Alan Mulally, the CEO of Ford Motor Company (NYSE: F), voiced an unequivocally gloomy opinion about the future of the auto industry at the Paris Auto Show. After reporting a 34% plunge in auto sales for the month of August, Mulally warned reporters that "2009 is not going to be better than 2010. We won't see a recovery until 2010." He added, "The [economic] downturn is longer and deeper than we foresaw a year ago."
The auto exec added that it now expects the Russian market to stagnate next year; previously, Russia was the fastest-growing European market for Ford. Mulally sighed, "The problems of subprime and credit crunch are now all over the world." However, he clarified that the automaker's European production plants have the "flexibility" to withstand the expected downturn, and Ford generally has "the liquidity to deal with it."
As proof of that sufficient liquidity, Ford on Wednesday repaid $1.5 billion in debt as part of a routine transaction. Morgan Keegan analyst Pete Hastings told the Detroit Free Press, "It means they paid with cash," rather than drawing on a credit line. Hastings noted, "In a normal credit market, this wouldn't even merit a mention. But it isn't, so we're trying to interpret every little move."
Despite Ford's apparently stable cash position, investors today seem to be erring on the side of caution. The stock is down about 4% this afternoon to trade at $4.37. Today's plunge extends the equity's slump beneath staunch resistance from its 10-week and 20-week moving averages.
Elizabeth Harrow is an analyst and financial writer in the research department at Schaeffer's Investment Research. She is featured in the video series Schaeffer's Daily Q&A on SchaeffersResearch.com.
Reader Comments (Page 4 of 4)
10-02-2008 @ 11:08PM
Tony said...
J , ok even at the worst 20% , the payroll at the top seems wide and top heavy , execs. have continued to establish pay increases , a ratio of 1 exec. to what 500 labor , work force that in the last 10/15 years has seen a reduction in pay of at least 30% spendable , (inflation or cost of living included) .... even with introduction of foreign manufacture , its a reduced workforce due to automation. , and the automation is quality goods , not an extreme demand for service to replace labor , There is no real market here for jobs anymore , the only outlet seems to be wage adjustment from the top , to pay those still employed . a wage more fitting to expense ratios , , wages have tanked , cost of living has gone up , and credit cards are abused ... I dont take wage reductions , and at the same time pay increased CC interest as many have , We cant drive out the jobs of foreign interests with taxes or dutys , or there will be more job losses , a firm investment needs be made , possibly in building (structural) so as to use imported metals , double back or turn the corner on steel mills , and start to lessen import dependence , hard labor yes , thats what this country was built on , it needs a restart . possibly labor to rid some of the city blight (on a major scale) and build or rebuild as they initially did 100 years ago........lord knows , the banks should have Some ability to finance if they can sort out and rebook sales of those currently overextended. ........ No its not a plan ... just a dream , its a wide football field , and yards to go.
10-02-2008 @ 11:05PM
Tony said...
Perhaps start with replacement of highway bridges that are in such dire need . .and build some refineries and steel mills.
10-02-2008 @ 11:53PM
areyoukidding? said...
the big 3 (?) better get their acts together... gloom and doom... what idiot wants to spend tens of thousands of dollars on a vehicle that gets maybe 12 mpg? Especially when everyone is waiting for better made, more efficient cards... ones not completely made of plastic, by the way.
get a clue... you should have gotten a clue 40 years ago... ya morons!
10-02-2008 @ 11:54PM
Robert said...
Why has it taken so long for our American Auto Makers to increase the mpg on all vehicles at least 5% per year. With our intelligence and engineering ability this could have been implemented years ago. Yet corporate control and greed kept this from coming into play. If America can focus on our need to be energy sufficient, we may see hope in the near future. If I had an extra few billion in my company, I would do as the Japanese did after the war - reverse engineer technology. I.E. obtain one of their new hydrogen Honda Cars - reverse engineer (take it apart & reassemble) and begin mass producing our own Ford version. No excuses, it can be done in a short time.
10-03-2008 @ 12:09AM
gwl said...
I totally agree about VW vehicles being a POS. I also associate Audi as nothing more than a more expensive version of a VW. Many of Audi's models are almost identical to VW's, and their resale value is way overpriced for the junk you get. If I was in the market for German, it would have to be a BMW. I see way more old BMWs on the road than Audis!!! My mother has owned Buicks for years. Her '93 and "99 LeSabres both got 30 mpg with the large 3.8 V6, and her current Lucerne V8 is one really nice vehicle to drive, and the foreign makes don't have a chance keeping up with that Lucerne. Same with my Mustang GT, it gets about 22-25 MPG and blows the doors off of any foreign make worth twice as much. It is especially great when a person with a Mitsubishi (Lancer EVO), Subaru (WRX, either version), or an Audi (even the ones that are three times the price of my Mustang!) wants to rev their little engines and challenge me to a little stoplight race only to find themselves in back of my 'Stang because I just ripped them just in first gear!!!
10-03-2008 @ 12:24AM
Tony said...
Re: FoMoCo , well Banks need a bailout , even the big 3 need them , Corporations have bit the bullet before , and have been replaced by other home based corps. previously (ie airlines) So unless the current managment all get money hungry (like they dont have large enough of paychecks) and allow foreign buyouts , even hostile takeovers , Something needs be done to keep our top 3 american corp. giants from death , But Not with The current early seperations and Golden Parachutes ...... watch and see how many execs. , jump ship to retain benefits before approaching the govenment for a bailout .....Yet For the US as a whole ...... however strange , the condition or repair of the Social Security system seems to have taken a back seat ....... Yet , I can only Dread the condition of this basic American progam , should we start to loose major contributors or corporations , whose massive contributions , are currently keeping it in a neutral position
10-03-2008 @ 12:26AM
Frank said...
Ford service sucks. The sales people lie and deceive. The management laughs and says well we have your money. Sink swiftly you deserving smucks
10-03-2008 @ 12:38AM
crystal said...
Ford sucks, thats why this is happening. My mom has a ZX2 a 2000 and guess what its sitting there broken and has been for a year and the engine is shot. They took care of it and didnt abuse it. We knew something was wrong with it for a long time and ford wouldn't do anything even under warranty. So whats that say about ford! TRASH get a BMW
10-03-2008 @ 12:29AM
e said...
i own 3 fords.. 1996 mustang gt 4.6 v8 155k, only thing i replaced on it was the clutch, tires and oil - 2003 ranger 2.3 liter 4 cylinder 65k - gets me more than 20mpg and hasnt had a problem yet - 2006 mustang gt 4.6 v8 17k.. ford had a cpu update which they paid for. no complaints here.
10-03-2008 @ 1:57AM
rodney holland said...
Everyone who brags about sending all their money to Asia should not question why we are in the financial situation we are in. I am a GM fan personally, the Ecotech is the #1 rated four cylinder engine on the planet. The Ford Fusion surpasses the Camry in quality. There are tons of reports detailing the incredible quality of American vehicles. The number one rated vehicle period, is Buick; not Honda, not Toyota, not Lexus, not Mercedes. American manufactures built large vehicle because that is what their customers wanted. If customers wanted small vehicles ten years ago they would have been building them ten years ago. They built what sold. It was not until gas prices skyrocketed that large vehicle became evil. I myself would never consider driving any vehicle not equipped with a V8 engine, or any Asian vehicle. People spend twenty thousand dollars on a new Asian vehicle to gain three miles per gallon. It will take eight years to break even, and you have to be seen driving an Asian vehicle for all that time. Wake up people.
10-03-2008 @ 6:22AM
steven said...
first of all people u no why your ford is junk is because most of u wont maintain your vehicle like u supposed to. u buy vehicles that way too expensive for your house hold income.u cant afford too fix them..hmmm sounds like housing market bought house that way out a your league.ford has some quality vehicles out there now how i no i fix emm ...
10-03-2008 @ 7:38PM
Ron Janssen said...
The Ford Motor Company's problems just got a lot worse! I just returned home from the movie "Flash of Genius." If most people react as I did, Ford has even more serious problems. I have been one of those very few Americans that have refused to buy foreign cars and still have two US made autos, a Lincoln Navigator and a Buick in my driveway. After seeing that movie, I will never buy a Ford Product again.
I am not some wacky anti-business leftist, in fact I am a conservative Republican, who was the Worldwide Marketing Director for a Fortune 25 company. We took great care to make sure similar situations did not occur in that company. Companies like the Ford Motor Company, unfortunately give all of the rest of us in corporate America who try to do things right and above board a bad name.
10-21-2008 @ 1:44AM
OTISFORDSUCKS said...
*BEWARE of Otis Ford,Inc. Quogue,Eastern Long Island,N.Y. (Hamptons). "Otis Ford Put Used Parts On My New Car". http://www.otisfordsucks.com Website recently updated. Edward T. Otis III,owner. Also a Ford shareholder, with no help at all from Ford. SHAME. Thank you.
11-22-2008 @ 7:12PM
Marc said...
I have been a auto tech for some 32 yrs and 25 of them with ford
I have been reading alot of these emails on how bad ford is and having to push them ect ect I work in a area that have lots or dealerships and I know alot of these other techs there,,they have there problems as well jap cars in the past 10 years are no better
america is just forgetting some 70 years ago the big 3 helped save our country and now we take for granted and want to have theme go away
they make a great cars and trucks
let them go and watch our country weaken even more,,we will be working for them and if our country ever needs to retool for war again do you think toyota will let us do that