Ford Trucks It Up. Again. But Small Cars Still Rock

John Horner
by John Horner
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ford trucks it up again but small cars still rock
Is the F150 a Phoenix rising from the ashes or an Icarus once again flying too close to the sun? The Wall Street Journal tell us Ford is betting on a revival of the living dead by “rehiring 1,000 workers to build the company’s 2009 F-150 pickup” at the long suffering Dearborn Truck plant. Perhaps this is an attempt to spin the company’s upcoming November 7th epic horror film release, um I mean quarterly financial announcement. Said quarterly results are going to be horrifically bad. Barn-burner October clearances sales brought truck’s US market share back up over 13.9 percent, a stunning recovery from the sub 9 percent range of this summer and back on track with the rates of this time last year. But those trucks were blown out the door at prices which don’t make money. A horrible economic environment, reduced total sales and high fixed costs mean rivers of red ink. The only good news: Ford’s end of October truck inventories were down from June’s 130k to a skinny 50k. As long ago as August, Edmunds was reporting that buyer research behavior was already moving back away from small cars. Likewise, GM recently cancelled Saturday overtime plans at the Lordstown Cobalt plant. Gas prices are back down in the mid $2s, thanks for a record monthly drop in oil prices. Ford is betting that at least some Americans will revert to type and get themselves a new pickup, even if there isn’t a double scoop of cash on the hood. Meanwhile, FoMoCo CEO Alan Mulally remains committed to small cars…

Automotive News [sub] reports that Big Al will stay the course, continuing plans to get Ford’s small car lineup into shape. In other news, supertanker still needs two miles to make a turn. “Fuel ‘prices are going to stay relatively higher, even though they’re down right now,’ Mulally told Automotive News last week. [ED: What’s the rush?] ‘The most important thing we can do is have a full complement of small and medium-sized cars and utilities that complement our larger vehicles.'”

Complement as in make money? “The Ford CEO must find a way to achieve a decent profit margin on small cars. It will be tough to replace the $8,000 to $10,000-plus profit margins on big pickups and SUVs. ‘It takes a while to fill in that loss of revenue on the larger vehicles with the full portfolio of cars,’ Mulally said. ‘But over time, our plan is to make money on them and make a reasonable return.'” That said, Big Al wouldn’t predict/set a date for a return to profitability. For now, survival’s about as good as it gets.

John Horner
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  • Kazoomaloo Kazoomaloo on Nov 03, 2008

    I think this might go well for Ford; without a doubt the new F150 will be a great truck, and with Dodge going away, those Ram buyers are going to have to look somewhere else. If Chrysler falls, Ford stands to gain a good number of buyers for this great new truck.

  • RobertSD RobertSD on Nov 03, 2008

    Think of it as a marketshare game. Ford had capacity for about 300k F-150s on three shifts - maybe 350k with overtime. This year, trucks are going to have their lowest industry share in a long time and the F-150 will still move 350k units. If total industry sales are flat next year (and I predict they will be close), and the full-size truck market will ~1 point higher marketshare AND Ford has a new F-150, which they expect to at least maintain their share of the half-ton pie, then they will need more than 350k units. They will probably need 400k, maybe 450k if they see ok, if weak, commercial demand. And may need more if in tough economic times, commercial fleets flee the HD trucks for half-tons that are almost as capable for most jobs. And that level of demand requires a new shift. As you point out, they've made their inventories really lean with days supply probably around 60 days, and as long as velocity of sales matches or slightly lags velocity of production from time to time, they've matched their capacity. As for profits on small cars versus profits on big SUVs... Ford used to lose money on every small car it built and most mid-size cars. The Focus and Fusion are pretty close to break-even. That's like a $2k-$3k per vehicle swing. You don't need them to be insanely profitable, you need them to make $500-$1000 per vehicle. If every car sold around the world made just $1,000 on average, Ford would make ~$6B. It's not about huge profits on small cars, it's about consistent profits on all cars.

  • Carsofchaos The bike lanes aren't even close to carrying "more than the car lanes replaced". You clearly don't drive in Midtown Manhattan on a daily like I do.
  • Carsofchaos The problem with congestion, dear friends, is not the cars per se. I drive into the city daily and the problem is this:Your average street in the area used to be 4 lanes. Now it is a bus lane, a bike lane (now you're down to two lanes), then you have delivery trucks double parking, along with the Uber and Lyft drivers also double parking. So your 4 lane avenue is now a 1.5 lane avenue. Do you now see the problem? Congestion pricing will fix none of these things....what it WILL do is fund persion plans.
  • FreedMike Many F150s I encounter are autonomously driven...and by that I mean they're driving themselves because the dips**ts at the wheel are paying attention to everything else but the road.
  • Tassos A "small car", TIM????????????This is the GLE. Have you even ever SEEN the huge thing at a dealer's??? NOT even the GLC,and Merc has TWO classes even SMALLER than the C (The A and the B, you guessed it? You must be a GENIUS!).THe E is a "MIDSIZED" crossover, NOT A SMALL ONE BY ANY STRETCH OF THE IMAGINATION, oh CLUELESS one.I AM SICK AND TIRED OF THE NONSENSE you post here every god damned day.And I BET you will never even CORRECT your NONSENSE, much less APOLOGIZE for your cluelessness and unprofessionalism.
  • Stuki Moi "How do you take a small crossover and make it better?Slap the AMG badge on it and give it the AMG treatment."No, you don't.In fact, that is specifically what you do NOT do.Huge, frail wheels, and postage stamp sidewalls, do nothing but make overly tall cuvs tramline and judder. And render them even less useful across the few surfaces where they could conceivably have an advantage over more properly dimensioned cars. And: Small cuvs have pitiful enough fuel range as it is, even with more sensible engines.Instead, to make a small CUV better, you 1)make it a lower slung wagon. And only then give it the AMG treatment. AMG'ing, makes sense for the E class. And these days with larger cars, even the C class. For the S class, it never made sense, aside from the sheer aural visceralness of the last NA V8. The E-class is the center of AMG. Even the C-class, rarely touches the M3.Or 2) You give it the Raptor/Baja treatment. Massive, hypersophisticated suspension travel allowing landing meaningful jumps. As well as driving up and down wide enough stairs if desired. That's a kind of driving for which a taller stance, and IFS/IRS, makes sense.Attempting to turn a CUV into some sort of a laptime wonder, makes about as much sense as putting an America's Cup rig atop a ten deck cruiseship.