Last Friday, Ford announced its largest production cuts in over two decades. The bold (not to say unavoidable) move comes in the face of evaporating truck sales; even large discounts on the formerly formidable F150 and Explorer can't move the metal faster than it's being built. With a debt rating that’s sleeping with the fishes, with the company’s “Way Forward” recovery plan in triage, with another disastrous quarter only days away, Ford is looking increasingly, irredeemably desperate.
The cutbacks are large in both scope and scale. Ford’s rolling production blackouts will hit ten assembly plants in total. The Blue Oval Boys will reduce output by some 21% for this year’s final financial quarter, shrinking total vehicle production to just over three million vehicles for the year (roughly nine percent behind ‘05 totals). Ford truck plants will fare the worst, losing 404k units from previous annual output targets.
That's not good. Last year, Ford’s F-Series pickup trucks accounted for nearly a third of the company’s 3.2m US sales total (or more than seven times Volvo's American sales). For the first time in three years, the F-Series will not reach its sales target— not even the revised 900k mark recently put forth by embattled CEO Mark Fields. With over 270k units depreciating on dealer lots, America’s best selling truck will bear the brunt of at least half of the cuts.
No matter how you look at it, coming-up short is gonna hurt. Ford’s Michigan Truck factory was once one of the world’s most profitable production facilities; through the late 90’s, it generated some $10b in annual revenue. While Ford doesn’t divulge production costs or profit margins for its individual vehicles, analysts indicate that each F-series pickup delivered $13k in profit. The evaporating truck market has put Ford’s cash cow on the barbie, and there aren’t any newborns ready to lactate greenbacks on their behalf.
Falling revenues are only half the problem. J.P. Morgan analyst Himanshu Patel figures Ford’s decision to downsize production will cost the company $1.4b this year, and around $2.7b in 2007. The main reason: Ford’s current contract with the United Auto Workers (UAW). Idled union workers will receive a Supplemental Unemployment Benefits (SUB) package. After an initial period of partial government support, Ford will have to pay them 95% of their normal take home pay for a 40-hour work week, for not working. Union members with at least ten years’ service will still receive full employer-paid health insurance.
Looking ahead, the UAW contract also stipulates that no union worker can be laid off for more than 48 weeks due to a decline in sales or production. While it’s doubtful that production would halt for that long, the 48 weeks is cumulative for the entire four year agreement. Short term, expanding their blue collar buyout program is the only way for Ford to staunch their “death by a thousand cuts” labor cost wounds.
Unconfirmed reports indicate that Ford will put buyout offers on the table to all their hourly workers in the next week. UAW V.P. Bob King has already stated that he could convince his brothers to stay home– for the right price. But none of this will solve Ford’s cash crunch. Only an immediate series of blockbuster new products and a new, more favorable union contract can do that— neither of which is likely.
Again, there's no immediate relief on the product front. Sales of fuel-sipping B-segment cars are up 43 percent and growing. In most urban markets, Honda, Nissan and Toyota dealers can’t keep up with demand for their Fit, Versa and Yaris, which are selling at full retail or, wait for it, better. Despite finally admitting the seriousness of this market, Ford has yet to announce a B-segment buster.
Meanwhile, Ford’s desperation is there for all to see. Yesterday’s announcement that FoMoCo would follow GM’s lead and offer up to 72 months of zero percent financing to anyone with a pulse is a clear-cut indication that Ford is willing to do anything to stay in business— including cheapening the brand and mortgaging their future. Ford isn’t even trying hard to hide the fact that they’ve thrown open their doors to sub-prime borrowers. "If you were on the margin for being approved for a loan,” Ford flackmeister Jim Cain said. “You are more likely to get a loan today than you were a week ago."
The question is, is Ford more likely to avoid Chapter 11 than it was a week ago? Ford's market share is still declining rapidly– from last year's 25.7% to this year's 18.1%. The company would like you to believe that the production cuts reflect a new, new realism and demonstrate management’s courage to make difficult decisions. Which may be true. But the old maxim “You can’t cut your way to prosperity” is just as true for Ford as it is for GM and DCX. Ford is still poised for breakup, merger or bankruptcy.
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With the Focus as a 20th century holdover, how can Ford expect to compete? It’s Ford’s complacency and cynicism that has created this problem, thinking that one small car fills the niche.
I remember being initially shocked when LA Area Honda dealers were adding on a $1500 markup to Fits a few months back, even the non-Sport base models. In the bay area, the mark up was (reportedly) as high as $5,000
Then I drove one.
I still hate the idea of markups, but with no competition whatsoever, the Honda dealers were not totally out of line. It’s a free-market afterall.
A few days ago, Fod nixed the proposed Yamaha V8 for their new flageship MKS; opting instead to use the 3.5 V6.
Just today, Ford announced that it was considering going private.
Bold moves, indeed.
If you believe that Ford will survive by any means other than bankruptcy, there is a tremendous financial opportunity here. Long term Ford bonds are selling at a discount so they yield 9-10%(for example 2028 6.62% series at 72 and 2031 7.45% global secs at 76).
You can sit back and make 9-10% on your money and the only risk is complete bankruptcy which is not probable in the near term.
These death watch articles make for depressing reading. I keep trying to figure out how Ford could get out of its tailspin, but it will be tough slogging indeed.
Off topic, but since Jonny brought up how dealers are marking up the Fit, I thought I would run the TCO – Total Cost of Ownership – numbers for Hondas on Edmunds. Interestingly, the Fit costs $32,451 for 5 years, the Civic $32,045 and the Accord $33,940. Meaning that before being marked up, the Fit already costs a buyer more than a Civic and only $25/month less than Accord.
It seems to me that people are rushing to these B segment econoboxes a bit too fast. Once they realize the savings aren’t all that real, will they get sick of the econobox ride? I bet it gets to be a long commute on a short wheelbase after a while.
So, if your credit score is about the same as your cholesterol level, you can still get a 72-month, 0% interest loan through Ford Motor Credit? Sweet! But I still owe $10,000 on the loan for my 1992 Tempo. Do you think I can roll that into my new loan? I can? Even though I’m out of a job? AWESOME!
I imagine Ol’ Henry invading Billy Boy’s nightmares each night, taking his heir behind the barn and whooping him for not giving the people what they want at a price that makes sense. Then I feel better.
C’mon folks, this isn’t brain surgery. When did we last pay a buck-something for gas? A couple of years ago? The 2.5 have had at least two years of ramp-up time. Where’s your fuel-efficient small car product line?
Ford’s Bold Answer: “We’ve got a dusty Focus.”
Maybe in business, as in life, we get just what we deserve.
I think part of the problem is due to how long it takes to design new products and bring them to market.
I believe it’s still at least 3 years, or a rushed 2 years in some cases.
Flexible manufacturing facilities can help alleviate sudden, short lived, market changes, but those flex-facilities can’t do nuthin’ when it takes years to develop a new product.
Is there a way to design a vehicle faster? And I’m not talking about re-skinning an old dog.
It certainly is a scary time to be a Ford insider, but holy s**t, the UAW is kicking the big 2.5’s collective asses. 95% of your pay for not working? WTF? I can’t believe an exec signed up to that.
The problems at FORD are similar to GMs as a low life hourly worker at GM I
see this way 3 areas need to be dealt with in this order1st dump half the dealers and half the brands then dump half the bloated management
Last but not least [and this hurts to say]deal with the unions.
As a senior employee it gets you down to see hundreds of jobs go out the door every month,at the same time the layers and layers of the bloated white collar work force never get touched.
Its also painfull when you convince your non GM friend to buy a CHEV only to have him screwed around by a lousy dealer.to the point that he trades it in on a HONDA,where he was treated like royality.
I hope that FORD and GM can pull out of this but its gonna take a lot more than production cuts and buyouts
However long it might take to redesign a vehicle, it doesn’t answer the fact that Ford already has a new Focus in Europe.
>>Off topic, but since Jonny brought up how dealers are marking up the Fit, I thought I would run the TCO – Total Cost of Ownership – numbers for Hondas on Edmunds. Interestingly, the Fit costs $32,451 for 5 years, the Civic $32,045 and the Accord $33,940. Meaning that before being marked up, the Fit already costs a buyer more than a Civic and only $25/month less than Accord.
VERY interesting. But given how long some people keep their cars, I’d be interested in seeing what the ten year costs are.
In the Bay Area, with its huge markups on Fits, I wonder how much of the demand comes from people who want a smaller car for the convenience, and who are not afraid to drive them now in the era of side and head airbags, and the decline of SUVs. I do most of my driving in the ‘burbs, but if I lived in Boston proper, I’d consider trading the Accord for a Fit. Or a Mini Cooper if they had a decent engine.
logan, it’s not that ford (and gm) take too long to develope new models. hell, it it takes an extra year that’s not the end of the world. IT’s that they don’t do it for 8 or ten long years. Look at the stuff at ford: thats from the 90’s, focus, lincoln town car, mercury marquis and it’s ford brother. It’s not that they don’t have the time, it’s that they never got started until it’s years out and the competition is on their second re-design. You can’t support as many models as ford/mercury with a re-design budget that let’s your competitors lap the track on you. Either redo the stuff every four or five years or push it off the cliff.
I’ve heard that $10 billion/year figure before from that particular factory – talk about short-term thinking! Ford should be doing much better now for all that dough, instead it’s just more of the same groupthink, the most truck-dependent of the Detroit 3, and a merely okay lineup of cars, some of which are getting production whacked along with the trucks.
Supposedly some executives said years ago they weren’t going with the C1 Focus, that they would just continue to update the current model – that’s just one example of where the ax needed to swing.
Who else deserves a Deathwatch? VW?
It’s interesting. It’s clear the dealer mark-ups on the Honda Fit have pushed the price of that vehicle beyond what it is worth – and I think it’s a very good vehicle. I see an opportunity for Ford here – at least in the short-term.
While the U.S. Focus is a bit dated and no longer a strong competitor to the newly revised Honda Civic, I can see Ford making a case that for the same 15K (or more) the Fit is currently commanding can buy you a very well-equipped Focus. The EPA says the Fit gets 38 mpg on the highway (same as the Civic). The Focus gets something like 35 mpg.
Ford has a number of decent vehicles in its line up. Some have been flawed in recent years – but most have been emminently fixable. But when the sales stall, Ford usually axes a model instead of developing and improving it – and/or changing its marketing strategy for the product in question.
While Ford’s current U.S. product line is, with only an exception or two, rather uninspiring, I have reasonable confidence that’ll get turned around within three years. The part that concerns me is that Ford seems to have fogotten how to market and sell cars.
The New York Times ran an article at least five years ago about the Michigan Truck Plant. At the time the plant ran 24 hours a day with three shifts and produced the previous generation Ford Expedition and Lincoln Navigator. This one plant was responsible for 66% of Ford’s profits. Thirty-three months output from this plant would pay for Ford’s acquisition of Volvo. I remember reading in the trade news that Ford was cutting back to only two shifts because of declining demand and telling my wife that Ford was in trouble. Any company that relied so heavily on a single plant and product would be bound for big trouble.
As a former San Francisco resident, I can attest to the desireability of teeny cars.
1,000,000 cars in San Francisco, 300,000 parking spaces.
Part of a hidden city tax is the around $250 residents pay every month in tickets for parking on the sidewalk. Get home after 6:00 pm and there is simply no where to park.
Plus, gas is always at least $0.50 more per gallon than the rest of the state as there is one gas station for ever 150,000 residents.
It’s 95% pay TOTAL after you claim unemployment. Ford does not pay all of the 95%… At least that’s how it is in Michigan.
An interesting sidebar to the Ford Deathwatch meme: A fascinating insight into the history of inefficiency at FoMoCo is revealed in the documentary “The Fog of War“. McNamara, a Ford exec in the late 50s, describes how they had no methodology for firing people, so they would go into their office at night and chop up their furniture. When the fired guy showed up to an office of splinters, they knew they had been axed. That is the least of the bizarro world scenarios described. It is a very short bit of a long documentary, but very insightful into the dysfunction of Ford. Worth a view for that alone.
As for San Francisco, if you choose to live there you get what you deserve.
There are no excuses left for Ford:
DCX makes the 300; Ford: Crown Vic
GM/Saturn for god sakes makes a decent roadster; Ford: uh….
Great B cars from Japan; Ford: Tired Focus.
My dad worked most of his adult life as a Ford exec and this is certain: labor and management are totally adversarial and hate each other’s guts. The Union will see the company go down before giving back benefits.
and will richard please tell us where to buy the bonds he mentions, and also explain what the hell “global secs” is? i like the way it sounds.
I live in SF. Fits fit the city. Moreover, driving a *Ford* in this town is not socially acceptable, except as a city-owned fleet car, or a dubbed-out Mustang GT in the Fillmore. B-segment Hondas, Scions, or Nissans lend the driver an air of practicality, not the cheapness that a Focus, Cobalt, or, God forbid, Neon would be sure to bestow upon their driver. MINIs are a dime a dozen in my neighborhood, and for good reason: they fit in parking spots where your Accord (or Focus) won’t. Small cars make a lot of sense here, but this city is not much like your average American suburb, where Ford still sells most of its products. I wonder, given Ford’s sunken status, if they would even be able to sell many B-segment cars here… But in the end it doesn’t even matter, since they don’t have a car to sell – until 2009. Nice work, Bill.
Now Playing “Ford’tanic”
Women,children and union officials dressed like women please exit first.
Ryan makes a good point. While it may take years to create a new vehicle from the ground up, surely it would take less time (and money) to modify a Euro-spec (or World-spec) car to meet US crash and emissions standards.
I was in SF twice. You think I would have learned the first time…
I know I’ll probably get flamed for this, but I don’t see how it’s labor’s fault that Ford hasn’t had a car people want since the Explorer in the early 90s. If the UAW was calling the shots on what cars get built, then it would be fair enough. It’s like saying Enron wouldn’t have been bankrupt if they hadn’t had to pay all of those damn secretaries.
Ford could have done any number of things, including taking the lead on hybrids before Toyota did instead of their “me too” Escape. Or…something. I’m not paid to think up their ideas for them.
I’m sure you could tell me fifty things that the union did that were outrageous, and I can see that a lot of their benefits are whacky, but at the end of the day, those are the guys out of work for someone else’s mistake.
None of that would be relevant if Ford’s higher ups did their job right.
I bought a Hyundai after the head gasket went in my sable at 77K and the transmission started to go at 96K. The 10 Year 100K warranty would have covered both repairs on a Hyundai. making people pay more for a warranty that is free at hyundai is ridiculous. Refusing to admit the heads were torqued down wrong and the transmission was improperly designed for 9 years straight is hubris at it’s finest. Apparently others like me decided to skip the ford dealership in the last two years and it shows.
My father drove Fords for 52 years and he now drives a Hyundai. I drove Fords no matter what but the next car for me is japanese or korean. I really don’t give a $hit if Ford and GM go down, the other companies will take their place within 2 years.
When did
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start?
Anyway, the story I heard on the Focus was that North America didn’t get the new Euro Focus because Ford lost a lot of money on all the recalls the Focus suffered from. They opted to reskin the car and retain most of the factory tooling to try and make some money.
If GM (US largest company) and Ford “go down” no one will have enough money to buy ANY car. Large sections of the US economy are linkaged directly to domestic auto manufacturers and there demise will affect you in ways that you can’t possibly imagine. Even Toyota admits it cannot afford to loose GM. Be careful what you wish for.
Aside from the Euro-Focus, why can’t Ford also import the Ka and Fiesta, two very successful subcompacts that are sold in Europe and South America?
I’ve read that Ford sez the Euro-Focus is too expensive to import (why?), but isn’t having zero market share in a quickly growing market segment just as big of a loser?
stormj, you are correct that it is FoMoCo executives who are to blame for deciding what gets built. However, it is the UAW’s fault for the exhorbitantly high health care, pension and hourly wages Ford must pay (and subsequently pass on to the consumer) in order to employ the workers.
How many other jobs do you know where the company subsidizes government unemployment up to 95% of the pay? How many other jobs do you know where laid off senior workers are still covered by the companies health care (fully paid for by the company)?
Ford can’t make the same profit margin (or any profit) on the smaller cars BECAUSE of the UAW, which is why they don’t make them. They eschewed the small car market in favor of the (then) highly profitable truck and SUV market.
gearhead455:
August 24th, 2006 at 2:26 pm
“It’s 95% pay TOTAL after you claim unemployment. Ford does not pay all of the 95%… At least that’s how it is in Michigan. ”
This is correct, Ford has to supplement the government funded unemployment policy (usually 1/3) to reach the 95% mark. Employer is on the hook though if there are any delays or errors in filing.
quote gearhead: Even Toyota admits it cannot afford to loose GM.
It is true there is an odd relationship there that includes design sharing (Vibe / Matrix) and production sharing. How many people know that you could buy a Toyota Cavalier in Japan for a few years? JDM Tite Yo!
Sharing tech between brands like Mazda and Volvo and Ford’s own cars (at least in Europe) is the right thing to do.
Unfortunately for Toyota, they took the sharing a little too far. The Matrix has a very cheap, plastic feel too it, something I would only expect from the Big 2.5. It’s styling is nice and functional, but I could not get over how ‘cheap’ the car felt.
OK, I understand the American’s won’t spend for a small car attitude at Ford. But come on, it’s obivous that the amrket has changed and a new small car dynamic is happening. So where’s the Ford Escort rebadged Mazda3 as an answer to the B Segment hole in the line up. This is not rocket sience people, slam a blue oval and a Escort sticker on the thing and start shipping. The Mazda3 is already engineered for North America, so what good is controlling Mazda if it can’t help you out in a pinch. The “leadership” at the Blue oval are clueless.
We’d all like to blame the UAW, but once again the blame rests squarely with GM and Ford. Since the Japanese began building American manufacturing facilities in the 70s how many new plants have Ford and GM built in Michigan and other forced union states while their competitors built new plants in right-to-work states? Their corporate responsibility to their shareholders is to compete and remain profitable. They have failed by choosing to coddle the unions rather than compete on level ground.
They are also at fault for giving in to the unreasonable demands of the unions. The attritition those contracts have taken on both companies has been far more expensive than any short-term damage a strike might have done. GM and Ford have failed to stand up to the unions and demand reasonable terms and they are now paying the price for letting the UAW walk all over them.
If I were in management at Ford I’d announce to all of the right-to-work states that I was looking to build some new factories and oh can I please have some massive tax breaks? I’d build new buildings and truck the tooling and equipment lock, stock, and barrel to the Southeast. This could be accomplished in the time remaining in Ford’s current UAW contract, and when the contract expires, good riddance.
The UAW contract has an exclusivity clause – if Ford attempted to build a new plant that did not use union labor, that would break the contract, and Ford would lose the legal proceedings.
The fact is the unions will take the company down rather than accept reality- they are used to very lucrative compensation, which is why so many of them have never worked anyplace else – they make more than they could doing something else.
Ford is screwed. Take a look at this list of vehicle offerings:
http://auto.consumerguide.com/Search/index.cfm/type/new/make/1602/name/Ford/
They have nothing.
For those of you that blame the union for the high cost of health care and pensions, please keep in mind that Ford (and GM, and DCX) management signed those contracts as well.
It’s like having your kids threatening to cry if you do not give them ice cream for breakfast. Either you tell them no and listen to the crying, or you end up with fat, lazy kids.
My take on the UAW is simple. It was the union execs job to ask for the moon and the sky, it was the ford execs to say no. There would have been strikes but it has become a pay me now or later scenario. Ford & GM kicked the can down the road and now the road has ended. Heres where the high labor costs and rigid work rules cost ford. Every time they have to spend either more man hours or dollars on labor than their non union competitors, they have that much less to spend on material, engineering, new plants etc. For every year a toyota or honda can skate by under the union radar (the uaw has lost in every single organizing drive at a foreign owned auto company.) they have extra money to put into the product (and yes some more into their pockets, thus they are profitable) The union situation only works if this were europe, everyone has the union no exceptions., no two tier wage and benefit packages. I am not saying which is right, just the facts. The foreign auto companies have to take the uaw or the native ones have to cut it loose. The road is ending in the next couple of years.
Ford is in a position to break the union. If the union does not accept Ford could go C-11. Either way they will lose there jobs… so their balls are in a vice that is slowly tightening no matter what.
GM just made the union flinch, next is Ford than Chrysler.
I wonder what is going to happen to the “GM Death Watch” when GM reports a modest profit next quarter. My prediction is that you will not here a damn thing about it, or it will be spun negative on TTAC. Perhaps “GM Life Watch” is in order.
Ford’s serious troubles may very well help GM recover from their large financial losses and market share. At the very least it may give them some breathing room to figure out what to do.
Gearhead 455-
Don’t hold your breath , you won’t ever hear any backpedaling from the GM bashers. What they really need to do is take an economics course, maybe then they’ll realize that companies like GM don’t simply go under. There’s too much to lose for everybody, especially for the Republicans. Do you think the next GOP candidate wants that hanging over his head? The bashers also need to stop judging GM from their experience at Avis, don’t they realize those cars get the mother loving @#$% beat out of them? The fact that they are so durable is a testament to GM reliability.
Oh, one more thing, will somebody please explain to me where this notion of cheap interiors in GM versus Toyota, Honda, etal comes from? Sorry, that point is totally lost on me, I mean every car made nowadays has a primarily plastic interior.
Ford & GM UAW? – You are going the way of the Dodo Bird
Now that Ford has joined GM and announced its next buyout plan for workers the UAW locals are again in reaction mode wondering what to do now.
http://qualityg.blogspot.com/2006/08/ford-gm-uaw-you-are-going-way-of-dodo.html
Since they need to break up the union anyways, why not break the contract now and fire everyone, and rehire those who are willing to negotiate.
Then you can lean down your work force at the same time, kill 2 birds in one stone.
LOL! I know, someone on here blames GM because the Toyota matrix/ Pontiac Vibe has a cheep looking interior. Ummm What? I know first hand that GM had little to no input on the engineering of the Pontiac Vibe or Toyota Matrix. Sorry to shatter your aluminum foil hat wearing GM conspiracy theory… That’s all Toyota baby, and it’s built just like the rest of them.
I wish more people would look through the fog of your own perception for once.
montess, do you not have reading comprehension skills? No one is saying that GM or Ford are going anywhere. Every single time you chirp that GM is not going any place, you prove that you are not comprehending anything anyone is saying. Chapter 11 does not mean that they close the doors and disappear off the face of the planet. It simply means that they have finally spent more money than they make, the coffers are dry, and unless we file Chapter 11 we’ll have to close the doors.
You clearly need the economics course. Tell me, how does a company expect to stay in business if its annual costs continually exceed its annual revenue? Do that and you’ll get a Nobel prize in economics. You need to at least break even to stay in business. GM has been posting huge losses, losses in market share, and declining sales. They are predicting a good third quarter, but only by buying out workers and cutting costs.
By the way, GM went to Bush, hat in hand, and asked about a bailout. Bush told them to pound sand.
gearhead, GM will only turn a profit in the coming quarters due to cost cutting, not increases in market share or increases in sales. They are still too truck and SUV dependent. Last quarter their US operations sales dropped 17 percent. I am not making excuses, but until they start clawing their way back into the market share, any profit will be short term gains.
I’ll say it again, I want American manufacturers to survive. Competition breeds innovation. I like the F150. I think it is a fantastic vehicle. I love the 300C, Charger and Magnum, though they did chince on some of the interior components. The new Corvette is getting rave reviews (primarily because it was conceived, designed and built by men with a passion unlike the rest of GM). Ford’s European division makes some damn fine cars (European Focus for one).
Are any of us wishing for their departure? Not I, but then again I am not willing to buy their average crap either.
“Since they need to break up the union anyways, why not break the contract now and fire everyone, and rehire those who are willing to negotiate.
Then you can lean down your work force at the same time, kill 2 birds in one stone.”
Because there would be a huge class action lawsuit. The only way they would be protected is by C-11 and it would be WAY WAY WAY (did I say way?) cheaper to buy out the workforce to break ties with Ford.
Will Ford survive? That question was asked in the early 1980s when Ford was building oversquare old folks cars. Then came the Taurus and saved their bacon. Is there a Taurus-like savior car on the horizon? Unfortunately, no. Ford is going to have to cut development time, jettison aged platforms like the Ford Crown Vic (with underpinnings that date to the late 1970s) and a car that seems new in comparison, the aging Focus. Nobody wants SUVs and huge pickups that take $100 on a good day to fill. Doesn’t look good for Ford.
Market share this, market share that… STOP IT! Did you know that GM builds more than 2 times the amount of vehicles now than when they had more than 50% of the market share in the 1960’s?
Just because GM is cutting cost and production #’s does not mean it will not make money. It’s all about the appropriate production rate with a profit generating low overhead.
They said the same BS in the 70’s 80’s and 90’s. Now we all hear it again…
Ford and GM are going nowhere. You can write “Death Watches” until your blue in the face and it just will not come true.
Comparing Hyundai to any other automaker is like comparing apples to oranges. Hyundai is an extremely large company that does not depend on automotive profitability to survive or flourish.
They are in fact “buying the market” with product that is improving yearly.
Once they have become a mark associated with quality and reliability, watch the price go up.
The company appears to have adopted the business philosophy of Henry Ford. Become a dominate factor in transportation. Rail, Shipping, and now automobiles.