Ford Delays New F-150
After losing its "best-selling vehicle in America" badge, Ford's F-150 has hit another pothole. Automotive News [sub] reports that the beleaguered Blue Oval Boyz are postponing the release of the all-new 2009 model by two months. The coompany says the delay will Ford can burn through its massive overstock of the outgoing model. Both F-150 plants will lose a shift this year, and one of the two will idle for most of the third quarter. These cutbacks are just part of the Ford's production slowdown. The Wall Street Journal reports that Ford will cut overall production by 25 percent in the third quarter, and by as much as 14 percent in Q4. "Ford has taken decisive action to respond to this accelerating shift in customer demand away from large trucks and SUVs to smaller cars and crossovers, and we will continue to act swiftly moving forward," says FoMoCo CEO Allan Mullaly. Ford also says its pre-tax earning will be worse in 2008 than 2007, and that cash burn will be higher than previously expected (by them, maybe). With $40b in liquidity, $23b in debt and $16b as good as spent to keep the turnaround on track until 2009, these cash burn issues are troubling, to say the least. Ford's stock reflects these concerns, currently down nearly 7 percent on the day. Paging Captain Kirk!
RobertSD, it appears you have a lot of information about the operational aspects of the auto industry, or at least FoMoCo. Thanks for your insights. "When the full benefits of the UAW deal come into play and corporate finishes streamlining (probably late next year), unit net rev per small car at Ford will rival Honda and Toyota, even in the U.S." is truly great and game-changing news. I too have wondered why the Ranger has been neglected. Why did updating it "make no sense" two years ago? And more importantly, why does it take three years to bring a fresh compact/midsize BOF pickup to the US market? Good grief, it's not the Manhattan Project. Yes, making cars is complicated, but it's not a lot more complicated for Detroit than it is for the rest of the world.
Windswords, my guess is that we will lose two of the Detroit three. Chrysler may not survive the year. While Ford is the most likely survivor, the remaining company being GM is not out of the question. GM has enough product to survive with two or three badges, it has little chance with eight. The GM dealership I've visited most recently, a Chevy store in one of the most affluent areas in the U.S., is just depressing. A couple of Corvettes and HHRs next to a sea of white commercial vans practically indistinguishable from those sold 30 years ago.
dwford said: "... the drop in used market for these trucks means it makes little sense to buy new." That hangover effect is going to drag the truck market for quite some time. The fashion purchasers who are getting out when they can is going to continue to put a big supply of lightly used trucks on the market for cheap. Contractors and others who really need a truck are going to be able to pick 'em up on the cheap for at least another year or two. New truck sales are not going to stabilize for a long time. Ford is smart to push out the 2009 intro. Why introduce a new product into a dead market?
Although it will cost them in the short term, Ford delaying the 2009 F-150 intro is a smart move. Putting the new model on the lots next to all the old 2008s sitting there means they'd have to discount the old ones even more to try and move them. This way, it gives the dealers a little more time to get rid of the old ones at a more profitable margin. The wild-card in this scenario is Chrysler. They're ostensively in exactly the same situation and, thanks to a shoddier product, have a much more dire predicament. It will be interesting to see how their strategy shakes out with the new Ram being released and available ahead of the F-150, even though there seems to be just as many new 2008 Rams on Chrysler lots as there are new 2008 F-150s on Ford lots.