USA: Ford on the right road but some potholes still ahead
Ford's recovery is on track but some obstacles remain, according to the Associated Press.
The report said Ford chairman and chief executive Bill Ford is now far more upbeat - a little more than a year after describing his job as "brutal" -for good reason.
The second-largest US carmaker recently beat Wall Street financial targets for the ninth consecutive quarter, keeping with its pledge to "under-promise and over-deliver", AP said, adding that, in the most recent quarter, Ford's $US1.9 billion profit not only doubled the Wall Street consensus forecast, but topped first-quarter earnings of larger rival General Motors.
"I think we surprised some people," Bill Ford reportedly said in a recent interview, adding: "Not just with the size of our earnings, but the fact that the strategy we laid is working. There were a lot of sceptics, so it feels good. But we have to keep it going."
Associated Press said that maintaining the momentum of a restructuring plan started more than two years ago will surely be a topic when Bill Ford faces shareholders on Thursday at the company's annual meeting in Louisville, Kentucky, a state where the company employs about 10,000 people and builds some of its best-selling vehicles, such as the Explorer sport utility.
The report said that, after raising the carmaker from a sea of red ink, Bill Ford is in a much stronger position these days at the helm of the company his great-grandfather founded 101 years ago - Ford lost $6.4 billion combined in 2001 and 2002 before rebounding with a $495 million profit last year.
AP noted that Ford executives have said they expect a wave of new products - 40 new vehicles worldwide this year - and continued cost savings to increase profits in 2004 and have also reiterated a goal of achieving an annual pre-tax profit of $7 billion in the next couple of years.
But many obstacles remain, including increasing competition and improving quality from foreign brands and pricing wars that continue to erode profits, Associated Press said, adding that Ford actually lowered its consumer incentives by an average of $85 a vehicle from March to April, but they still averaged a hefty $3,519.
Analysts reportedly expect those deals to escalate in the coming months following lacklustre sales results in April that contributed to already higher-than-normal vehicle stocks.
Autodata Corp. figures cited by Associated Press show that, to the end of April, Ford's US sales were down 2.7% from a year ago, and its market share was off a little more than 1% to 19 % - in the same period, Toyota Motor saw a 12.7% rise in US business and its market share gained 1% to rise to 11.8%.
Ford reportedly said some of the dip in business can be attributed to a pull back in high-volume but low-margin sales to daily-rental fleets, a popular destination in the past for cars such as the Taurus.
"They're gaining in profitability at the same time that they're losing market share," Burnham Securities analyst David Healy told Associated Press, adding: "Some of it's deliberate. Some of it they're just getting beat over the head by competitors' products."
Noting that Ford plans to begin selling the industry's first petrol-electric hybrid SUV this summer, AP said that the carmaker remains a target of some environmentalists for the company's overall fuel efficiency ratings and its decision last year to back off a goal to improve fuel economy by 25% in its sport utility vehicles by mid-decade.
Associated Press said members of the San Francisco-based activist groups Global Exchange and Rainforest Action Network plan to attend Thursday's meeting and intensify an ongoing campaign to compel Ford to improve fuel efficiency and reduce tailpipe emissions.
"The first step toward recovery is for Ford to admit it has a problem -- oil addiction," Jennifer Krill, the Rainforest Action Network's campaign director, told AP, adding: "Ford's recovery from its addiction to oil will be the American auto industry's first real step toward creating a clean and healthy family of cars."