Blog: Dave LeggettQ1 financials generally good, but will the going get tougher?

Dave Leggett | 4 May 2016

We’re well into Q1 results season and there are one or two interesting straws in the wind. One is that North America continues to be a strong vehicle market this year, and that is reflected in Ford’s impressive results. Perhaps even more importantly, Western Europe’s car market continues to move in a positive direction, Ford booking a healthy profit for the region in Q1.

A strong performance in North America also helped FCA in the first quarter, though that company’s high level of debt remains a cause for concern, especially given the company’s exposure to less buoyant car markets elsewhere (like Brazil). FCA chief Sergio Marchionne has been relatively quiet lately, but I suspect he’s giving some thought to a potential partnership with someone out there. He seems determined and has been banging this particular drum for some time now.

Another straw in the wind is that the conditions that have generated very healthy margins and profit for the premium makers for some time now may be becoming less favourable. BMW reported its first quarter profits earlier this week. While the overall figures are strong, there are some negative developments in there. It’s not all that surprising, perhaps, but it is interesting to note that BMW is warning of a volatile global political and economic environment. Companies will have to be smart and agile to maintain profits in the more challenging environment that is emerging, with volume and margin growth prospects decidedly mixed in regions around the world.

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