By on October 26, 2017

Ford Super Duty Limited

Ford Motor Company’s eagerness to quench North America’s insatiable thirst for light-duty pickups and SUVs drove the company to earn $1.6 billion in the third-quarter of 2017, according to an earnings report from Ford.

Also helping boost the automaker’s bottom line were some tasty foreign tax credits and an accountant’s best friend: cost reductions.

In addition to cutting costs across several different departments, Ford also saw costs driven lower by a non-repeat of the costly recall of this time last year. At the time, the company recalled nearly 2.4 million vehicles for problem door latches on vehicles ranging from the 2012-2015 Focus to the 2015 Mustang. Of course, the wonky door problem hasn’t entirely gone away.

In a statement, president and CEO Jim Hackett said, “This quarter demonstrates that our team’s focus on fitness is showing early promise,” going on to say, “We also know that we must accelerate that progress in the short term.” Reading between the lines, one could extrapolate that further cost cutting and shuffling of executive chairs may be on the horizon.

The numbers were further helped along by – what else – truck and SUV sales. Last month, Ford sold 82,302 of its F-Series trucks, its best month this year. It was only the fourth time since the beginning of 2010 that more than 80k of its full-sized pickups left showrooms in a single month. In fact, this year’s third-quarter sales were the best for F-Series since the heady days of 2005.

2017 Ford F-450 Super Duty Platinum Crew Cab 4x4

It’s not just volume pushing Dearborn’s profits higher. Average transaction prices of its trucks were $45,400 in Q3, up nearly $2,800 from one year ago. The entire segment is seeing a rise in average transaction prices (up an average of $1,600), but Ford has done a better job of moving the bucks-deluxe, high-profit models. Ford Credit also performed well, making $600 million in pre-tax profit.

SUV sales also helped Ford’s bottom line, with the Escape, Edge, and Explorer selling at a rapid clip. One would be wise to keep in mind that the high-profit Expedition and Navigator are just getting up to speed, so profits in upcoming quarters will be padded by those machines as well.

In anticipation of corporate tax-reform efforts, Ford brought $266 million in foreign tax credits back onto its U.S. balance sheet, continuing a planning practice it started in the second quarter. The explanation of this practice makes this author’s head spin, but suffice it to say that the exercise allows Ford to find some tax breaks to help offset expenses or reinvest in the business.

Wall Street expected the Blue Oval to post $32.8 billion in revenue this past quarter. Beating that number by $3.7 billion surely contributed to the company’s 2-percent share price bump seen in this morning’s pre-market trading. Still, the price languishes at around $12.25 a share.

In its earnings report, Ford states an operating margin of 8.1 percent and a market share of 13.5 percent in North America. Interestingly, the company partially blamed an underperforming European market (-1.2 percent margin and -$86 million pre-tax results) on “Brexit effects.”

[Image: Ford Motor Company]

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24 Comments on “Mighty Truck Sales (and Cost Cutting) Fuel Ford’s Q3 Income...”


  • avatar
    Ryoku75

    Meanwhile they still haven’t learned how to make door handles, nor solved the Power shifts issues.

    I know of a place with a small three fleet of new Focus, all of them are having serious Powershift issues (rough shifting, not going into gear).

    The door handle thing is inexcusable in this day and age, they’re not fancy Tesla handles either.

    • 0 avatar
      PrincipalDan

      Dear Consumer,

      If you expect to buy one of our vehicles that is assembled and designed in a manner that shows we might know what we are doing – buy BOF.

      Signed,

      Ford, GM, Chrysler

      • 0 avatar
        Hummer

        “Dear Consumer,

        If you expect to buy one of our vehicles that is assembled and designed in a manner that shows we might know what we are doing – buy BOF.

        Signed,

        Ford, GM, Chrysler”

        Consumers have had nearly 40 years to figure this out, I’ll admit a couple exceptions, otherwise I don’t understand why people refuse to accept this.

        • 0 avatar
          PrincipalDan

          It’s like Jack’s comparison yesterday of Traverse vs Tahoe. One is likely to be on the road with 300,000 miles on the odo and the other one… not so likely.

        • 0 avatar
          Ryoku75

          I’m not sure if I can stand by that decree, Detroits made some decent unibodys in the past (Falcon, Fox body, W-Body, FWD H-Body, original Cherokee), the problem was they had a habit of milking the platforms for decades while the world moved on.

    • 0 avatar
      JohnTaurus

      Yes, how awful that Ford is the only automaker with some issues like these. They still haven’t figured out how to build anything, every one of those 86k trucks they sold last month are on their way to the junkyard today. Doom, gloom, negative, awful, terrible. The only words to describe a non-Tesla U.S. automaker. Good news = bad news.

      Even Hyundai builds vehicles that never need to be recalled. Having an issue amongst the millions if vehicles it builds is inexcusable. (It would be totally excusable is it was Toyota.) It just goes to show, Ford is circling the drain while making only a measly $38 billion in profit.

    • 0 avatar
      whynot

      Eh, the Powershift issues are clearly deep rooted design problems and Ford is certainly not going to go through the expense of redesigning the PowerShift transmission when its future is bleak anyways.

      • 0 avatar
        Ryoku75

        It shouldnt be redesigned so much as replaced with a more conventional automatic, leave the experimental/sporty Powershift to the GT.

        • 0 avatar
          whynot

          Ford wasted too much time early in the current Focus’s life trying to make the PowerShift work (educating customer expectations and actual software/hardware changes) and now it is just not worth the expense of replacing with a new transmission for only a couple of model years.

          I would expect the next Focus (whenever that actually is) to have a conventional automatic. PowerShift has cost Ford a lot of potential goodwill though. My sister has one, has had multiple problems with it, and is about ready to completely swear off Fords because of that thing (she doesn’t mind the rest of the car).

  • avatar
    deanst

    Ford earnings are up by about 600 million – which is about equal to the charge they had last year for warranty expenses. the other noteworthy item is falling market share. Not much other news.

  • avatar
    EBFlex

    In a very related story, Ford just recalled over a million of these beer can appliances due to poorly designed door handles and just today announced a recall for the F-150 due to defective engines and issues with the 10-speed transmission.

    But keep cost cutting to raise profits. Seems like it’s a great business plan.

    • 0 avatar
      Big Al From 'Murica

      No issues with my “beer can”. 36k miles and it is sitting at an average of 22.6 mpg over that time. I did swap the base sync system with an aftermarket car play/Android auto deck but only because those weren’t available in 2015.

      As to the door handle, I live in the south so it’s a non issue but when I lived in upstate NY every car I owned at some point had the door pop open driving because of snow and ice jammed in it. Is this just something we are noticing now it is this a special issue? No engine issues though it is still early, but I’m pretty anal about maintaining it.

  • avatar
    jpolicke

    So Ford makes most of its money on trucks. When did this become The Obvious About Cars?

  • avatar
    srh

    This will not help me in my plan to buy an F-150 or F-250 by end of year. I’m hoping for a serious, serious downturn in the truck market.

    • 0 avatar
      PrincipalDan

      I guess you’ll be the only one praying for higher gas prices. Roughly $2.30 a gallon here in my little corner of NM – I’d say $3.50+ would put a damper on the party around here (other than the fraking guys.)

      • 0 avatar
        SD 328I

        Maybe, but even when gas prices was at $4 a gallon, trucks were still the best selling vehicles.

        There were only a couple of months where I think the Civic beat the F150, but that didn’t last long.

        Maybe a reduction in sales across the board, but probably won’t stop trucks from leading total sales. I mean you got full size trucks getting 26 mpg for gas and 29mpg for diesel these days.

        • 0 avatar
          highdesertcat

          “Maybe, but even when gas prices was at $4 a gallon, trucks were still the best selling vehicles.”

          You can get full-size trucks with heavy-breathing, twin-blown squirrel engines in them. Like an F150 with an Ecobust V6.

          I had a rental 2017 Ford Expedition EL AWD with an Ecobust V6 that returned excellent mpg over a 3500+ mile roundtrip.

          The only thing disconcerting was at a slow take-off from a dead stop, you could feel every cylinder fire until you got up to ~ 30mph.

    • 0 avatar
      DenverMike

      Don’t let “average transaction” figures scare you. Mid-spec 4wd crew cabs are fast becoming the “average” purchase, along with increased uptake of luxo trucks.

      The used pickup market is starting to reject base 2wd pickups, so I’d get the most loaded pickup your budget can take, unless you’re set on driving it into the ground.

      • 0 avatar
        srh

        This is true. But sales managers sitting on lots full of F-150s seem unwilling to make the same deals that they were when, for example, GM was about to go bankrupt and I was able to buy a $54K Duramax CC LWB 4×4 Chevy 2500 for $36K. That dealer even gave me over KBB on my Mazda 6s trade-in, presumably because he wanted something he could actually move.

        It doesn’t help that my requirement is a crew-cab with a 6.5′ bed. While the F-150 CC mini-bed is everywhere, I’d guess only about 5% of F-150 CCs on the dealer lots have a 6.5′ short-bed. This alone is almost pushing me to an F-250 (which, oddly, with the features I care about ends up stickering for about $7K less than an F-150 and more rebates to boot).

        Of course with the superduty the challenge becomes finding a gas engine. A gas CC Lariat superduty is about as rare as an F-150 CC short-bed.

        • 0 avatar
          ajla

          You ask about ordering one (especially on the F-250)?

          You’ll miss out on the year-end savings and have to wait awhile for it to show up, but you’ll get exactly what you want and should still get some discount.

  • avatar
    Oldschool

    It makes you wonder what other parts Ford is cheapening out on. To screw up on door latches really makes the company look like it’s lost its way. They’re betting way too much on truck sales to get them by, and the retarded brainwashed consumers that are buying them that will drown in debt by those $60,000+ truck purchases.

    Seriously, how can this even be an issue? Doors not shutting correctly or being stuck closed? I’ve never had door latch problems on any cars I’ve owned, including my older cars.

    I’ve owned both Ford and GM cars, and each one is still good carmakers, but they honestly don’t a give a shit sometimes and it’s the culture of both brands of not caring that is one of the main reasons why problems like this exist. The Japanese have an honor code of some sort and is very keen on making sure their products are the best they can be, I wish American companies thought this way.

    Until the culture and attitude changes, both companies will find themselves on the brink of bankruptcy again in the coming years. At the same time, both brands make excellent products, you just have to know what models to look for. Generally speaking the smaller, eco-compacts suck, and probably will have more problems than their mid-size models.

    I own a 17 Impala and love it. I really don’t know why more people aren’t buying them as they cost about the same as other mid-size cars, yet you get more car for your money, the value is incredible. Getting one used at a year old is a steal, especially the V6 LT model.

    I’ve also had zero problems with it, and drive all around town for hours a day for Uber, so I know they can make great cars and can compete with the best of them.

    But this is just ridiculous.

  • avatar
    gmichaelj

    Just looking at the auto press summaries, and without diving into their 10-Q:

    I am surprised that the new CEO didn’t take the opportunity to incur more losses, now, so he could blame them on prior mgt. and then artificially book some gains later when he might need them.

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