Ford (F) is hyping impressive new products -- a new factory in China and sustainable approaches at home -- as it prepares to release preliminary 2012 first-quarter financial results on Friday, April 27. The company that built its brand selling manly trucks and feisty muscle cars made in the U.S.A. now embraces foreign markets and green technologies. The iconic brand is building on one of the more compelling turnaround stories in recent memory. Is the turnaround complete, or is this just the beginning for the auto stock that investors have grown to love over the last few years?
Ford's latest models continue to set the standard across multiple categories. The redesigned Explorer has been a big seller in the SUV category and the refreshed F-Series pickups have posted extremely strong sales. The 2012 Ford Focus is quickly being hailed as the best compact car to ever come out of Detroit and fans are clamoring for it in markets all over the world. Ford investors are reaping the rewards of CEO Alan Mulally's goal to consolidate Ford's global product portfolio into a single lineup of vehicles.
Ford's latest model entry coming to market is the all-new Escape. The public has gotten a little worried about Ford's new mini-SUV as the incoming design is quite a drastic departure from the old school, boxy, mini-utility vehicle it replaces. The new Escape is sharply styled with a hint of luxury. Much like the outgoing Escape, the new version will compete in the U.S. with vehicles like Toyota's (TM) RAV4 and the Honda (HMC) CR-V. This time, Ford is challenging the competition with upscale styling and luxurious interior options rather than relying on value pricing and a one-size-fits-all approach. I believe the timing at Ford is just right for a strategy like this. The new fuel-efficient drivetrains and sleek lines should snare the majority of buyers scared of minivans and a sea of sameness on the roads. According to The Detroit Free Press, Ford already has 8,000 pre-orders for the new Escape, suggesting that dealers are champing at the bit to roll these out.
Beyond sexy new models, Ford is aggressively chasing its rivals abroad with its plans to build a $760 million assembly plant in Hangzhou as part of a strategy to double its production capacity in China by 2015. Ford will start construction later this year and the plant will open in 2015. The new plant will initially produce 250,000 vehicles per year.
The Hangzhou plant news comes on the heels of Ford's recent announcement to invest another $600 million in efforts focused on expanding capacity at its Chongqing facilities by 350,000 passenger cars. Beefing up China while current operations in North America are boasting their best first-quarter sales in four years appears to be a natural ramp to stock growth. European fears come and go and China was not a sexy place to do business last year if you were an automaker, but Ford appears to have its eyes on a much bigger global prize.
Auto sales in China rose 2.5% last year, after a decade of double-digit growth, but most automobile manufacturers view this as merely a speed bump. Ford's recent efforts to penetrate the Chinese landscape come at a time when the domestic power has less than 3% of the current market share. Ford's main rival, General Motors (GM), has 13.8% of the Chinese market while Volkswagen currently claims 12.2%.
With expansion in China under way, Ford has been busy on the home front as well. The company charged into Earth Day by launching several new initiatives that will encourage people to consider a more green way of life and ultimately a greener vehicle in the future. Ford teamed up with the cultural media platform SHFT.com to create a new documentary series that profiles leading eco-entrepreneurs and innovators who are transforming industries with fresh sustainability solutions. The series will be featured on multiple platforms including SHFT.com, Huffington Post, AOL, and U.S. Virgin Airlines in-flight entertainment. While these platforms might not appear as powerful as traditional channels, rest assured that Ford is getting in front of a highly targeted and sought after viewership with this tactic.
Can Ford pull off some Chipotle (CMG) style buzz of its own by goosing its customer base with stories of clean living and earth- and animal-friendly practices? All signs point to yes: 200,000 customers have already visited a custom website Ford set up to help fans learn more about what might be the right fuel-efficient vehicle for their lifestyle.
A sustainable lifestyle matters, but then again, so does horsepower. The brand responsible for many a childhood dream with the creation of its iconic 5.0-liter Mustangs back in the day is now opting for a much tinier power plant. Lucky for us, Ford's EcoBoost line is shrinking engine size without shrinking performance. With a gallon of gas planted firmly at $4 and a growing demand for clean technologies driving most markets, Ford is in a very desirable position. The company currently offers seven vehicles with the smallest engines in its segments -- more than any other competitor.
Even better news for both Ford fanatics and investors alike is the upcoming release of the new EcoBoost 1.0-litre three-cylinder engine scheduled for a North America launch in 2013. This innovative engine is roughly the same size as the average laptop computer, but is still able to generate 125 horsepower. At its core, this will be the highest-output-per-liter, regular production engine that Ford has ever made.
Ford's new, tiny engines headline an impressive list of coming attractions that should position the stock for steady growth into car-buying season and beyond.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
