As a journalist, you try to remain unemotional when covering stories. But I have to confess, I felt pretty sad reading the Ford earnings report today. The American automotive icon had a disasterous 2006. And there’s no relief in sight. Doing the math, the company lost over 24-thousand dollars a minute -- basically the cost of a Mustang!
According to auto industry analysts, the problems are simple: a weak product line and a bloated cost structure. The company has seen a big drop in consumer demand for its key products, such as F-series pickups. Understandably, higher fuel prices are driving many Americans away from trucks and SUVs -- to car models.
What’s interesting to me is that Ford’s stock rose today -- in spite of such a dismal earnings report. I couldn’t get a straight story on the reason why.
The best guess seems to be that things can’t possibly get worse at Ford. In addition, investors seem to have confidence Ford CEO Alan Mullaly can turn things around better than Bill Ford, the previous CEO. They seem to view Mullaly as a straight shooter who has a handle on Ford’s problems and the guts to take strong corrective action.
What’s clear is that Ford’s problems are not shared industry-wide. Toyota did exceptionally well in 2006, with sales up an incredible 13.7%. As a result, Ford -- which had long been the nation’s second largest automaker behind GM -- is now set to settle into the number 3 spot behind Toyota.
Ford even fell behind DaimlerChrysler in US sales in November.
The big question I have is: Why do foreign automakers like Toyota seem to have a better pulse on what the American consumer wants?
I’m also curious: If you were to buy a car, what would it be? Would you consider any of Ford’s brands?
Comments
I think the Ford pickup is the best for durability and the Lincoln's are very well made luxury cars.
The new series fords cars are also very well built.
In my opinion Ford needs to improve the sales and promotion of the best cars that compare with the competition. What happens on the sales floor is the key. I believe all the automakers have access to the same technology today so success is more about sales methods.