Ford Is Back to Profitability with Improved Mileage

Ford (F) has returned to profitability, benefiting from increased market share which is the likely result of improved mileage. Ford earned almost $2.4 billion for the quarter, but it was the result of a large one-time gain associated with the debt reduction actions completed in April. The pre-tax operating losses were $424 million; an improvement of $609 million from year-ago results.

Ford has gained U.S. market share for January through June 2009. Wards' Six month market share:

GM 19.8%
Toyota (TM) 16.1%
Ford (F) 15.9%
Honda (HMC) 11.1%
Chrysler 9.8%

Ford also gained share in Europe and Asia, boosted by the fuel efficient Fiesta.

In contrast with GM and Chrysler, Ford is the only U.S.-headquartered manufacturer with vehicles qualifying for the Clean Fleet Report Cars with the Lowest Greenhouse Gas Emissions. Both the Ford Fusion Hybrid and Ford Escape Hybrid are in the top 10 list.

Ford is on target to meeting CAFÉ with average fuel economy in 2010 being 20 % better than 2005.

The Focus will be increasingly important to Ford’s success as it lowers manufacturing cost with a global version and when it offers an electric version in 2011.

In 2012, the Ford Escape Hybrid, already the most fuel efficient SUV, will get a lot more efficient by also being available as a plug-in hybrid. The PHEV Escape Hybrid is already being tested in a number of fleets. By 2012, Ford will offer multiple

EcoBoost engines will be delivered in over 1 million vehicles globally, delivering better mileage through turbocharging and direct fuel injection.

Ford could have greater market share than GM by 2012, unless GM transforms its entrenched culture centered on large heavy vehicles as the only way to generate adequate profit margins. In the next few years, Ford will face increased competition with Toyota and Honda both offering hybrids for less than $20,000. Ford will also face intense EV competition with Nissan (NSANY), BYD, and a number of emerging electric vehicle makers.

In the future, oil price increases and oil shocks will deliver market share to makers who minimize consumption of petroleum fuels. Winners will build the best hybrids, plug-in hybrids, and electric vehicles. Ford is investing nearly $14 billion in the U.S. over the next seven years on advanced technology vehicles, including $5.9 billion in loans from the U.S. Department of Energy for advanced fuel-saving vehicles.

“In 10 years, 12 years, you are going to see a major portion of our portfolio move to electric vehicles,” Ford CEO Alan Mulally stated earlier this year. Now Ford is executing its electrification strategy.

Ford Q2 Earnings Presentation

Earnings Transcript

Disclosure: No position

Comments

[jerrydd:]

With gas going back up to $4/gal late next yr and up from there until it crashes the economy again, Ford had better go better mileage as GM, others must if they want to survive.

While an EV Focus is good, it's just a stop gap as EV's need to be built as EV's to get costs down, profits up. By reducing weight, making them more aero much smaller EV drives, battery pack are needed, thus cost for the same range, performance.

For real mileage a small ICE of say 30hp with a 20kwgenerator/motor clutched to an 100hp EV drive motor , 40 mile range battery pack in a Focus would hit 100+ mpg on long trips and no gas use on daily trips for many.

But these will rule only a few yrs as 200+ mile range EV's with fast recharge stations will become the standard. Why is money. EV's will be cheaper than ICE's to build and gas will climb to very high levels, as high a it can go without killing the economy. Which it will do every 2-3 yrs until we become mostly free from oil in about 10 yrs.

The fact is we hit peak oil in early 08 and the world is buying more cars, trucks as 3 billion people go from third world to first world economies and will suck up whatever oil is available.

But in 10 yrs they, us will have learn to live with little oil switching to RE powered EV's, NG, biofuels and mass transit, high speed trains. Invest accordingly.

Jul 26 01:42 PM