Ford Motor Company (F)

NicieNicie (49.79) Submitted: 5/01/07 1:16 PM : Start Price: $8.02 F Score: -29.18

I believe FoMoCo has been overanalyzed, and made scapegoat for the sake of journalistic cliches like "industrial decay" or "America's former predominance in [whatever]." Looking at the financials, one could make a case for purchasing F as a contrarian "play."





But IMHO it goes beyond that. This company isn't going out of business. Oh, it has made some horrible blunders in the past. It's undoubtedly true the company stayed with huge, chassis-based SUV's for too long because they were so cheap to build. (Chevrolet too, I must note.) The current P/E of 6.93 shows a company in trouble but also signals the possibility of a really great buy.





Another (perhaps) regrettable quirk is Ford's uncanny knack for bringing out product at the worst possible time. The Five Hundred (Mercury Montego) is a five-passenger sedan in family-friendly style. Not for nothing does "car guy" Remar Sutton (DON'T GET TAKEN EVERY TIME) remark that the American car co's seem to think that everyone in America drives as their mid-level people do--pack the whole family in a roomy sedan and head up relatively uncrowded interstates to Mackinac Island.





But in terms of global culture, it is FORD that is much more the international car company that happens to be headquartered in the USA; it is GM that is the American car company with lots of branches and subsidiaries (Holden, Opel) abroad. Just look at Ford's pre-eminence in Brazil.





Getting into European luxury marques like Jaguar was dumb in retrospect. But one incredibly smart thing Ford has done is to buy eighty percent of Mazda. Ford uses some of Mazda's platforms in its own cars--Mazda uses a Ford platform in one of its. Finally, after twenty years of puffery, the "world car" truly has arrived if American platforms and designs influence international companies, not just the other way around.





And in its class, the Five Hundred (together with brother Merc. Montego) is a gem. Well fabricated, incredibly roomy (esp. compared to the old rear-wheel-drive Crown Vic), and relatively economical on gasoline. Would somebody please tell me why a Volkswagen Phaeton, with similar bland styling and similar cab-forward structure, commands twice the price as the Five Hundred? There's not that much difference, not even in quality of fabrication.





Other products include the Focus, which here never really found its niche among econo-cars, but which has been and still is very successfully marketed in Europe as an entry-level family car (and it started the trend to cab-forward styling at Ford). Ironically, here at home the Focus was viewed (and treated) as just another econobox in an already overcrowded field (Corolla, Civic, Sentra, Lancer, and so on). Selling incredibly stripped Focuses (some without even an armrest!) to the rental car companies was poor economics and worse public relations.





Two new twins assembled in Mexico, the Ford Fusion and Mercury Milan, have earned top ratings from testers. In this post-Bill Ford era, let's hope the new mgmt. will avoid calling these mid-sized products "Camry-beaters" -- that's a mug's game. But IMO and the opinion of others, Ford's new cars stand on their own against practically anything else.





Hopefully now that you-know-who is gone the corporation won't waste money trying to jump-start an instant hit and classic like the original 1964-1/2 Mustang. That's like trying to build a machine to make lightning strike twice. Financing for Ford will be tenuous in the near future; but since they are technologically way ahead of Chrysler (good for its styling of the 300, not much else lately) and GM (which seems plagued with inertia and mediocre repair records), Ford IMHO is going to ride out the storm in better shape than anticipated.





Of course, we are talking about a leaner Ford here, and don't expect a dividend beyond a gesture anytime soon. But I am treating this as a buy-and-forget it venture. I bought a couple of lots of stock when it was trading close to nine dollars; when the dividend was cancelled and the share price went below eight dollars, I bought some more. Set it and forget it! And the best way to decide if Ford products are dudes or dogs is to visit a dealership yourself; you might be pleasantly surprised.

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