding in the fact that Toyota has full heartedly entered the market...... It all adds up to trouble.
Their CEO is not up to snuff. Don't get me wrong, I think Mulally is a good guy, and I think he did a decent enough job at Boeing, but in over a year at Ford, he's done very little to aid in the restructuring of this troubled Dinosaur. His first move was to remove the Taurus brand. Then 8 months later, he says, bad idea, lets rename the 500 the Taurus and bring back to life this venerable brand. He now wants to bring back the "Have you driven a Ford lately" slogan. Simply stated, he's stuck in the old Detroit mentality that he's going to be able to market his way out of this crisis. Wrong. He looks completely overmatched.
Their corporate culture is garbage. This is a company that donates 98% of its political contributions to Republicans. Now I don't want to get too political here, but we can see where the tide has gone. Without a Republican President, House or Senate, who is going to cover up this companies environmental issues? Who is going to prevent CAFE standards from increasing? Uggg..... Things look ugly.
US Auto sales are not looking good for now or the near term. Ford is so heavily vested in this market, that I have trouble believing it could survive a prolonged downturn of the US Auto sector.
Finally, just take a close look at their balance sheet. It makes the strongest of stomach's ill. When you're mortgaging your plants in the hope, and I do emphasise hope here, that you'll be able to turn things around by 2009.... Then you know the end is near.
Auto sector will be a challenge, but Toyota Motors will outperform the S&P in 2008, while Ford continues to dissapoint.
Ford at under 6 and a half looks so tempting, but this brings us back to reality, very nicely stated.
There is no question that Ford does not have the capital the Toyota does. But I would not give up on them yet. There still is a market for trucks and SUVs even at $3.00 a gallon otherwise they would shut the lines down or at least slow them down. They have much more flexibility in this contract than in ones past. As far as the Republican thing goes, I don't think that they have too many friends in Washington Republican or Democrat. Certainly not in the White House who has basically done nothing in any way to help them.- -nothing, fully knowing that many pension funds are built on their stock. If Ford was in Japan, that would not be the case. Their Government makes special provisions so that its industries can compete fair or not. (Like devaluation of currency for instance). You seem also to forget that many of what you consider Wow factors actually do not even come from manufacturers, they come from suppliers. Yes you are correct about the Hybrid stuff. But do you really think that Hybrids are the answer all? Most industry leaders will agree that there needs to be a certain level of fuel price, before they are actually "economical" --Even with economies of scale growing. Are hybrid sales really that strong???? Out of 17million cars last year how many were hybrid? This is a question because I do not know, but I do not think that every hybrid made is gone off the lot the same day or even within several days. Again, this relates to market. Ford sells and markets to whom they predict is interested in their cars. (Yes some are bad predictions). Toyota has the capital to invest in Hybrids, because they can afford to lose. But if they couldn't would they be so strong in it??
To answer your question, there were about 300,000 Hybrid sales through November in the United States. Compare that to 225,000 in 2006 for the same period. That is roughly 25% growth in a tough market. This is still a comparatively small market, but it's growing fast. Additionally, Ford has the least fuel effecient fleet of any major manufacture, even if we don't consider the Hybrid aspect.
With oil at 100 dollars a barrel, analysts are projecting that we are on a crash course with 4 dollar a gallon gas by this spring. People are still buying the Expeditions........ Just much much much less then in 1998 when fuel was 89 cents a gallon.
That is still less than 2% of the total USA vehicle sales. Hybrids have been around for nearly 10 years and I would not consider that to be substantial growth by any measure of nearly 10 years. Compare that to roughly1,500,000 F series vehicles, including Expedition only shows that there is still a market for F series vehicles. Ford's problem as you have stated is that they have not had signicant car sales. Their larger problem in past is that they A: Had Huge pension liabilities, B: Had Huge Medical Liabilities C: Had NO flexibility in their union contracts. Toyota has never had to contend with these issues. At least not yet. When you consider how many people are on the Ford pension roles and medical roles, and the FACT, that all medical billing includes costs related to non payers ( a substantial amount that is), It is clear that Ford and other domestics, even those not automotive related, contribute to USA economy by "default" and almost in a "welfare" way, because of the numbers of people under their coverage. (Some retirees have been retired 40 years. This is unlike the implants manufacturers who do not have a history of taking care of their retirees, for two reasons, 1: Have not been in USA long enought to have significant people on retiree roles, 2: In their home country of Japan, their government caries the retiree pension and health care liabilities.-- so they are off their books. Those were the significant issue with the UAW contracts which turned out positve for not the UNION but the corporations. As stated before this is a huge burden removal for Ford thanks to the last contract which will pay off big for them. They have nice fuel eco cars in EU that with the proper flexibility could be adapted to USA sales in future. I think Ford's biggest problem, though, is that they have this unfair stigma that many Americans are not willing to let go. They have nice vehicle and good quality too. And when the public finally realizes this I hope things will change. I do agree though that their car line-up is still lacking some and with a new CEO without family or inner structured political ties that should change. Lets hope so.
You're being unfair saying that Hybrids have been in this market nearly 10 years. The introduction of the Honda Insight hardly qualified. A car that never sold more then 500 units.
With all the excuses you have for Ford, you still don't address that Hybrid or not, they have the least effecient fleet in the industry, and gas prices are going to hit $4 this Spring. Ford's average vehicle returns 18 mpg. Compare that to Toyota at 23.5 mpg's.
Actually I am being honest and fair, because it has been roughly 10 years of "hybrid" infusion in USA. And on top of that about the same for "urban cars too" I still don't see any of those on the road, quite frankly never (Smart type cars that is). Why, becuase other than those who truly make enviromental concerns a factor in their car buying habits, the by far overwhelming majority of the public do not really care a whole hootinanny. And that is why in roughly 10 years their is not significant sales numbers of these vehicles. But lets forget the Insight. and just say 7 years (if you want to start with the Prius). The fact remains that after 'seven" years 300K industry combined annual sale of hybrids is not substantial growth in a industry that is 17 million vehicles strong. Maybe gas will be $5 Dollars a gallon by March? Maybe? When I was in high school I watched fuel go from 35 cents to $1.00 I also 10 years later watched companies like General Motors poor billions of dollars to develop and substantially downsize cars for the soon to be $3.00 gallon that was supposed to come in the 1990s
( Like the 1986 Cadillac Eldorado and Seville ) The problem was that the fuel prices did go up some but not evidently enough to pursuade the buying public to buy these Cadillacs that were the size of Grand Ams. (And these were actually really well engineered cars too by design). So GM had to practically give them away.
But the real issue here is Ford Stock and your claims that it has no future. I cannot read the future. As you know Stock buying is always chance, but there is also a infuse of common sense too. Like issues I have pointed out related to their biggest past growth yield which was their contractual obligations that are no longer. (and yes some past bad management too). As far as your statement origianlly about their "Republican help" They never really got any of that, remember Mr Bush told them their cars were not "relevent". (Off course he also claimed weapons of mass destruction too). I have only tried to spell out some other factors related to possible stock growth for Ford. Actually I wanted to get your input on what you thought of these relative to their future, since stock investments mitigate risks based on probability which is the only thing a stock investor has to go by (Unless one has inside information like Martha). I do not know where Ford Stock will be in a year. I hope that Ford Motor Company will be in the Black, because I think it is good for America for reasons that I have pointed out and then some including the reason you can debate this on internet without fear. Although I do not know whether your numbers are correct regarding their "CAFE" I will give you the benefit of the doubt. But I will say that Ford in USA , ( because in Europe and globally different story) has in the last 10 plus years been a "Truck company predominantly. Toyota on the other hand has been the opposite. But, I think if you look at Toyota CAFE numbers and their trend they have come down and not gone up. They also learned to like big too ( Remember Tundra and other Toyota behemoths). Because they also like profit.(Yes even more than enviroment) I do not think Ford is ready to throw in the towel on US cars. It is clear that they in past lost their perception in US cars, but I don't neccessarily think they are out of it yet either. Their cars are not as bad as you may believe. Always remember what Toyota sold here 10 years ago, and what they have evolved into today and you may see history repeat itself , except with Ford name plate instead. I sure hope so.
You say hybrid sales are still insignificant. Lets put it this way. In 2000 Toyota began selling the Prius in the United States. In 2000 Ford sold 445,000 Ford Explorer's, a Ford record. In 2007, the Toyota sold more Prius' then Ford did Explorers. Prius sales increased 69% in 2007. In 1998 Ford recorded 21 Billion dollars in profit. 8 years later they were 10 Billion in the hole. Do you get the picture yet? Just because the stock has hit 6, doesn't mean that it will miraculously bounce back. It takes Ford 34 months to design and implement production of a new vehicle. It takes Toyota 23 months. Can you see why one company is more nimble then the other?It takes on average, 25 man hours to build a Toyota, at Ford, 38. GM has almost caught Toyota in this catagory by implementing TPS manufacturing. Ford, is the industry laggard. So lets review. It takes Ford longer then anyone to bring new models into production, it takes more man hours then anyone to build a Ford (labor hours), and Ford has the least effecient fleet of any major auto manufacturer.Taken together, you've got a company that is in deep trouble.
I said that industry wide, Hybrid sales growth in 10 years in not significant and it is not. Actually, it was in 2006 that Ford lost the significant and I believe it was $12 million. 2007 Annual sales and profit numbers are not out yet, so we will see where they really are when those numbers are released. As far as Explorer, ( Before your attack was on Expediton) Do not forget that a certain Firestone incident also had a lot to do with its demise. As far as Ford Stock at $6.00 is also not an indication of its end as a corporation. As I have stated before. I cannot read the future and now I will expand that: I doubt you can either. You have brought up legitimate issues, But I am concerned thay you may have a deep set hatred for Ford Motor Company and that is the basis more than anything in your arguments because you have yet to comment on the direct issues that I have brought up regarding recent changes at Ford. I will bring up another. It is no doubt that Ford could not compete with its "business as usual as it was two years ago" . What makes things worse now, is not oil prices as much as it is possible reccesion based upon lending. That is more of a concern to me than anything. But that is the concern for all in the industry. Ford has to get smaller by default, because 10 years ago there was only several players in US market, but today there is many. Why do you not think that with changes in its UAW contracts and pension fund liabilities it can not do that and still remain profitable? What about its global growth? As far as design lead times and man hours of assembly I will check that out. I would probably believe that Toyota still is the leader in man hours and design lead times.
Looks like we are going to have to agree to disagree here. I don't have any deep founded hatred for Ford. I've never worked for them, owned one, been hit by one or anything to that effect at all. 4 years ago, I looked at buying a Focus for my wife (who's from Europe), and we test drove one down at the local Ford dealership. We both quickly realized that the US sold Focus and the one in Europe were two very different cars. That is about all.
I believe that resources are scarce. Most of my plays involve this fundamental belief. In the auto sector, TM and HMC seem to be the most poised to capitalize on expensive gas. When gas hits 6 dollars a gallon, things are going to look a lot like Europe in terms of what people drive. European's don't drive, Expeditions, Excursions, F-150's..... or Sequoia's for that matter.
Ford has the least efficient fleet out there. Management/Corporate culture hasn't impressed me either. I understand that Mulally is trying to put as much lipstick on this pig as he can, but he's sailing into a number of formidable headwinds at the moment.
In fact, I'm willing to bet that by 1/1/2010 a Gallon of gas costs more then a share of Ford Motor Company.
If you feel differently, then feel free to invest. Perhaps you know something the majority don't. You speak of the UAW contract and things to that effect. Well, those concessions are already priced into the stock. They still can't assemble a Fusion for less then Toyota can assemble a Camry in Georgetown, KY. They've simply narrowed the gap a bit.
Currently the market is guessing that oil will re stabilize at 70 a share. If that is the case, then I see 6 dollars as a fair valuation. But I don't think that is the case. When oil hits 125, and then 150 a barrel, then things are really going to get ugly....
Actually, I think we agree on more than disagree. I definately agree with your hypothesis of TMC and HMC regarding if fuel prices begin to sky rocket, although I think part of that is the American car stigma again, because I believe GM competes car to car with Toyota and Honda when it comes to fuel economy and car size. Ford definately still lacks in cars for US market, but they do have nice cars in EU that I would find hard to believe are not in the process of being preped for USA. I do not have anything but your word on assembly time, but I am going to verify that, so I will for now give you the benefit of the doubt. I neither work for Ford and have not owned one since 2001. ( I currently drive a Buick which has been a trouble free car with 100k , although my Ford had close to 150k when I sold it.). I think where we differ is in the idea that there is not anything in the works in regards to adaptation for near and long term future. I believe there is, ex. Issues I pointed out. But, not wanting to speak for you, my interpretaition is that you believe they are not prudently working on correction. And I do not think there is anything to back that up. Everything you have said thus far is historical data. I question some of your statement regarding their Hybrid programs, because I know for a Fact that they have an extensive hybrid program. ( I don't believe that any of Toyota's THS system thus far have been two mode, but I will check that too.) But remember, The world once thought Ghosn was the guy that everyone wanted because of his success at Nissan but he also was and I believe still is "on the fence" with hybrid tech too. As I said before, there is a lot at stake here not only for Ford, but for USA. because a large part of the economy still depends on these large corporations. I rather that stay a part of the US economy than Japan or any other.
American automakers have lost tens of thousands of jobs to foreign companies and we continue to buy their products. Wise up.. Its easy to sell a foreign car in the U.S. try selling an American car in Japan. When China gets rolling with their new vehicles, the American car makers will go kaput. Are we all moving to China to find a job?
I don't necessarily buy your argument ameronly.The Fusion is made in Mexico while the Camry is made in Kentucky.... As the dollar continues to slide, American manufacturing is going to have even more competitive advantages.....Read this article though.... It illustrates what a disaster Ford's balance sheet really is.http://www.fool.com/investing/general/2008/03/26/its-ford-tough-to-like-ford.aspx
I understand a lot of foreign based vehicles are made in the U.S. THe UAW is now under 500,000 members from a high of over 1 million. Those jobs went overseas, balance sheets of all American automakers are dire. The fact remains we are not protecting our American workers. European countries do not want the American dollar, because of its falling value. Toyota says it will soon be the number one automaker in the world. We are shooting ourself in the foot. The bottom line is 360,000 Japanese are making cars in Japan...those were American jobs.
I see a picture every day in our newspapers about jobs going overseas and American workers losing their jobs. Todays newpaper said 200,000 jobs in Pennsylvania have been lost in the last seven years. We all need to wake up, UAW has lost over 500.000 jobs to the Japanese auto industry. Fords quality is now as good as any. If we do not start buying "American" we all are in trouble. My neighbor just purchased a Mitsubishi, he was surprised when I told him Mitsubishi made the Zero fighters that clobbered Pearl Harbor, how soon we forget.
Gas Prices (April each year): YoY % Change: 2004: 1.77 2005: 2.25 27%2006: 2.76 23%2007: 2.82 2%2008: 3.47 23%Let's predict Apr 2009 gas prices. Simple model: assume YoY prices increase linearly throughout the year (this is perhaps a slightly implausible scenario since from glancing at the data it looks like the curve is steep at the beginning of year and flattens over the summer months, though it look like does increase over autumn months). Jan 08 gas price starts at: 3.08. Thus over first four months of the year: .38 increase.Predicted 2009: 3.9640% YoY increase.Difference between average MPG of Ford and Toyota:(23.5 - 18) / 18 = 31%'Nuff Said.
You are incorrect on a variety of levels. Ford is already in a severe downturn and is already surviving. The Taurus was long gone before Mulally was ever interviewed for a job at Ford....actually he brought the name back, and wait unttil you see the replacement. It is outstanding, The UAW deals he hammered into place will benefit the comany for decades. The plant closings and massive employee RIF actions are tectonic in scope and impact. Their product quality is outstanding, despite a general lack of consumer awareness of such, which they are now addressing. This country still needs the trucks they build, badly. Last time I checked, you aren't likely to get a ride to the hospital in a vehicle made by Honda or Toyota anytime soon. To say Mulally is outmatched is just silly. To say he has done little to manage the restructuring of Ford would simply suggest that you are extemely uninformed about the organization you profess to critique. CWH
I get the feeling that this person doesn't like Ford because they donate to the Republicans. Whether a company donates to the Republicans or Democrats is pretty far from my mind when I invest.
When gas hits $7 a gallon in 2 years there will be no green revolution yet! Other then plug-in hybrids The green worlds platform is an empty promise and could never be fulfilled without taking away cars from the masses! They have nothing that could work. The perfect battery alone can't solve any problem because they could not be mass recharged at a highway refueling station. Hydrogen is a joke and can't happen because unless you get free electricity from enough solar cells, the gas is too expensive to manufacture and nearly impossible to distribute. How about the gasoline powered fuel cell? That would work. It could get 3 X the mpg and utilize the irreplaceable distribution infrastructure. Yes,bio gas/oil would also work but there is not enough fresh water to irrigate the zillion of acres needed. It will also collapse due to it's high cost after "supports are removed. Get used to fossil fuels! 'Until we make an atomic car nothing else will economically replace oil. In 95' massive amounts of oil was found with easy access in ANWR. The republican congress voted to drill there. Clinton vetoed it. Now the worlds economy is paying the price. He really thought that doing so would create alternative fuels. Here we are 13 years later and you still have nothing but low BTU grade alcohol. The green nuts are leading the world into an abyss with their impossible model based on false G Warming data. The Chevy volt is a smarter system than the Prius. In 5 years Toyota will take patent license from GM to manufacturer their superior system. But gas remains here to stay. You will get better gas mileage but your entire lifestyle will be reduced as energy will remain very expensive. Of course if congress gets out of the way we could become an exporter of oil again when we drill in ANWR. So I pray for it!
I don't want to get political either but Big Oil is so involved in Washington and they will continue until the whole oil thing collapses. Even if you go to Shell website you'll see that they have 2 scenarios for future. Planned and unplanned reaction to disappearing oil reserves.Meanwhile pessimists and many scientists have given us the wrong information for decades. I remember 8 years ago scientists were saying that cars are not even a big thing in the whole picture and most of global warming, oil consumption is from making electricity. Back then that made no sense to me and now that we have 800 million cars in the world that makes no sense to me now. Every car is different, many people can't afford to get new cars that can run on less gas, many people don't service their cars the right way to save gasoline....so what makes sense?? I suggested this 8 years ago and I still say it's the best thing. And that would be electrical cars. Electro motors are 98% efficient and the energy wont be wasted in heat like current cars. Plus, it is way easier to control one source, that being the power plant, than regulating and controlling 800 million cars. Energy from Wind, solar, geothermal, nuclear can be converted to electricity and that can recharge car batteries. The heat that is produced in power plants can be converted to electricity whereas the heat that is generated in our cars goes to waste. What makes sense to you??
These are good arguments and we've heard them before. But there are other factors to consider: 1) Oil will come down in price again, and when it does, all of the those trucks will look okay again, hopefully long enough for them to make some real longer term plans; 2) Americans love trucks (I don't know why) and will keep on buying them even if they are expesive to fuel; 3) If things go really bad they will go into bankruptcy and get rid of their pension obligations 4) they are likely in the "too big to fail" category 5) at this point any hopeful signs are likely to have a big impact.
But do you really think that gas prices will go up ~20% for next several years? At this rate we will have $10/gallon gas in about 6 years. This seems very unlikely. New sources will come on line and prices will ease.
Great back and forth here. I'm with sl7vk in the end, but the exchange of ideas and the debate are good to read.