By on March 19, 2020

Looking to cover its financial ass with available cash, Ford Motor Company announced a series of measures on Thursday to ease it through the ongoing pandemic.

If you’re a shareholder, kiss that dividend goodbye. However, if you’re in the mood to skip the toilet paper line outside Costco and head to the dealer instead, the Blue Oval has an offer for you.

The biggest financial move is the addition of over $15 billion of cash to the automaker’s balance sheet, drawn from two credit lines, to cover the planned shutdown of all U.S. assembly plants (to say nothing of planning for an even rainier day in the near future). Further cash protection comes from the automaker’s decision to suspend its dividend.

As for the company’s guidance for the current year, that performance prediction is null and void.

“Like we did in the Great Recession, Ford is managing through the coronavirus crisis in a way that safeguards our business, our workforce, our customers and our dealers during this vital period,” Ford CEO Jim Hackett said in a statement. “As America’s largest producer of vehicles and largest employer of autoworkers, we plan to emerge from this crisis as a stronger company that can be an engine for the recovery of the economy moving forward.”

At the end of 2019, Ford had $22 billion in cash on hand.

“The company will provide an update on the year when it announces first-quarter results, which is currently scheduled for April 28,” Ford announced.

As the fast-moving coronavirus pandemic leaves markets and manufacturers in disarray, Ford announced the suspension of production at its European and North American assembly plants earlier this week. The shutdowns could easily go longer than planned. In fact, given the nature of the virus, it would be unusual to not see the idle period extended (or re-imposed in the future).

On the buy side, Ford hopes to lure hesitant customers into showrooms with a three-month payment deferral, bolstered by three additional months paid for by the manufacturer. That effort falls under the eye-rolling banner of Ford’s “Built to Lend a Hand Program.” All 2019 and 2020 model-year Ford vehicles apply, minus the big-bucks, high-margin 2020 Ford Super Duty line.

[Image: Ford]

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26 Comments on “Amid Virus Chaos, Ford Erects Financial Firewall...”

  • avatar
    SCE to AUX

    Hunkering down the wallet – smart. But the weakest mfrs won’t be as resilient.

    • 0 avatar
      R Henry

      @SCE to AUX

      “the weakest mfrs won’t be as resilient.”

      Depends how “weakest ” is defined. Ford’s stock price is the definition of “weakness.”

      Agreed. Pretty sure Maserati and Fiat are done here, but they were essentially done before the virus. As for Nissan/Mitsu and Mazda…???

      • 0 avatar
        SCE to AUX

        “Ford’s stock price is the definition of “weakness.””

        No doubt. I was referring to the $22 billion in cash – that’s a nice war chest, and ‘war’ is pretty much what we’re in for, economically.

        I thought of Fiat/Maserati/Alfa, too. Nissan will survive. Mitsubishi may survive simply because it’s part of the alliance, and Mazda is tied to Toyota for a new US factory. All of that could change, of course.

        • 0 avatar

          Mazda will most likely not survive in the USDM. Losses in its major market outside the US where it makes its money will result in the company no longer being able to support the minimal volumes/income in the US. The “partnership” with Toyota will not be of much assistance – Toyota will give them the boot to minimize their own financial issues. Most likely this will be the final nail in the already mostly completed coffin for the brand in the US. It is perhaps sad but inevitable. Mitsubishi will likely survive as it fills a small minimally served niche in the USDM with fewer models but it has the support of a very large parent corporation that does not need to rely on Toyota.

        • 0 avatar

          “No doubt. I was referring to the $22 billion in cash – that’s a nice war chest, and ‘war’ is pretty much what we’re in for, economically.”

          While that’s not a bad war chest, FoMoCo, however, is loaded w/ far more in debt.

          • 0 avatar

            Don’t forget that that $22B “in cash” is actually $22B additional debt as Ford clearly announced that it was coming from two lines of credit.

      • 0 avatar

        Ford’s stock is underpriced, GM’s overpriced by half, and Tesla’s is overpriced by 10x. Right now Ford could be a recommended buy – just watching its share price to see if it gets near $3-$3.50 – during the 2008 period, I dollar cost averaged my way down on Ford so that my average buy cost was $2.98 – I sold my shares at $11 – some 400 of them when the place i worked for went under during Obama’s recession.

        I will not hesitate to do this again.

        • 0 avatar

          “Obama’s recession.”

          which one was that? The one that started a year before he took office?

          • 0 avatar

            @JimZ: Yes, in much the same way that the same people will call current situation “the Biden virus” 4 years from now.

          • 0 avatar

            Statistically…courtesy of the Great Orange Denier and Fauxed News, the majority of “believers” are in a very high risk demographic for adverse outcomes related to COVID 19. Any future partisanship from the right might turn out to be biologically self-limiting.

          • 0 avatar

            Biden would have to first become president for it to ever be called “the Biden virus”. Between his run for US Senate against Ronald Reagan and him mourning the loss of 150Million Americans since 2007 from gun violence there is no way he will have time to campaign for US President.

        • 0 avatar

          The Great Recession arose from Republican/”conservative” fiscal policy/outlook on regulation of the financial sector.

          Takes about 2 terms for those policies to wreak their inevitable havoc – thus, the recession arising from the S&L crisis (there was also Black Monday prior to that) which ended up (ironically) costing Bush Sr. a 2nd term and the Great Recession (which was like the S&L crisis on steroids) which arose at the end of Bush Jr.’s 2nd term.

          • 0 avatar

            I urge all Republicans to print out at a graph of GDP, and then label significant political events (such as presidential elections) on it.

            Here’s the graph, straight from the source:

            Feel free to reduce the range, but please include at least 2007-2020.

            The only way to win arguments with Democrats is to be aware of the results of this exercise.

          • 0 avatar

            @Luke42: You need to track national debt, NOT GDP. Because when you do, you will see plainly who is the tax and who is the spend. Neither party is both.

  • avatar

    I wouldn’t be surprised if Ford’s dividend percentage isn’t dropped significantly, if/when it is resumed.

    Personally think Ford has been making far too many mistakes over the last several years, which is why their stock has been steadily declining since 2013.

  • avatar

    A coronal clearance sale coming to a dealer near you!

  • avatar

    What is the justification for allowing this program on toys like the $75K GT350R, the $90K GT500, the $70k Raptor, let alone the $400K GT, but not the Super Duty?

    Does Ford think people who work with their trucks aren’t going to be affected by this virus?

  • avatar

    If I’m going to buy a new vehicle right now, I’m gonna need some serious smootchy smootchy right on my a$$ from the salesmen, followed by the sales manager, and then the F&I guy. Begging would not be discouraged, pictures of their hungry children encouraged. The cutie you got running the reception desk? She needs to bring me a cup of coffee stat, cream, no sugar.

    Did I also mention an 84 month, no interest, no money down, sign and drive loan? And that’s on top of I didn’t even have to ask for it Ford A-plan pricing.

    • 0 avatar

      And you’ll still be upside down 48 months later.

    • 0 avatar

      Way to go buddy, you get yours. If your elderly neighbors come knocking looking for a roll of TP make sure you grill ’em hard about what’s in it for you.

      • 0 avatar

        Grocery store may be out of the better toilet papers but I have yet to see one grocery store that didn’t at least have a huge stock of the cheaper 1 ply stuff.

        It’s almost like no one actually needed 6 packs of 36 toilet paper rolls.

    • 0 avatar

      We’re dealing with this right now. Sales at a local dealership isn’t budging on lowering the price of one of their cars. One that isn’t popular and also won’t be available after 2020: the Regal TourX. C’mon, drop that price. Make that sale!

    • 0 avatar

      good to see people still plan to be jerks to those working in the retail sector. And yet we feel those needing a helping hand are the entitled ones.

  • avatar

    I was in the market for a new vehicle up until this weekend.

    I’m holding out for an indication that employer will survive.

    For a used vehicle, I’m waiting for a direct need. For instance, it’s easy to imagine that I may need head out across the country looking for work, and towing a small travel trailer with a used SUV would make sense in this scenario.

    For a new vehicle, I’m looking for the following things:
    0) Assurances that both my wife and I will keep our six-figure jobs.
    1) A plug and 30-miles all electric range.
    2) Three rows and a 5000lb towing capacity.
    3) 0% interest.

    The information I need to make a decision isn’t yet available.

  • avatar

    Tremor might be replacing my Raptor…..I’m diggin’ it….

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