Ford CEO Predicts Sales Recovery by End of '09

Robert Farago
by Robert Farago

And I predict Ford CEO Alan Mulally will be proven wrong. Of course, I could be wrong about Mulally being wrong. I mean, I’m the not-so-proverbial nutter in the attic. Big Al’s probably got an entire building full of MBA-owning sales analysts doing nothing but crunching numbers (and hanging out by the water cooler talking about how TTAC talked about them hanging out by the water cooler). I base my false dawn dismissal on three main facts. First, Detroit’s been blowing smoke up the media’s ass since The Boston Americans beat the Pittsburgh Pirates by two runs to clinch the inaugural World Series. If not before. I don’t trust a word they say. Second, same again, only this time not discounting the fact the automakers may actually believe their own delusions. Which is some deeply scary shit. Still. And third, housing starts.

TTAC’s own Ken Elias first gave me the heads-up on Motown’s final descent into bankruptcy two years ago. That’s when he brought my attention to the fact that US housing starts had more or less stopped. It was the worst of all possible worlds for Chrysler, Ford and GM, depending as they did on their pickup trucks for fat profits. When the housing market cratered completely, it was only a matter of time before all that low interest, easy credit home equity cash would dry up, taking car sales into the Sahara with it.

So, where are we now? In April, new housing starts dropped 54.2 percent from the previous year’s totals. Total housing starts: 458,000—the lowest level since Fulgencio Baptista checked out of Havana (1959). Building permits sank 3.3 percent to 494,000 units, the lowest level since the Commerce Department started keeping records (1960).

I reckon the situation is not unlike the car biz. The housing market has to absorb (or plow under) a huge inventory glut and disappear an enormous amount of excess production capacity before it will even begin to get back on its feet. But with the go-go economy gone, the “rabbit in the python” over-supply problem is digesting very. Very. Slowly. How slow? What am I, an economist? But anyone who figures that pickup truck sales are going to bounce back by the start of that most magical of years (2010) is kidding themselves.

Of course, if GM and Chrysler had been allowed to fail, Ford would have done very nicely indeed in that most profitable of vehicular genres, rewarding the only Detroit automaker who stayed away from the federal trough (thanks to the Ford family’s desire to maintain control, but hey, why quibble?). Never mind. If I was Big Al, I’d be thinking about hunker mode, rather than Annie-style promises to the troops. Just sayin’.

Robert Farago
Robert Farago

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  • CarPerson CarPerson on Jun 13, 2009

    When is the Ranger due for a maximum update? Ford will never be the king of trucks with that Neanderthal piece of work in showroom. The superiority (technical design, fit, finish, NVH, refinement and more) of the Toyota and Nissan is incredibly obvious to anyone comparing them. Is the problem the F150 is sucking up every development truck buck they have?

  • U mad scientist U mad scientist on Jun 13, 2009
    And from Nouriel Roubini another one of the few economist who predicted this and continues to be correct. He's actually saying some of the stuff I've mentioned before, like temporaneous weak growth. - If the gov’t was smart (an oxy-moron, emphasis on moron) they would create investment tax credits for target industries and temporarily protect American markets, to stimulate real capital investment, i.e., to give the wealthy something else to buy with their money other than oil futures…..but they won’t because damned liberals don’t really understand economics, and also don’t have a grasp on how tax policy and trade policy are necessary tools to stimulate the economy when necessary You're not quite getting how ranting works. You need to match policy to its actual supporters, not just tack the dumb "gov === bad, liberal === bad" rule to the end of some random statement. For example, if demonstrating that dumb rule is the goal, you need to make sure you're not advocating the same thing the bad people are. Your last statement needs to be directed at the morons who didn't bother reading the econ 101 website much less the book, because there are sure a lot of them offering "free market" advice these days.
  • Varezhka I have still yet to see a Malibu on the road that didn't have a rental sticker. So yeah, GM probably lost money on every one they sold but kept it to boost their CAFE numbers.I'm personally happy that I no longer have to dread being "upgraded" to a Maxima or a Malibu anymore. And thankfully Altima is also on its way out.
  • Tassos Under incompetent, affirmative action hire Mary Barra, GM has been shooting itself in the foot on a daily basis.Whether the Malibu cancellation has been one of these shootings is NOT obvious at all.GM should be run as a PROFITABLE BUSINESS and NOT as an outfit that satisfies everybody and his mother in law's pet preferences.IF the Malibu was UNPROFITABLE, it SHOULD be canceled.More generally, if its SEGMENT is Unprofitable, and HALF the makers cancel their midsize sedans, not only will it lead to the SURVIVAL OF THE FITTEST ones, but the survivors will obviously be more profitable if the LOSERS were kept being produced and the SMALL PIE of midsize sedans would yield slim pickings for every participant.SO NO, I APPROVE of the demise of the unprofitable Malibu, and hope Nissan does the same to the Altima, Hyundai with the SOnata, Mazda with the Mazda 6, and as many others as it takes to make the REMAINING players, like the Excellent, sporty Accord and the Bulletproof Reliable, cheap to maintain CAMRY, more profitable and affordable.
  • GregLocock Car companies can only really sell cars that people who are new car buyers will pay a profitable price for. As it turns out fewer and fewer new car buyers want sedans. Large sedans can be nice to drive, certainly, but the number of new car buyers (the only ones that matter in this discussion) are prepared to sacrifice steering and handling for more obvious things like passenger and cargo space, or even some attempt at off roading. We know US new car buyers don't really care about handling because they fell for FWD in large cars.
  • Slavuta Why is everybody sweating? Like sedans? - go buy one. Better - 2. Let CRV/RAV rust on the dealer lot. I have 3 sedans on the driveway. My neighbor - 2. Neighbors on each of our other side - 8 SUVs.
  • Theflyersfan With sedans, especially, I wonder how many of those sales are to rental fleets. With the exception of the Civic and Accord, there are still rows of sedans mixed in with the RAV4s at every airport rental lot. I doubt the breakdown in sales is publicly published, so who knows... GM isn't out of the sedan business - Cadillac exists and I can't believe I'm typing this but they are actually decent - and I think they are making a huge mistake, especially if there's an extended oil price hike (cough...Iran...cough) and people want smaller and hybrids. But if one is only tied to the quarterly shareholder reports and not trends and the big picture, bad decisions like this get made.