By on June 20, 2008

ford-f150-fx4-front-filed-800.jpgAfter 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!

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15 Comments on “Ford Delays New F-150...”


  • avatar
    RobertSD

    The flip side of this story being that they’ve added third shifts to three plants because they recognize that things have actually changed. Ford’s cash situation is not dire yet. Pre-tax losses last year were only a couple hundred million. I fully expect it to rise to just over $1 billion this year. With some new money coming in from the Jag/LR deal, I still don’t think Ford is anywhere near Chapter 11.

  • avatar
    dwford

    I think I can count on one finger how many new F150s my dealership has sold this month. Unfortunately for Ford, the drop in used market for these trucks means it makes little sense to buy new.

  • avatar
    motownr

    Good point, RobertSD. Ford’s cash position is certainly better than GM’s or Chrysler’s, and they certainly don’t have the massive distraction in terms of brand overlap that plagues the General.

    It will be interesting to see how profitable the Big 3 can be in NA when you take into account their future model mix…they historically haven’t been able to make money on anything other than the big rigs.

    The gravedancers will continue to have more fun delighting in the prospects of GM and Chrysler. Those two are the wild cards in the mix right now.

  • avatar
    RobertSD

    For the Detroit makers it has always been a labor cost/utilization issue. Wayne (the Focus) will now be running at about 110% of design and 60% over plan. That means the $200 million Ford put into tooling won’t be spread around 180,000 Focuses/year. It will be around 300,000 Focuses/year. Then, the fixed chunk of your labor costs are baked in and divided more widely. Your variable hourly rate (which is much less expensive than health care, pensions, etc) is your only increase. My guess is that the Focus is bringing in money this year – which is amazing as it was losing about $3000/vehicle last year. 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.

    Ford’s risk from a product side is, in my opinion, keeping the quality on their cars and CUVs high through this realignment. They have done an incredible job on quality in the last three-ish years and have gained credibility for their work… but they could lose that all quickly if they push for expediant shifts over quality shifts.

    Ford’s risk from a financial side is Ford Credit being too exposed to the used truck market. Luckily, most people buy their trucks outright, so the number of lease returns will be small compared to say, a Civic or even a Fusion. A write-down of $1 billion seems reasonable, but that is an asset play and not an actual cash drain.

    But, the refreshed Fusion and hybrid are coming (Job1 is Dec. 23 right now). The upgraded Escape hits Job1 on Monday. We now have a date for the C1-2 Focus – late 2010. So, again, I’m not nearly as bearish or worried about Ford as I am for GM or Chrysler.

  • avatar
    windswords

    I have stated here before that I think that if we are going to lose one of the domestic 3 (lose as in kaput, no longer existing), Ford will be it. The reasons are too numerous to go into now (the boss expects me to work this afternoon) but if I’m wrong, so be it (and I won’t mind it, because I don’t want to see any company go under), but if I’m right you heard here first.

  • avatar
    hwyhobo

    I wish Ford more seriously explored a possibility of updating a Ranger.

  • avatar
    SunnyvaleCA

    Will the new model–for the first time in automotive history–be smaller and lighter than the preceding one?

  • avatar
    RobertSD

    They did explore it. And in 2006 when they explored it, it made absoutely no sense, even after Katrina and watching people freak out over that oil spike. That’s why we’re getting the global Ranger in late-2010 or early-2011 and the F-100 around that time as well. It does make sense now, but it’s a bit late to do much and too late in the game to be throwing money around for something that’s dead in 2 years.

    @Sunnyvale: The new F-150 is lighter. Not smaller.

  • avatar

    The other good part about this story is that Ford will be selling the European C1 Focus here in 2010. Better late than never.

  • avatar
    Droid800

    TriShield :
    June 20th, 2008 at 4:47 pm

    The other good part about this story is that Ford will be selling the European C1 Focus here in 2010. Better late than never.

    It isn’t the C1 focus, its C2. The C1 Focus is dead after this generation, and will be replaced by the ‘global’ C2 Focus.

  • avatar
    RobertSD

    It’s actually the next-gen Focus, not the C1. C1-2, I believe is its designator.

  • avatar
    50merc

    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.

  • avatar
    Patrick

    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.

  • avatar
    John Horner

    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?

  • avatar
    rudiger

    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.

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