Ford shitcanning all its cars but the Mustang.

[CaminoRacer]

What I see there is a seasonal component of both gas prices and small car sales. Gas prices go up in the spring/summer and car sales also go up in the summer (no one likes to browse dealerships with snow covered cars).

And the hybrid sales has a decent trend upward as more hybrid models are offered and the sections of the public demand more eco-friendly options. And there's also a seasonal component. And Q1 2011 is opposite of the prediction.

Like Ed said, has prices have some impact on consumer choice, but it's not large and there are other factors that affect things.

[12,000 RPM]

Hmm, did I post this before? Made this for another forum a while back.



You were saying?

[Tave]

  SUVs, CUVs, and pickups aren't automobiles now?  Hell, the model T more closely resembles an SUV/CUV than modern sedans to me.

2 of the top 3 best-selling vehicles in the world last year were the Corolla and Golf. We're talking about a vital market for mainstream manufacturers. Abandoning said market completely should be an option of absolute last resort. IMO, you're being kind of flippant here and giving the impression that you don't think it's a big deal.

Ford makes money in segments other than passengers cars.  They lose money in passenger cars. How many loss making products does Ford need to keep producing in order to keep you satisfied?  My position is simply don't be in business lines you can't be profitable in, feel free to take that to its logical conclusion to your hearts content.   

Escape might not beat the CRV in comparison tests but they seem to be able to make money in that segment. This isn't new and isn't unique to Ford - SUVs, CUVs, and trucks are higher margin than cars across the board, including for manufacturers that can turn a (slim in most cases) profit in cars.

Toyota is probably on-track to sell more Rav4s over the next 5 years than Explorers and Escapes combined. Ford is getting completely outclassed in every important segment out there other than pickups and pony cars.

And maybe they didn't have a choice. If this is a last ditch effort to throw everything and the kitchen sink out before the boat slowly burbles underneath the waves, then so be it. If the decision was at all governed by other considerations, I see huge holes.

[SVT_Power]

Yea... This looks like a terrible correlation between fuel prices and fuel efficient car sales

LOL without even going into any kind of stats, those aren't even good examples of correlation.

At least use a convincing correlation like:

[Lebowski]

2 of the top 3 best-selling vehicles in the world last year were the Corolla and Golf.

Ford's decision and discussion ITT relates to the US market. You're shifting to the global market because you're stretching (just as you were with the Henry Ford comment).

We're talking about a vital market for mainstream manufacturers. Abandoning said market completely should be an option of absolute last resort. IMO, you're being kind of flippant here and giving the impression that you don't think it's a big deal.

Ford (and GM and Chrysler) have demonstrated over decades an inability to turn a profit in US passenger cars. Better run companies than the D3 without the D3's structural disadvantages have low margins in US passenger cars.

IMO, you're being flippant about companies pouring capital into market segments where they can't and won't turn a profit, let alone an acceptable economic return.

Toyota is probably on-track to sell more Rav4s over the next 5 years than Explorers and Escapes combined. Ford is getting completely outclassed in every important segment out there other than pickups and pony cars.

Yet Ford seems able to compete profitably in those segments. Maybe when they stop throwing good money after bad in the US passenger car market, they can better allocate capital towards improving their product lineup in profitable segments.

And maybe they didn't have a choice. If this is a last ditch effort to throw everything and the kitchen sink out before the boat slowly burbles underneath the waves, then so be it. If the decision was at all governed by other considerations, I see huge holes.

You see holes because you're basing your argument on emotion and illogical/irrelevant false ideals ("but it's their raison d'etre!  I say so myself!"), not on rational analysis, facts, or economics.

[Lebowski]

LOL without even going into any kind of stats, those aren't even good examples of correlation.

At least use a convincing correlation like:

[img width=800 height=315]http://www.tylervigen.com/chart-pngs/3.png[/

Lol.

[Tave]

Ford's decision and discussion ITT relates to the US market. You're shifting to the global market because you're stretching (just as you were with the Henry Ford comment).

I already pointed out that 4 out of the 7 non-truck top-10 domestic sellers were mainstream sedans. You cut that out of my quote and didn't respond. 

Ford (and GM and Chrysler) have demonstrated over decades an inability to turn a profit in US passenger cars. Better run companies than the D3 without the D3's structural disadvantages have low margins in US passenger cars.

Companies sell different products on different margins all the time. Ford abandoning a half million vehicle/year market is an extraordinary development in the history of the brand.

IMO, you're being flippant about companies pouring capital into market segments where they can't and won't turn a profit, let alone an acceptable economic return.


Yet Ford seems able to compete profitably in those segments. Maybe when they stop throwing good money after bad in the US passenger car market, they can better allocate capital towards improving their product lineup in profitable segments.


You see holes because you're basing your argument on emotion and illogical/irrelevant false ideals ("but it's their raison d'etre!  I say so myself!"), not on rational analysis, facts, or economics.

Think Ford is a good buy right now? Eleven bucks a share baby!

[Lebowski]

I already pointed out that 4 out of the 7 non-truck top-10 domestic sellers were mainstream sedans. You cut that out of my quote and didn't respond. 

I don't understand why you are excluding trucks for one thing. Might as well make it, "four out of four of the top ten excluding those that aren't sedans are sedans". I also don't know what post of mine this is refuting - I never said the sedan market is going to zero.

Five of the top five vehicles by sales are trucks or SUVs/CUVs (F150, Silverado, Ram, RAV4, Rogue). Sure, four of the next five are sedans - and zero of them are Fords.

But this is all moot as doesn't relate to profits, which is why I ignored the first time.

Companies sell different products on different margins all the time. Ford abandoning a half million vehicle/year market is an extraordinary development in the history of the brand.

We're not just talking about "different" margins, we are talking about consistently negative margins.  And companies also cull unprofitable products all the time - the bandwagon argument is a weak one.

Think Ford is a good buy right now? Eleven bucks a share baby!

I own some, and would buy it here if I didn't already.

[Tave]

I don't understand why you are excluding trucks for one thing. Might as well make it, "four out of four of the top ten excluding those that aren't sedans are sedans". I also don't know what post of mine this is refuting - I never said the sedan market is going to zero.

Five of the top five vehicles by sales are trucks or SUVs/CUVs (F150, Silverado, Ram, RAV4, Rogue). Sure, four of the next five are sedans - and zero of them are Fords.

I isolated truck sales because they regularly clock-in at 40% fleet by volume, and represent as much the light-commercial market as they do the passenger-car market. The amount of average Joes buying full-size pickups for a personal vehicle is severely overstated by the gross sales numbers.

Again man, I'm not faulting Ford if they absolutely had to do this. I just think you're underplaying what a huge deal it is.

[Lebowski]

Even if you don't "absolutely have to" exit a segment, why continue allocating capital to a segment that you can't compete profitably in?

I don't think they necessarily had to do it, but from a shareholders perspective I think it was probably the correct, profit maximizing decision.

[Xer0]

For the spinners on a budget, with news that Ford is gonna shit on all their cars going forward, you can no snag a brand new Focus ST for 17K.  Hell of a fucking deal.

[12,000 RPM]

Yea I saw that. Pretty good for buyers, absolutely shitty for owners.

[Laconian]

For the spinners on a budget, with news that Ford is gonna shit on all their cars going forward, you can no snag a brand new Focus ST for 17K.  Hell of a fucking deal.

!!!!!

[MX793]

Yea I saw that. Pretty good for buyers, absolutely shitty for owners.

Shitty for owners trying to sell their cars now.  Wait a couple of years and used values will probably go up.

Another realization I just had is that after years of Ford having overdogs in the H and G classes in SCCA, the only vehicle they'll have that can even be used in Auto-x will be the Mustang.  CUVs generally fail the rollover criteria and are barred from competition.

[SVT_Power]

CUVs generally fail the rollover criteria and are barred from competition.

Sounds like...discarimination against CUV's

[AutobahnSHO]

Sounds like...discarimination against CUV's

well, they are kinda high up. snooty. as in Dr. Seuss silliness which came to my mind

[Laconian]

Sounds discriminatory against Baby Boomers with their high H-point needs. They're the real victims.

[MrH]

Down with barstool style seating!  I like my legs out in front of my like a Formula 1 driver, whether I'm driving a sports car or an SUV.

[r0tor]

Meh... Wouldn't be surprised if this doesn't end up as a giant PR stunt to give Trump ammo to kill CAFE standards

[TBR]

I mean this might be the right economic and strategic decision but it seems like a pretty big red flag too. I get that they are selling fewer sedans relative to their competitors, their own crossovers, and their past, but it's not an insignificant number either, and some tailing off is to be expected since the Fusion and Focus are pretty old at this point. If they can't make money on 200k Fusions a year then I would be pretty concerned if I was a Ford investor.

[Lebowski]

I mean this might be the right economic and strategic decision but it seems like a pretty big red flag too. I get that they are selling fewer sedans relative to their competitors, their own crossovers, and their past, but it's not an insignificant number either, and some tailing off is to be expected since the Fusion and Focus are pretty old at this point. If they can't make money on 200k Fusions a year then I would be pretty concerned if I was a Ford investor.

How is this a "red flag" when it has been common knowledge for about 20+ years that the D3 don't make money on cars and make all their NA earnings on trucks/SUVs/CUVs?  It wasn't exactly a secret.

[2o6]

How is this a "red flag" when it has been common knowledge for about 20+ years that the D3 don't make money on cars and make all their NA earnings on trucks/SUVs/CUVs?  It wasn't exactly a secret.

GM makes money on cars.

[Lebowski]

GM makes money on cars.

GM loses money on passenger cars in aggregate last I read, and has for most of the last two decades or so.  Their car margins are closer to zero than Ford's, but still negative.

[2o6]

Is that wrapping GM Europe's losses in that?



I can't picture GM not making money on cars like the Cavalier; that was less than 20 years ago and made using parts from the mid 1980's. That chassis was well amortized.

[Lebowski]

Is that wrapping GM Europe's losses in that?



I can't picture GM not making money on cars like the Cavalier; that was less than 20 years ago and made using parts from the mid 1980's. That chassis was well amortized.

I believe it's just North American cars. They don't break out profitability by product line so analysts usually have to try and back it out, with plenty of assumptions etc.

It's not just the development costs (although the market has got so competitive and tech so good I imagine it does cost more to develop new models now), they have high cost UAW labor, they have too much capacity. Too much capacity and inability to cut it means they are over reliant on discounting to keep inventories in check etc.

It's hard to make money in mainstream passenger cars, I've read companies like the J3 make sub 5% margins in small cars. Toyota for example is a really really good company and doesn't have the D3's legacy/structural disadvantages, if Toyota is making a sub 5% margin on something, good luck competing with them and even breaking even.

[12,000 RPM]

I think we've been long overdue for a market correction. Americans don't need to buy 17 million new cars a year, especially if millions of them are sold at a loss. Average age of cars on the road keeps increasing. Once rates Rose I think that correction will happen pretty quickly. Already seeing a correction from subprime no longer being viable.

[TBR]

How is this a "red flag" when it has been common knowledge for about 20+ years that the D3 don't make money on cars and make all their NA earnings on trucks/SUVs/CUVs?  It wasn't exactly a secret.

I don't follow the industry in a ton of detail from a business perspective so perhaps it was common knowledge to those who do (eg Musk's buddies in the analyst community), but I had assumed the relative sales success of the 2nd generation Fusion translated to profitability. Maybe not, although I honestly don't believe that Ford lost money on the Fusion as a total program. I mean it succeeded their expectations to such a degree that they opened a new production line in Michigan (in addition to the original one in Mexico).

Regardless, it is not a good sign that Ford's leaders don't see a reasonable path to profitability in what is still a pretty big segment. I am not sure why the same thing won't happen in the crossover segment as it continues to supplant the sedan segment. Whatever massive structural disadvantage they have that causes them to lose money on a mid priced sedan made in Mexico and a small sedan whose R&D costs are shared globally (and aren't going away btw since, as far as I know, they aren't cancelling the program, just US sales) are going to apply to crossovers too.

[12,000 RPM]

Crossovers are subject to the same internal issues (UAW costs etc.) and even the same market pressures (lower prices than comparable imports) but ultimately they have the margin necessary to warrant building. I'd wager Ford's crossovers are not as fleet dependent as their sedans either.

R&D seems a bit DOA for Ford's mainstream offerings... yes they have the new MQB style platform and joint transmissions with GM, but all the engines are carry over stuff that have been around for close to a decade, and they don't seem quick to migrate anything below the Explorer to a new platform. I imagine what little money they are spending on R&D will go to EVs.

[CaminoRacer]

Regardless, it is not a good sign that Ford's leaders don't see a reasonable path to profitability in what is still a pretty big segment. I am not sure why the same thing won't happen in the crossover segment as it continues to supplant the sedan segment. Whatever massive structural disadvantage they have that causes them to lose money on a mid priced sedan made in Mexico and a small sedan whose R&D costs are shared globally (and aren't going away btw since, as far as I know, they aren't cancelling the program, just US sales) are going to apply to crossovers too.

+1

[r0tor]

The focus and fusion are world cars.  They are still being developed.  You would think to offest the development costs they would try to sell them globally.  The US restrictions just point towards less of "we can't make them profitable" and more towards a cafe political statement and/or trying to brainwash their customers into more expensive crossovers

I wouldn't doubt there bring a press conference in a few months with CAFE standards being dropped and Trump declaring how he just saved thousands of jobs