To no one's surprise, Ford (NYSE: F) will detail its plans to dive into the small car market when it announces earnings on Thursday. It is a lot late to get religion.
According to The New York Times, "as part of the huge bet it is placing on the future direction of the troubled American auto industry, Ford will realign factories to manufacture more fuel-efficient engines." The bet is a smart one, but it may not matter.
Ford is now close to a decade behind the curve. Companies such as Toyota (NYSE: TM) have produced small cars for the US market since the days they began to open dealerships in America as Ford chased immediate profits in pick-ups and SUVs. The margins in these products were outstanding, but their success relied on gas staying at $2 a gallon forever. Things did not work out that way.
Ford will now go through a process of more cost cutting, firings, and expensive retooling of its plants. To make all of this work, the car company will have to borrow money or sell more stock. In either case, current shareholders are likely to be diluted.
Ford has been so slow to move into the market for fuel-efficient vehicles that it may have trouble staying solvent if the US car market stays very soft for the next two years.
That means Ford's future as an independent company could be in jeopardy.
Douglas A. McIntyre is an editor at 247wallst.com.
Reader Comments (Page 1 of 1)
7-22-2008 @ 10:51AM
gumbo koontz said...
Doug
Wil ya puhleese shaddap about Ford and start wrtiing to General Electric about buying Ford and double revenues overnight!! Ford aint going nowhere but need some lift somewhere somehow. So quit tormenting Ford stockholders!! You are just a stupid sogging ass!!
7-22-2008 @ 10:51AM
gumbo koontz said...
Doug
Wil ya puhleese shaddap about Ford and start wrtiing to General Electric about buying Ford and double revenues overnight!! Ford aint going nowhere but need some lift somewhere somehow. So quit tormenting Ford stockholders!! You are just a stupid sogging ass!!
7-22-2008 @ 10:53AM
gumbo koontz said...
Doug
You sounds like someone is watiing for everybody to bail out of Ford before rushing in to buy up Ford... You are supposed to scream off some rooftop that Ford is a bargain stock and everyone is welcome!!
7-22-2008 @ 11:04AM
gumbo koontz said...
It is bit too late to sell Ford at $4.50 anyway, What the hell is your point?? Who are you writing this to? Gossip groups or shareholders??
7-22-2008 @ 11:06AM
gumbo koontz said...
Ford just put up the whole company, barrel, lock and stock as collateral for one big last loan in efforts to turn around, yet you are pussytalking about a bit too late crapshooting... Cmon doug are you a wuss or waht?
7-22-2008 @ 11:08AM
gumbo koontz said...
Doug
are you an union sympathizer hell bent on revenge for what Ford had done to UAW rank and file workers, arent you? It aint my fault that UAW got in to this mess.. It is UAW' own makings.. So will ya get on with this or what? Just dont make an ass fool out of yourself.
7-22-2008 @ 11:13AM
gumbo koontz said...
I take the long view that Ford will possibly make the turnaround and start taking market share back from Tokyo Inc . Ford is a great company chianed to UAW. Ford is unshackled to an extent but not completely free yet. I am willing to give UAW another chance to straighten out its act and start working for shareholders as they are supposed to. I am holding on Ford stock to keep the jobs here if possible or at least to keep seeing Fords on the road . I am sure there would be a morale letdown once we no longer see Ford cars around. it can be a bad thing that can happen if you moron keep humping along ..
7-22-2008 @ 11:13AM
gumbo koontz said...
I take the long view that Ford will possibly make the turnaround and start taking market share back from Tokyo Inc . Ford is a great company chianed to UAW. Ford is unshackled to an extent but not completely free yet. I am willing to give UAW another chance to straighten out its act and start working for shareholders as they are supposed to. I am holding on Ford stock to keep the jobs here if possible or at least to keep seeing Fords on the road . I am sure there would be a morale letdown once we no longer see Ford cars around. it can be a bad thing that can happen if you moron keep humping along ..
7-22-2008 @ 11:17AM
gumbo koontz said...
Doug
You are probably a real estate kind of guy who like to jettison ballast out of your air balloon at any cost to our economy. If it takes a Ford to fail to save your real estate, you would say fine... huh?
7-22-2008 @ 12:06PM
flaman said...
douglas macintyre is totally irrelevant-he probably holds a Huge short position on ford--in my brokerage office we completely disregard anything he says about ford--
7-22-2008 @ 12:34PM
roudy11z said...
I will also suggest that any people still employed by Ford ,at the decision making level, that might have been responsible for Ford's demise over the last 10 years be put in jail for 1 year and take away their perks forever. Just a thought.
RoudMan
7-22-2008 @ 2:19PM
David said...
The Ford Focus, Ford Fusion, and Mercury Milan are all great vehicles that get good gas mileage and are available today. The Ford Flex is going to be a big seller for Ford too. Ford is also a global company, let's not forget.
7-22-2008 @ 2:56PM
Robert said...
Actually, they shouldn't have to borrow any more money or sell additional stock. Ford was sitting on about $29 billion last quarter and an $11 billion credit facility. They were expecting to spend $14-16 billion in cash between now and the end of next year - the increase in investment will result in maybe $17-19 billion in burn. But Ford needs only about $8 billion to continue operating, giving them $2-4 billion of cushion room before even touching the credit line.
It's true that Ford is late to the party, but the shift has been monumental and extremely sudden - even Toyota has taken a blow. ToMoCo's $1.2 billion investment in San Antonio to produce up to 300,000 trucks yearly will churn out no more than half that this year as Tundra sales plummet also. They will have make updates to at least two additional plants as well.
7-22-2008 @ 3:42PM
Jobu37 said...
Quit picking on Doug. He is just trying to be proactive and bash a Ford decision before it becomes old news. One of his remarks in this useless blog was "Ford has been so slow to move into the market for fuel efficient vehicles......"
Focus is at the top of the MPG ratings for the C car segment. Also leads the category in NVH and has the best drivabililty of any other entrants.
Escape has the BEST mpg numbers in the small CUV segment. Highest HP in the 4-cyl. category. And once again best NVH.
Taurus matches or beats every entrant in the D segment regarding MPG ratings. Best NVH ratings in it's class. Best safety rankings to boot.
In about six months both the Fusion and Milan, in addition to dramatic makeovers, will offer hybrid versions that will get MPG near or above 40 MPG. Honda, Toyota, Nissan and none of the other imports loved so much by Doug have anything that can match the MPG of these cars. Before anyone spouts off, the Prius is a class below these mid-size sedans.
So once again this blogger ignores facts and blogs about his own prejudices towards Ford or anyother manufacturer not based in the Far East.
7-23-2008 @ 12:06PM
jpdr1100 said...
Ever noticed that all the great things from Detroit are just about to happen. Toyota and Nissan have hybrid mid-sized sedans in the dealerships now. Have for several years. Ford's is expected in 2010.
The Germans have been selling the equivalent of Eco-boost for years now. Ford is going to "revolutionize the industry" when it brings this same technology to market in two years.
7-24-2008 @ 4:41PM
gerald said...
Hey dumb as" Ford is done and so is GM. All they make is junk and gas gusslers. Toyoyta and honda much better cars and better resale value.
7-25-2008 @ 9:31AM
joe said...
Well Gerald i'd have to prove you wrong on that about junk, i have a 92 s-10 blazer with 354000miles on it & still get 26 mpg, no oil burning, S-10 pu i've had for 26 yrs same engine, still runs like new so you go ahead & support the foreign auto industry but i'll stick to mine.
7-26-2008 @ 11:07AM
carminesilverado said...
I do know that Ford can bring World cars produced in other countries here to reengenere and provide to american buyers /also the name Ford hase much going for the co.
7-31-2008 @ 2:26PM
Joe said...
Here's what Doug doesn't know about Ford, and the Japs:
In 1968 Ford was the only manufacturer in the world who created and sold a car that got 40 to 45 MPG on leaded gas. It was called the Mustang E, the E stood for economy. But, your Mommies and Daddies didn't want feul economy and the car didn't sell well. There are currently about 4 or 5 still registered. When Ford gets off it's duff and tells the unions to finally join them to combat the enemy, then you will see all the Jap cars falling in market share.
About the Jap companies, they don't have to compete in the market place as our companies do. If a Japanese car company faced lossed in the past, their government would out right cover the loss to develop market share, ie their version of DUMPING. By the way, I own several Fords, one is a 1930 model A gets 45 mpg, 66' mustang convert gets 22 mpg, and an 85' mustang gt that gets 18 mpg. I haven't seen any Jap car last that long, never mind being in good shape. Recycled Jap garbage. Doug, you're a dope and need to do more due diligence.