Ford shitcanning all its cars but the Mustang.

[r0tor]

Truck sales did not tank during the second sustained surge. They.....picked up. [/Ray Caruso]

http://www.goodcarbadcar.net/2011/01/chevrolet-silverado-sales-figures/
http://www.goodcarbadcar.net/2011/01/ford-f-series-sales-figures/
http://www.goodcarbadcar.net/2011/01/dodge-ram-sales-figures/

OTHER small car sales surged, but the Focus sales fell. So again I ask. With history as our guide showing that Focus sales fell during ideal conditions for small car sales, what makes you think it will be different this time?

The highest gas priced were in 2008-2009.  The same year of the worse f150 sales in 30 years

[12,000 RPM]

How is it wasteful and pointless? People don't keep cars for 30 years anymore because we've decided that cars are disposable commodities that need to be replaced as often as our phones. If cars were still built for longevity, they'd still be owned for long periods of time. But selling someone a car that lasts dozens of years isn't profitable.

Not sure why you are knocking this mentality... how long have you kept each of your cars for? ~3-4 years?

Cars were built to that 30 year standard. Old Benzes and Toyotas. People on average still didn't keep them for more than like 7-8 years tops. Plus cars ARE getting better built. The average age of cars on the road has been increasing steadily for decades, speaking to both the increasing durability of cars and the average person's increasing willingness to keep them.

[12,000 RPM]

The highest gas priced were in 2008-2009.  The same year of the worse f150 sales in 30 years

Yea I'm sure that had nothing to do with the worst recession since the depression that dragged the whole industry down. Prius sales were down too.

[r0tor]

Yea I'm sure that had nothing to do with the worst recession since the depression that dragged the whole industry down. Prius sales were down too.

Yet Focus sales were up (as pointed out previously)...

[MX793]

Nobody keeps a car for 30 years anymore, unless it's something like a Ferrari F40. Building cars to that standard is wasteful and pointless.

FWIW our 6 year Ford has been holding up OK over the last year. Admittedly Ford really shit on itself with fuel economy, My Ford Touch 2 and those awful DCTs in the Fiesta/Focus.... but if you can live with some gas guzzling and avoid all that other shit they seem as well built as anything Asian. Ford is just facing a shitload of headwinds, even with competitive cars. It's a brutal market

People didn't keep cars for decades then, either.  Those high schoolers in 30 year old cars certainly weren't the original owners.  Maybe the 5th or 6th...  I'll wager some of those cars were junkyard rescues as well.

[CaminoRacer]

Late 90s and early 2000s cars have great longevity. Modern engines but not nearly as many silly electronics to go bad. And very few turbo engines.

[12,000 RPM]

Yet Focus sales were up (as pointed out previously)...

So of the 4 years over the last 11 that gas was >$3.50, the Focus saw sales increases over 1 of them. And that was 11 years ago. Strong odds

[Lebowski]

Yet Focus sales were up (as pointed out previously)...

Ford loses money selling the Focus in the US.

Your point, even (generously) granting your volume assumptions are correct, boils down to "Ford is going to regret not having the Focus to lose money on when truck sales decline!" 

Stupid.

[r0tor]

So of the 4 years over the last 11 that gas was >$3.50, the Focus saw sales increases over 1 of them. And that was 11 years ago. Strong odds

Without cars to hedge against a 2008-2009 style truck market sales cliff - Ford can be out of business in a heartbeat

Their furniture making CEO is oblivious to this

[MrH]

If your "hedge" loses money, what's the point?

[Submariner]

If your "hedge" loses money, what's the point?

Think of it as stock portfolio. 

Market up: Cars loose 4% and trucks make 10%.  Net gain is 6%.

Market down: Cars make 10% and trucks loose 15%.  Net gain is -5%.

Without cars, Ford could loose 15% instead of -5% with them.

I'm not sure what the numbers are like at Ford and I'm not sure if that is a viable strategy.  But that is the theoretical point.

[Lebowski]

Think of it as stock portfolio. 

Market up: Cars loose 4% and trucks make 10%.  Net gain is 6%.

Market down: Cars make 10% and trucks loose 15%.  Net gain is -5%.

Without cars, Ford could loose 15% instead of -5% with them.

I'm not sure what the numbers are like at Ford and I'm not sure if that is a viable strategy.  But that is the theoretical point.

Cars don't "make 10%" in a market down scenario, they don't make anything, they lose money for Ford.  If they can't make cars profitable at a 17mm SAAR it's pure fantasy to assume they will somehow become profitable in an overall market decline.

You don't need to know what the actual numbers are - committing capital to a "hedge" that loses money in up markets and loses even more money in down markets is stupid.

[CaminoRacer]

GM/Ford could both save a lot of money by simplifying option sheets and reducing inventory levels.

[r0tor]

Cars don't "make 10%", they don't make anything, they lose money for Ford.  If they can't make cars profitable at a 17mm SAAR it's pure fantasy to assume they will somehow become profitable in an overall market decline.

You don't need to know what the actual numbers are - committing capital to a "hedge" that loses money in up markets and loses even more money in down markets is stupid.

Of course if your a beancounter who doesn't realize there is no "abort" button to the plan it sounds great.  But if truck demand goes down it's a decade to do the market research, design, retooling, federalizing, production and marketing to get back into the car game.  The company will be toast far far before then, but the furniture maker CEO that sinks the company will undoubtedly get a beautiful golden parachute.

[Lebowski]

Of course if your a beancounter who doesn't realize there is no "abort" button to the plan it sounds great.  But if truck demand goes down it's a decade to do the market research, design, retooling, federalizing, production and marketing to get back into the car game.  The company will be toast far far before then, but the furniture maker CEO that sinks the company will undoubtedly get a beautiful golden parachute.

Cars lose money. If truck demand declines you're not going to save the business by losing more money in cars.

[2o6]

Ford's lack of profitability sounds like a Ford problrm, not a "car shapes are unprofitable" sort of rationale.

If the Focus, Fiesta, and Fusion are unprofitable, what was the point in investing in a new Focus and Fiesta?




It seems weird. If the Focus and fiesta were so damn unprofitable, I don't understand the rationale of still cont I using to sell them in Europe, where they also still likely lose money on them.

[Lebowski]

Ford's lack of profitability sounds like a Ford problrm, not a "car shapes are unprofitable" sort of rationale.

In that case sounds like not selling cars in NA is a Ford solution.

As has been pointed out numerous times now, it's not just a Ford problem, at minimum it's a longstanding D3 problem, and even for those companies that are profitable in cars (ie J3), small mainstreamer cars are low margin.

[r0tor]

You would be a motivating person to work work... If at first you don't succeed, give up and run away

[Lebowski]

No worries Rotor, I wouldn't hire you.

The D3 have been trying and failing to consistently make money selling passenger cars in the US for decades.  If your position is "well gee maybe they just haven't tried yet" you haven't been paying attention.

What's demotivating is mgmt continuing to allocate precious capital to consistently uneconomic/unprofitable business lines.

[2o6]

No worries Rotor, I wouldn't hire you.

The D3 have been trying and failing to consistently make money selling passenger cars in the US for decades.  If your position is "well gee maybe they just haven't tried yet" you haven't been paying attention.

What's demotivating is mgmt continuing to allocate precious capital to consistently uneconomic/unprofitable business lines.

I can't recall a space in time where the big three didn't sell car shapes at all.

[MrH]

Think of it as stock portfolio. 

Market up: Cars loose 4% and trucks make 10%.  Net gain is 6%.

Market down: Cars make 10% and trucks loose 15%.  Net gain is -5%.

Without cars, Ford could loose 15% instead of -5% with them.

I'm not sure what the numbers are like at Ford and I'm not sure if that is a viable strategy.  But that is the theoretical point.

Lose*

But yeah, like Lebowski said, they don't ever make money.  Not even in "up" years.

Ford's lack of profitability sounds like a Ford problrm, not a "car shapes are unprofitable" sort of rationale.

If the Focus, Fiesta, and Fusion are unprofitable, what was the point in investing in a new Focus and Fiesta?




It seems weird. If the Focus and fiesta were so damn unprofitable, I don't understand the rationale of still cont I using to sell them in Europe, where they also still likely lose money on them.

It's not unique to Ford.  The margins on cars are really, really slim.  The big three have come a long way to compete with Toyota and Honda, but there's still a big gap.  Plain and simple, they're competing against the King of Manufacturing.  They're just not as good at it, and haven't been able to catch them.  You're fighting against a company that invented the game and has a huge head start.

That's why I'm surprised Toyota hasn't also crushed in the truck market yet.  I think it's partially brand perception holding them back, but also design and product planning.  They'll eventually overcome these things, and then the big 3 are going to be in the same position but now with their cash cows at stake.

[2o6]

I would say that Ford pulling out of Latin America would have been a wiser move. But, IDK shareholders probably don't think Brazil et al aren't "Mature" and are still worth growth. It doesn't make sense to sell 500K units of a car in the EU that also likely still has thin profits. How many Focus or Fiesta Viganles are they selling? Can't be that many.






Also, doesn't the Tundra have a worse frame, less payload, less towing capacity, and weaker engines? I know back in 2006 ish, it was very clear that the Tundra was not as good as the American trucks. The Ram, F150, and Silverado are excellent trucks.

[MX793]

The 2000-2006 Tundras were less capable.  It was fully redesigned in '07 into a bigger, more capable truck with the new 5.7L V8.  IIRC, it was the most powerful half ton at the time and the 5.7 is still very competitive, though no longer class leading.

[Lebowski]

I would say that Ford pulling out of Latin America would have been a wiser move. But, IDK shareholders probably don't think Brazil et al aren't "Mature" and are still worth growth. It doesn't make sense to sell 500K units of a car in the EU that also likely still has thin profits. How many Focus or Fiesta Viganles are they selling? Can't be that many.

Ford has said they won't rule out exiting geographic business units so it's possicle they will exit Latin America or Europe at some point.  I imagine they have different timelines for turning those around.

Regardless, that they lose money elsewhere isn't justification to continue losing money indefinitely selling passenger cars in the US. 

[SVT_Power]

Truck sales tanked when gas priced surged.  Small car sales surged.  Truck sales took 5 years to recover after people got jobs and $3+ gas was considered the new norm.

No reason to think this doesn't happen again.. andnsoon

I wrote my master's paper on the effect of gas prices on vehicle purchasing decisions in the US from 2010-2014.

When controlling for economic variables, gas prices have minimal impact.

[CaminoRacer]

I wrote my master's paper on the effect of gas prices on vehicle purchasing decisions in the US from 2010-2014.

When controlling for economic variables, gas prices have minimal impact.

Wait, really? I did my econometrics project on that too. Same findings.

[AutobahnSHO]

I wrote my master's paper on the effect of gas prices on vehicle purchasing decisions in the US from 2010-2014.

When controlling for economic variables, gas prices have minimal impact.

Wait, really? I did my econometrics project on that too. Same findings.

Is that for short-term gas price changes? I wonder if long-term permanent price change would affect more.

[SVT_Power]

Wait, really? I did my econometrics project on that too. Same findings.

Aw man that sucks, we're both about to be proven wrong by r0tor's anecdotes.

[Xer0]

Aw man that sucks, we're both about to be proven wrong by r0tor's anecdotes.

[r0tor]

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