By on October 25, 2010

If you regret not buying Ford stock when it was $1, you might want to reconsider even at the current $14. Bloomberg reports that Ford may well report a record third quarter profit of some $1.37 billion, based on the projections of five analysts. Considering that the market is still depressed, some analysts see plenty of potential left on the upside, projecting a possible $20 share price within the next 12 months. The keys to Ford’s success? Here’s just one: the new Fiesta is fetching $3,000 to $4,000 above its $14k base price, because buyers are happily taking them loaded with options. The result is that average transaction prices for the Fiesta are higher than Honda Civics and Toyota Corollas. And the Fiesta is a class smaller. The small cars-can’t-be-sold-profitably-by-Detroit curse has finally been exploded.

Ford also increased market share in the Q3, 15.% from 13% two years earlier. But the critical factor is that market share gains aren’t being bought by heavy discounting or low prices. Ford’s “New Whiz Kids” have proven themselves, and then some, by steadily maximizing transaction prices through careful adjustment of features and maintaining discipline.

It (Ford) also boosted revenue per-model by cutting discounts by 23 percent since 2008, according to Autodata, a researcher based in Woodcliff Lake, New Jersey. Buyers paid an average of $30,636 (emphasis added) per model in September, up 10 percent from five years ago, Edmunds.com, a Santa Monica, California-based auto-pricing website, estimates.

“Ford was among the first to recognize that making money is more important than moving the metal,” Johnson said. “There’s now a general level of pricing discipline across Detroit, which is leading to higher average transaction prices.”

The combination of higher than market-average transaction prices, cost cutting during the recent downturn, and a successful product mix has propelled Ford’s surging profitability. Ford is also gaining market share in key import-heavy geographic area, such as the West Coast (10.8%) and Northeast (10.4%). And Ford is gaining with younger buyers, with a 12% share of the 18-24 year-old market.

Ford’s previous Q3 record profit was in 1997, at the height of the Explorer and Expedition-driven SUV boom.

Get the latest TTAC e-Newsletter!

61 Comments on “Ford Set To Post All-Time Record Q3 Profit; Fiestas Selling For More Than Civics And Corollas...”


  • avatar
    akitadog

    I’d just like to point out that this is a HATCHBACK that is commanding higher transaction prices than the most ubiquitous small sedans in the country. You go, Ford!

  • avatar
    Z71_Silvy

    So…the 6 or 7 Fiestas sold sold for more than a Civic or Corolla…big deal.  That vulger little tin can is still a sales disaster…
     
    Also…I don’t believe a thing Ford says…they have lied many times in the past…
     
    Plus, Ford is the industry’s most heavily discounted automaker (gotta move the appliances somehow)…so something isn’t right.

    • 0 avatar
      Matthew Sullivan

      “Sales disaster”?  Here’s the point the article was making:
      “Ford was among the first to recognize that making money is more important than moving the metal…”
      “6 0r 7″ is fine if they are making money.
      I’m sitting on 3000 shares of Ford I bought at an average $2.20.   Just waiting for them to reinstate the dividend.  Go Ford!
       
       

    • 0 avatar
      Amendment X

      Keep on trollin’

    • 0 avatar
      umterp85

      at what point does the 10% Silvy reasonable commentary outwiegh the 90% troll ?  This guys is an insult to all TTAC posters. Ban him now.

    • 0 avatar
      picard234

      Did you actually read the article?

    • 0 avatar
      Zombo

      Silvy is still living the Ford vs. Chevy feud of 40 years ago . Actually I find his Ford bashing posts amusing rather than provocative or even remotely serious . They remind me of that pompous ass who bragged that he drove a Mercedes S Class in every one of his posts . Morons with a one track mind are too effing funny !

    • 0 avatar
      Patrickj

      @zombo
      I have to agree, Silvy is the comic king of the fanboys.

    • 0 avatar
      Z71_Silvy

      I love the projection…because I drive a Silverado…I MUST be a Chevy fan boy…too funny.
       
      I like all automakers…sure I don’t like all of their models…but I don’t hate any of them.  Ford just doesn’t build anything (well…I should say, sell here in the US) that is desirable or worth the hype.  The products they sell here are half-assed.
       
      Now, if they sold a real car here like the RWD, V8 falcon (rather than a bloated pig with FWD and a V6)…I would have one in my garage now.

    • 0 avatar
      Darrencardinal1

      “Because I own a silverado I’m a Chevy fanboy…”
      No silvy you are a fanboy because of the content of your posts. It is obvious you love
      Chevy and hate Ford and everyone else. You are a tool.
       
      And quit blathering about projection you have no idea what you are talking about.

    • 0 avatar
      Acc azda atch

      DarrenCardinal1
       
      AMEN!

  • avatar
    nonce

    Time for a windfall profits tax!!

  • avatar
    mikedt

    Top Gear seemed to like it as well. I just wish there was a little more room between the rear seat back and the hatch door. i.e. more wagon like.

  • avatar

    I’m speculating that Ford is also benefiting PR-wise from not taking bailout money.

  • avatar
    Crosley

    I do like the new Fiesta, is a well-done design.  What I was struck by is the fit and finish look impressive, almost like an Audi.  My only concern is I remember being excited about the Ford Focus when it came out, and it had terrible reliability.
    Consumer Reports gave them poor reliability rankings.  Anecdotally, I had a relative that worked for a courier service in Los Angeles, and they used new Ford Focus model in their fleet.  They had to dump them because they had so many issues.  They went and bought Toyotas, and they were rock solid.
    As far as investing in Ford stock, I have a hard time investing with any company where the Union is calling the shots.  they will squeeze a company until there’s nothing left, they really don’t care about the investors.  The UAW destroyed Chrysler and GM, and would have destroyed Ford had it not taken on a MASSIVE amount of debt before the economy took a dump.  Nothing has changed, and the UAW has not made any real reforms.  Ford also still has an incredible amount of debt to pay off in addition to massive pension obligations.  I hope Ford continues to make solid cars, but as a company, I’m still leery.

  • avatar
    rtfact32

    Try GM with over $3,400 on the table my friend…a far cry from $3,052 for Ford. ChryCo isn’t that far behind with $3.036.
    Try stepping out from behind the Bow-Tie and looking with an unjaundiced eye. I’m a died in the wool Ford man, and I even admit when a competitor has something right. If the new Fiesta is anything like my ’01 Focus ZX3, people will be extraordinarily happy with the fit, finish and quality of their new Ford.
     

    • 0 avatar
      HoldenSSVSE

      But look at the other story.  It is Toyota that is having to take the most off the sticker price (read here on TTAC) of all makes and models.  GM and Ford don’t even enter into the top ten and Ford is the best auto maker right now for commanding, “that is the sticker price, take it or leave it because someone else will come here and take it.”

      It was an interesting read from TTAC and I was shocked to see what brands are doing the bigest discounts to move iron at the dealer level, Acura, BMW, Mercedes, Toyota…

  • avatar

    Ford gained a lot of cudos from me by not going to the government trough. With that in mind I figured they earned a look see at least. So last February we shopped a Focus, Corolla and a Civic. The deal breaker on the Focus was a crappy interior and that’s the part one see’s all the time. It may not be the current edition but all the same I was not impressed one bit. The Corolla won out over the Civic due to ride comfort and interior sound level. In all other areas I felt them equal but two different rides due to the the Civic tuning and/or suspension.

    • 0 avatar
      dastanley

      Well Mike, I hope you enjoy your new Corolla more than I’ve enjoyed mine.  My ’06 Corolla is about as fun and exciting as accounting.  But, speaking of accounting, I can’t convince myself to get rid of it – it’s so damn cheap to own and operate.  With 43k miles, it’s bought and paid for, gets great mileage, and has never needed more than oil/filter changes and tire rotations.  Same tires and brakes (for now).  Uses regular gas.  Cheap ass radio.  My wife actually enjoys driving it (!) and would hate to see it go.  I just can’t bond with the thing.

  • avatar
    AaronH

    Fiesta and Focus quality has been in Europe for 15 years but the USA had to settle for crap products because of the UAW. Now that the UAW is finally dying of public opinion (bratty gimme-gimme parasites tend not to get much respect from Americans over time..Just look at what Americans think of the French), the great Ford products are reaching the American people. The new Focus is a sweetheart.

    • 0 avatar
      HerrKaLeun

      I’m all against unions.. but don’t follow your argument. I would blame management more than the union on this one.
      The (union) labor cost to install good or bad interior is the same. The interior material itself is made by suppliers that may or may not be union.

      I don’t see what the French did now…

    • 0 avatar
      krhodes1

      The problem is that those extra dollars spent on the union (labor, benefits and pensions) is money that cannot be spent on improving the quality of the car. When you are trying to hit a price point on a relatively cheap car, every dollar counts. The difference between a VW-quality interior and an old-Focus quality interior is a couple hundred bucks at most, and probably less.

      I too fail to see what the French have to do with anything.

    • 0 avatar
      psarhjinian

      The problem is that those extra dollars spent on the union (labor, benefits and pensions) is money that cannot be spent on improving the quality of the car

      GM and Chrysler had revenue problems, not cost problems.  They weren’t selling their cars for enough money, even though their operating costs weren’t out of line.

    • 0 avatar
      Crosley

      The UAW is by far the biggest reason why 2 of the Big 3 went under.  i also think it’s a valid theory that sky-high labor and benefit costs mean less money can be spent on the quality of the end product.
      i’ve never heard the theory that they should have just raised prices, that’s a new one.

  • avatar
    mjz

    I own Ford stock, so I’m a happy camper but let’s not go crazy here. The Fiesta has only been on a sale a short time. The first models sold would probably have been dealer ordered models that were loaded with options that all the “early adapters” will pay anything for (remember the days of $25,000 PT Cruisers?).

    Let’s see what the model mix and transaction price is in about six months, when the “regular” folk are out buying.

    But with that said, go Ford stock!

    • 0 avatar
      th009

      @mjz, Exactly.  Comparing options and discounts on a brand-new model to one that has been on the market for years doesn’t tell us much.  First six months of 2011 will be much more instructive.
       
      Still, a promising start for the Fiesta.  It’s not my cup of tea, but it’s the kind of small car that we need on this continent — and from other manufacturers as well.

  • avatar
    mjz

    Mike Batty:

    You really thought the Corolla, with its craplastic interior, was nicer than the Focus? Really? I am a former Corolla owner, and the interior on the new Corollas is awful, truly awful. Loads of hard craplastic in dull color combinations. Yuck.

    • 0 avatar
      slavuta

      mjz, I have to disagree with you, partially. Last week I extensively tested few cars and Corolla in its “S” trim with sunroof package had one of the better interiors. It shined in terms of seat comfort, especially for the back seat, with comfy seats, enough room for tall, and no hump in the middle. Partially because in other trims, like “LE” it was terrible.
      for Mike Batty all I can say is, how could you like the ride in the Corolla? I went for 300 yards, turned around and told dealer that was enough to go and test other cars because in Corolla you don’t feel the road. You are placed in the capsule and you float over the road. Clutch was so light that I could blow on it and it would disengage. The manual shifter felt like somebody under floor was holding it and pushing it against my moves and when it went into the gate it was like operating a stick in the barrel filled with tar.

  • avatar
    TrailerTrash

    I do admire Ford.

    I have owned 2 MKS.

    I have lots of Ford stock, so I do root for them.

    I look so forward to the ecoboost Focus. (hatch)

    BUT I Can’t Understand THIS car!  Why anybody would buy it at all let alone pay so much for the bells and whistles, none of which improve the driving and space of this car is beyond me.

    This must be the sole result of the ridiculous praise it is getting from the auto sights.
    But I drove it and …nothing.

    What Fiesta cool-aid party did I miss?

    • 0 avatar
      Z71_Silvy

      BUT I Can’t Understand THIS car!  Why anybody would buy it at all let alone pay so much for the bells and whistles, none of which improve the driving and space of this car is beyond me.
       
      Says the guy who overpaid for a mediocre rebadged Taurus………….

    • 0 avatar

      Psst… Silvy, it sounds to me that he kinda sorta agrees with you, at least about the Fiesta. Why are you alienating an ally?
       
       

  • avatar

    wonders never cease

  • avatar
    philadlj

    Makes you wonder, where is Ford’s economy model? What is a first-time buyer with a limited budget to do if there’s nothing from the Blue Oval priced anywhere near as low as a Versa, Rio, or Aveo?

    • 0 avatar
      srogers

      Economy buyers can buy the stripped sedan model.

      If that’s too high, they will have to go to a Korean model like what you’ve listed. Should Ford compete for those sales? I expect that the next generations of those mini Hyundais and Kias will cost more too – the Koreans are moving upmarket with every new release.

    • 0 avatar
      HerrKaLeun

      they should offer the hatch as economy model too. for a small car the hatch makes much more sense.

    • 0 avatar
      krhodes1

      The “economy model” is a certified pre-owned used car. If you can’t comfortably afford buying a nicely-equped well made car, you have no business buying a NEW car in the first place.

      Yes, in theory you can buy a $9995 Versa – but has anyone ever actually seen one on a dealer’s lot? And what idiot buys a car without A/C these days? You would never be able to sell the thing.

    • 0 avatar
      johnny ro

      Its the last gen focus. They are advertised for less than the fiesta near Boston. And stripped they are not as stripped.
      Good point though, when next gen Focus comes out Ford will have nothing down in the low teens to sell near boston.

    • 0 avatar
      PeriSoft

      You can buy a hell of a lot of used car for ten grand. A hell of a hell of a lot if you’re willing to risk doing some work yourself, or assume it’s vs. A 12k car and save the cash for repairs. I got, for 9k, a 0-60 in 6.9 car with a 220hp turbo, dual zone climate, rain sense, park assist, power moon roof, leather, 300 watt 14 speaker audio, and two years / 30k left on a bumper to bumper CPO warranty. Or for that I could have gotten 90% of a stripper tin can with no radio, no a/c, no power, crap seats, and terrible handlind$ all to trade for one more yeah but no more miles on a probably-worse warranty? No thanks…

    • 0 avatar
      DweezilSFV

      Krhodes: Always nice to have our betters remind us of what we can and cannot afford to do with our money.

      Personally I would find the prospect of buying a used Saab among the worst ideas as a potential used car buy. Especially one purchased with one half to one third of it’s useful life used up as you did with your purchase, Perisoft.

      No thanks: I’ll stick with Mr Lang for used car advice or continue to buy so called “stripped” new cars with exactly the amount of equipment I want on them.

    • 0 avatar
      PeriSoft

      @DweezilSFV – yeah, for most people a Saab in particular probably isn’t the best idea. Like I said, ‘if you can work on it yourself’. But the economies work the same way with Hondas and Toyotas; you just get 30% less car for the buck due to less depreciation. The point is that if you look a bit, you can get vastly more car for your money if you buy used, and you don’t have to sacrifice lifetime.
       
      Are you really going to keep your new stripper for ten years? With two years of warranty and money in the bank (vs buying a new stripper) to keep it on the road, I doubt I’m going to have trouble going 5 with my Saab.
       
      Yeah, maybe over ten years you spend a couple of grand more. But is it really worth driving a boring, uncomfortable, slow, POS death trap with no features to save 20 bucks a month? For chrissakes, cancel HBO and get a luxury car instead of a Kia with crank windows and no radio!

    • 0 avatar
      Acc azda atch

      PeriSoft:
       
      In case you haven’t heard..
      Anyone can put together a luxury car. But its the RIGHT combination of those options.. that make it worthy.
       
      Its insane to think ya can buy a 1 series BMW (Mini) for under 30g — about 25, with no leather, square tires and a underpowered motor. Ya get virtually nothing until ya give up at least 32, and thats just to get a tan leather and round tires.
       
      As far as BMW’s old standby..
      The 3 Series USED to be in the under 30g price point.. now ya have to spend at least 39 to get leather and a decent body color (not shiny primer) decent rims and tires with decent rubber. Dont bother buying all season b.s for areas with snow.. on a awd equipped unit.
       
      SO in the end
      You can pay as cheap as you want for a BMW or a MB and now you can even pay 30g for a G25, and get the name / badge with nothing behind it, except an anemic motor shitty primer color and nothing in the interior.. except a giant screen to type a destination out in.. when a aftermarket unit would be cheaper all the way around.
       
      As far as Hyun / Kia goes..
      They are selling whatever they have to to make sure you get every option you never even knew you wanted in a car that’s just cheaper than a Accord / Camry simply because the production is done with chinese labor and or tightly COST controlled (like VW in the U.S) to be under a price bracket.
       
      CHEAPer.. isn’t better.
      And just cause you have ANOTHER shiny primer BMW / MB / Lex / Infinti really doesn’t mean a damn thing. Ya bought the name not the concept.
       
      In the end..
      REAL Luxury COSTS MONEY, and just because its got a badge on the hood doesn’t mean its the good stuff.

  • avatar
    Sinistermisterman

    I’m just trying to steady myself here… A Detroit firm, making that kind of profit – in a recession? When was the last time anyone heard that kind of news?

  • avatar
    HoldenSSVSE

    To all the Detroit haters who said the Fiesta would never sell.  That is was too small.  That 40 mpg in such a tiny car was no big deal.  That the price was too high.  The content was all wrong.  Shoot, Europe has had it before us.  Ford is DOOMED.
     
    Too all of you I say — ttttththhhhhhppppppppppttttt!!!

    • 0 avatar
      psarhjinian

      How many Fiestas is Ford selling?
       
      When they are beating the Versa month over month you, and Ford, can crow, but as things stand, and while the Fiesta is probably selling at a decent price, it needs to sell volume as well.  The Mini also sells for more than the Civic or Corolla.

    • 0 avatar
      krhodes1

      As long as they are making a fat profit on each one, who cares whether they are beating some other competitor month over month?? That is EXACTLY the kind of thinking that got GM and Chrysler into bankruptcy court. We will lose a little on every one but make it up in volume!!! Ford is making a BUNCH of money on every Fiesta, Nissan is probably losing money if/when they ever actually sell one of those $9995 Versas.

      The Mini has been an absolute gold mine for BMW.

    • 0 avatar
      HoldenSSVSE

      krhodes1 nails it.  The Nissan Versa is cheaply made, its base model is just an inch away with having four milk crates as standard seating with a peice of rope for a seat belt, tires and rims optional.  It is also a quality train wreck when looking at the 3 year data on 2007 and 2008 model year vehicles.

      I would rather Ford sell ONE Fiesta a month at profit, than sell 20,000 of them a month at a $100 loss each.  Fun with math.

      Sell one Fiesta at $1000 profit and you make – $1000.

      Sell 20,000 Fiestas at a $100 loss each and you make -$2,000,000.

      I would rather have $1000 in my hand than a bill for $2,000,000

  • avatar
    Beerboy12

    Perhaps now GM will think of bringing the Corsa here… Now that will be fun.

  • avatar
    thornmark

    >>Here’s just one: the new Fiesta is fetching $3,000 to $4,000 above its $14k base price, because buyers are happily taking them loaded with options. The result is that average transaction prices for the Fiesta are higher than Honda Civics and Toyota Corollas. And the Fiesta is a class smaller. The small cars-can’t-be-sold-profitably-by-Detroit curse has finally been exploded.<<
     
    Wow, a Ford that isn’t fully KMarketed.  Yet.   No Fiesta sales figures. Transaction prices – I suggest it’s because Ford is supplying them loaded.  Within a year, reality will win and early Fiesta buyers will bemoan the big discounts they deserved but didn’t get.   Never underestimate low low low Ford resale value.  That’s why Fords make better used than new cars.

    • 0 avatar
      geeber

      Even if dealers are only receiving loaded Fiestas, they still have to sell them. If customers didn’t want to buy a loaded subcompact Ford, they would be sitting on the dealer lots, or only sold with hefty discounts. At this point, it appears as though the second scenario, at least, is not happening.

  • avatar
    ciddyguy

    This is indeed good news, I’ve seen a few of them around my neck of the woods, not many but a few so far but the car HAS only been out since, what, July or so, so give it time, it’ll be a fairly common site soon enough.
     
    I actually liked the car myself, better driving dynamics than the Honda Fit and that was with the 6spd dual clutch auto.
     
    The thing is, I’ve never been much of a Ford guy, let alone a GM guy and never thought I’d have another Ford after owning a POS Fairmont oh so many years ago, but for the past nearly 5 years, I’ve been driving a ’92 Ford Ranger truck that is just shy (literally) of 230K miles on the clock and has been very reliable overall and never thought I’d own a truck either but in early 2006 under hard financial times, I ended up buying this thing from friends when they saw my previous are and the sad state it was in. Best thing we ever did and I’m so grateful for having it and now I have  much better respect for Ford than I have had in the past and the Fiesta is on my short list when I hope to be able to buy a new car next year.

  • avatar
    Brian E

    The small cars-can’t-be-sold-profitably-by-Detroit curse has finally been exploded.

     
    As much as I want to believe – and really, I do – call me in two or three years after the novelty and the untapped market demand has cooled off and it’s competing against fresh iterations of the Civic and Corolla. But for now, bully for Ford.

  • avatar
    Dr Lemming

    The article is surprisingly p.r.ish for TTAC.  As far as the Fiesta is concerned, shouldn’t we wait a year?  If we see a double-dip recession I wonder how a top-end subcompact like the Fiesta will do.
     
    I’m glad to see signs of life at Ford but it seems premature to proclaim that the “New Whiz Kids” have proven themselves.

    • 0 avatar
      geeber

      I see a fair number of people “downsizing” their automotive choices when they buy a new vehicle. But they still want their new vehicle to be well-equipped. They want to give up bulk and the thirst for fuel, not features or nicer trim.

  • avatar
    shaker

    It’s not hard to believe that Ford is making a killing on an overpriced, Mexican-built econobox loaded with toys that first-adopters are hungry for.
     
    Now, let’s see how the next-gen, Michigan-built Focus works out. If prevailing logic applies, Ford will expect to keep profits as high on the UAW-built Focus, which means that transaction prices will have to stay well above $20k.
    I like what I’ve seen of the Focus, and it will probably be on my “hatchback short list”, but if I can buy a turbocharged Kia Sportage for around the same money, well…

  • avatar
    cpmanx

    The key point here is the first part of the headline: Ford just announced a $1.7 billion profit in Q3. You don’t do that just by moving a few high-price Fiestas. You do that by getting your whole cost structure under control, and by building vehicles that people are willing to pay more for. The company is doing that across the board–and that is the truly impressive thing.

    It’s true that high transaction prices for the early Fiestas do not prove that we have “exploded” the idea that Americans won’t pay a lot for small cars. But considering that this is happening in a bad economy, when gas prices are not particularly high, it is impressive and at least highly suggestive of a big change in the buyers’ mindset here.

    The new Focus will almost surely match the pricing model of its immediate competition (most notably the Cruze) and so start just below $17K. That means it will start about $1-2K below the Sportage. And I don’t know about you, but I’d rather get sharp handling and good efficiency, rather than paying extra for AWD and a “command” driving position (along with humongous blind spots).

  • avatar
    Chicago Dude

    Maybe TTAC will have another article later today, but if not, Ford announced some other things this morning that are newsworthy.
    During Q3, they paid off an additional $2 billion in debt and are scheduled to make a $3.6 billion payment to the UAW retiree trust on Friday.  With that payment, Ford will have completely paid off their UAW retiree debts (on which they were paying 9% interest).  This is one more step towards being a viable company in the long term.
    Ford also states that they anticipate ending this year with the same amount of cash as debt.  This is a full year earlier than their original plan.
     
    All in all, this makes me happy for my F stock.  Hope they can keep it going and start paying a dividend soon.

  • avatar

    People demand economy and will pay any price to get it.


Back to TopLeave a Reply

You must be logged in to post a comment.

Subscribe without commenting

Recent Comments

New Car Research

Get a Free Dealer Quote

Staff

  • Contributing Writers

  • Jack Baruth, United States
  • Brendan McAleer, Canada
  • Marcelo De Vasconcellos, Brazil
  • Vojta Dobes, Czech Republic
  • Matthias Gasnier, Australia
  • W. Christian 'Mental' Ward, Abu Dhabi
  • Mark Stevenson, Canada
  • Cameron Aubernon, United States
  • J Emerson, United States