Jobu37

Top 10 'Clunkers' and New Cars Purchased

Actually he sounds more like an idiot.


On Aug 11 12:52 PM Cincinnati87 wrote:

> Midas1, you sounds like a sales in a Toyota dealer

July ISM Shows Continuing Improvement

Due to the success of the Cash for Clunkers program it seems likely that the auto industry alone will push the index over 50 in August. Ford had already ramped up production in July but now they are faced with extreme shortages on Focus and Escape models. Chrysler and GM both now have an economic reason to start producing since they have finally worked their 100 day+ levels of inventory down a bit.

Numerous steel producers started calling workers back from furlough last week due to the uptick in demand which will also contribute to more growth in August.

And we also have the remaining unspent $600 billion in stimulus yet to come. The solar panel and wind turbine companies will be ramping up as they start to get their piece of the stimulus pie. Not to mention the Caterpillars of the world as more projects get started with stimulus monies.

Ford to Report Big Sales Increase: Does It Matter?

Ford had already ramped up production prior to the bump in sales in July. In spite of that, they are still out of inventory on models like Escape, Focus, and Mariner.

Since there is demand for these models, with or without cash for clunker money, Ford will have to ramp up production even more. That in turn provides GDP growth which to answer your headlines question "Yes it does matter".

The uptick in July sales will also allow GM and Chrysler to start producing cars since they were able to move alot of their dead inventory that would still be sitting on lots two months from now were it not for the cash for clunkers incentive along with excessive rebates on top of it by Chrysler. So even these two will contribute to material GDP growth in the coming weeks and months.

Even Honda and Toyota will be having to rebuild inventories.

All these vehicles being built in August as opposed to October for GM and Chrysler will stimulate the economy two months early. Which is a good thing.

Cash for Clunkers May Cost Up to $45,354 Per Vehicle

All of this is based on what Edmunds says and they have a proven track record of pushing there own agenda or preference. They are also media hounds that like to be thought of as the know-it-all of the auto industry.

If everybody believed everything they said there would only be one car company left in the U.S. And that would be Honda. I'm not sure that Honda has ever lost a "comparo" in any segment ever.

The idiots over there would probably find some way to pick to a Ridgeline over a F-350 or C3500 in a comparison amongst work trucks.

The fact is that this program got people that were sitting on the sidelines, for years in some cases, into dealerships. And in the process it got rid of a lot of smog producing gas guzzlers. At the same time it will result in more recycled steel that will turn keep the price of steel down a little longer to help the economy regain steam. The only downside is it will contribute to more govermental debt which will theoretically be offset by the future taxes generated by more economic activity.

As far as accomplishing what it set out to do it has done more than most government programs usually do.

How to Play the Real Story Behind Earnings

Waf sees the light!

These companies have succesfully cut the dead weight, which is what a recession is good for. Industry inventory levels are incredibly low. Commonsense would tell someone that at some point the supply channel is going to have to be filled back up. These companies are going to do that with less hourly workers subsequently becoming more profitable with modest top line growth from quarter to quarter. What all these so called experts are missing is the fact that reducing staffing levels is what allows increased profitibility even if topline growth is lethargic. And it will be hard, as it always is, for these companies to justify adding employees due to the incredible margins they will be getting out of selling more product with less people. In this scenario they will hold out unitl Q1 2010 when they start looking at manpower scheduling in order to get rid or overtime and at that point they will begin rehiring. Any CEO will try to holdout as long as he can to enjoy good margins and good stock appreciation. But at some point it becomes more expensive, due to overtime, to build more with less people. This is exaclty why unemployment is a lagging indicator.

A CEO with a team that watches manpower scheduling all the time is one who doesn't have to have massive layoffs when things get bad. These companies would have already adjusted their staffing levels along with a deteriorating economy. This is why unionized workforces assure companies of being cyclical companies. You can never get rid of the deadweight fast enough.

Why I Believe Ford May Be a Hold, But Not a Buy

Ford books revenue the minute a completed unit leaves the factory. The fact that 3rd quarter production is scheduled to be up 25% year over year in NA bodes well for topline revenue growth in Q3. Combine this with the fact that they have been able to increase transaction prices each subsequent month since March provides credible evidence that they will be able to beat the 2nd Qtr numbers. After one time gains and losses they lost $441 million in Q2. With the heavier production numbers along with better margins it is very likely that Q3 will be much better than Q2.

Other points to keep in mind:

Cash for clunkers started officially this past Saturday and the demand has been higher than anticipated for all makes, with Ford being stripped of inventory equal to or better than the competition. The only model that has been performing poorly this year, due to low gas prices, has been the Focus. This weekend the Focuses were flying off the lots. You can expect an increase in production of the Focus being announced this week.

Overseas, the plants that build the Fiesta (Spain, Germany, and China) are all producing at full capacity and they are still not keeping up with demand. This will continue through Q3 and if there is any semblance of a real recovery in Europe you can expect models such as the Mondeo and Focus to start picking up sales as well.

The only downside is continued weakness in South America. Most of the markets down there have not suffered during the recent global recession but are now starting to cool off. Ford was still profitable in Q2 but that may not be the case in Q3.

A Q3 loss of $200 million pushes this stock to $8-$9 by October. Even if they pay down more debt with stock the dilution will be irrelevant compared to the reduction in bond interest expense.

And Ford has shown time and time again a habit of under promising and over delivering. If they say they still see 2011 as the year they return to profitability you can rest assured what they really mean is 2010. Alot of this depends on when the pent up demand for cars starts to pick up. If Q4 is when the industry starts selling at a 11 million annual selling rate it is very possible that Ford will be back in the black in the 4th qtr. They are currently very lean and have a very high level of pricing power in the market.

Seven Car Companies Hurt Most by Recession

Toyota's share was falling long before the economic crisis hit so it may not be a given that it will bounce back quite as quickly as you appear to be implying. Toyota can no longer charge premium prices due to their perceived quality superiority anymore. Reality is starting to settle into the market and consumers are beginning to realize that they can buy higher quality, better looking vehicles from other manufacturers such as Ford. I realize that there will always be blind loyalists but it is safe to say that the number of blind loyalists has and will continue to diminish. Blind loyalty aside, what consumer in his right mind would choose a Camry over a Ford Fusion when the Fusion has beaten the Camry, and all others, in quality surveys for the past three years, and it also gets better fuel mileage, has better handling characteristics, and costs $1,000 or more less. And don't kid yourself about Toyota holding the line on rebates, while they still have some of the lowest rebates around they have increased by a larger percentage than most. Only Kia, Hyundai, Chrysler, Nissan and GM have been more aggressive with rebates. Check the rental lots, you will find alot more Toyotas amongst the Kias and Hyundais so even their current sales are inflated compared to their historical retail demand.

Ford Is Counting on China

So Zacks is rating Ford a hold based on information full of enough errors that it makes perfect sense as to why they missed the boat on Ford when it was selling at $2.00 and told everyone to bail out of it. FYI the Fiesta was launched in Europe first and then China. It has been the hottest model in Europe all year. Hence the reason, along with the Ford Ka, that Ford has picked up 2+ points of European marketshare in 2009.

If the GT, Freestyle, Five Hundred and Freestar support a Ford rating of hold I wonder what the new Taurus, new Mustang, new Fusion, and upcoming new to America Fiesta and Focus would cause one to rate Ford. Perhaps a buy with a target price above $15 a year from now?

Did the idiots at Zacks draw straws to determine who gets to write an opinion on Ford? Obviously whoever was chosen used data from 3 years ago for the basis of their analysis and had no prior knowledge about the company.

If this is how much work these idiots put into any of their ratings on stocks I feel confident that their advice is about as accurate as throwing darts at the Wall Street Journal from across the room to pick your stocks.

Zacks = fail.

Optimistic About Ford

You ask but "what do I know?" The short answer is "not very much".

Ford was carrying around 40 days worth of inventory at the end of May. There are already shortages of Expeditions, Fusions and Mustangs. Once the "Cash for Clunkers" stimulus kicks in the Focus inventories will tighten up as well. Ford is just being proactive in a good way not unlike their proactive approach to working inventories down that got them to the enviable position they are in now. If they didn't increase production to get closer to the preferred 60 days of inventory they wouldn't have anything to sell. The increase in production also includes higher prodcution for the rollout of the all new Taurus which should improve on the sales rate the current version has.


On Jun 30 10:50 PM smfranke wrote:

> "Pipas assured a revival of consumer confidence and stated that the
> worst is over for both auto sales and the economy."
>
> The confidence part of that statement doesn't jibe with what came
> out today.
>
> He should be correct on the June sales numbers though. (How hard
> is it to get your dealers to report sales to you?)
>
> I'm assuming that most people who have jobs already have cars. In
> this economy I don't think people will be buying new cars unless
> really needed. Fear of job loss should put a damper on purchases.
>
>
> Unemployed people probably can't buy cars even if they want to.<br/>
>
> I really don't think it's in Ford's best interests to be increasing
> production just yet. I'm not an auto industry professional, so what
> do I know?
>
> (disclosure... I drive a 2008 Taurus but I like Japanese cars better.)

Why I'd Avoid Toyota, The #1 Automaker in the U.S.

Japanese - the importation process in Japan adds many levels of cost to any product imported. So a 25K Chevy ends up costing closer to 40K. Historically , the government has kept the Yen artificially weak in comparison to the all currencies but especially the dollar. Recent times have allowed for the Yen to start moving closer to the natural exchange rate but it took a global semi-depression to do so. In recent months the Japanese central bank has been able to get it back up near 100 Y per $. All Japanese manufacturers count on the weak Yen to overcome their high labor costs and make their products competitive.
China - requires an auto manufacturer to team up with a Chinese firm before you get any real access to the market. Vehicles directly imported are hit with their version of a VAT. They also manipulate the exchange rate against the dollar.
Korea - essentially has a "Non-Korean tax". Even if you build a plant in Korea but are not a Korean based company your product is treated as if it is imported. Obama is supposedly addressing this in the current negotiations taking place on a new "free" trade agreement. Korea has essentially said that if you take away our auto tax we will ban U.S. beef. So lobbyists for the beef industry will derail any headway being made on free auto trade from the U.S. to Korea.
Mexico - the majority of their purchases are from Mexican plants owned by American, German, and Japanese auto manufacturers.


On Jun 22 05:50 PM 303820 wrote:

> Buddhabill...since according to you the auto industry is a global
> affair...can you tell me how many made in America cars and trucks
> the Japanese, Chinese, Koreans, Europeans and Mexicans buy?

Good Auto News: Chrysler Restarts Production, Ford Confirms Profit Plans

The pro import groups would say that you should buy imports because they are better cars and that you should not support the failed American companies. Essentially you should reward the companies that have done what it takes to make the best product.

However, the best products are no longer imports. GM and especially Ford have improved their products to the point that they match the best the imports have to offer and in many cases with Ford they have surpassed the imports.

The market has evolved into one in which you can buy the highest quality vehicles from American manufacturers for less money but import loyalists are resistant to accept it.

Having acknowledged the gains that GM and Ford have made it is important to point out that not all American manufacturers are the same. Chrysler essentially lags everyone in any metrics used to judge an auto manufacturer. They exist on fleet sales and heavily discounted retail sales that drive down the transaction prices for the two brands that are most often cross shopped with them, GM and Ford. The worse thing that could happen to the overall industry is the re-opening of any Chrysler plant other than the Jeep Wrangler plant since they will basically go back to pushing product on the market that is not being pulled by true consumer demand. That may not be entirely true, there are always going to be people that demand the cheapest thing they can get their hands on regardless of quality and in this arena Chrysler competes very well with the Kias, Suzukis and Hyundais of the world. The difference being that Kia and Hyundai are actually starting to put out good product and they are heavily discounting to establish marketshare.

In short if Chrysler's capacity were gone everybody in the industry would benefit via higher transaction prices. The downside would be the effect on overall unemployment and the fact that consumers would be paying more for cars. However, consumers should be required to pay at least what it costs to produce an automobile.



On Jun 18 10:21 PM 303820 wrote:

> would some one please explain to me what's the problem with buying
> American?

Why Ford Will Make It

Laser,

You point out the obvious very well. The product introductions that Ford has coming this year could very well be game changers. The Fusion (hitting lots now) in both hybrid and conventional form will be the new benchmark for all mid-size sedans. It is best in class in every matrix one can judge a car. Except for one, interior room. And for those that need the space the Taurus (August) which will also be the new benchmark for full-size sedans should fill their needs very well.

A year from now the Fiesta will be hitting the market and if gas has any sort of a runup between now and then it could very well be a 10K per month seller along with the new Focus that will once again be best in class, if it is not already.

I certainly don't view Ford a buy right now due to the upcoming dilution that will take place with the conversion of debt into stock but the bottom will be shortly after the conversion takes place and the appreciation in value will start there and once Chrysler is put to sleep the U.S. auto market will become much more profitable for everyone. Especially the strongest player, Ford.


On Mar 02 11:28 AM Laser wrote:

> I've read many of the comments and would like to respond thus:<br/>
>
> A bad experience at ONE dealership is not a reason to trash a brand.
> I've owned Ford products exclusively since 1980 and found that not
> all Ford dealerships are created equal. When I had a Ford product
> that seemed to be a lemon at one Ford dealership, I took it to a
> second one that fixed the reoccurring problem(s) once and for all.
> I wouldn't think of switching brands based upon one dealership's
> treatment of me.
>
> Second, I have read the nose-out-of-joint GM executive (negotiated
> six-speed transmission deal) and have this to offer him ... You forgot
> to mention the detail that the six-speed transmission was already
> in development at GM when Ford entered the equation and that both
> sides are appreciative for each other's contributions into this system.
> You also left out the detail that the reason Ford chose to locate
> its controllers on the outside was to give a better ability to tune
> the transmission for shifting quality. GM may have done theirs for
> "costs" but Ford did theirs for the experience of the consumer driving.
> I appreciate your contribution to the project but you obviously have
> a bias that is clear in your tone and comments. Any GM executive
> has no reason to have such a tone since your lunch is being handed
> to you every day on the sales floor.
>
> Third, much has been discussed about Ford's cash burn - it is true
> that Ford has a high cash burn rate but the difference is they are
> using the money to develop new products, to retrofit truck plants,
> and to accelerate products to market. GM is RETRENCHING and still
> burning excessive cash merely standing still.
>
> Fourth, GM has been unable and unwilling to offload underperforming
> brands. Plus GM paid $2 billion to get out of the deal with Fiat
> earlier in this century and paid $500 million to end the American
> Axle strike that GM allowed to fester. Furthermore, GM rushed the
> GMT-900 truck program to market and offered a product that was not
> innovative, looked much like the prior version, and was truly little
> changed. The most striking feature of this truck was the new song
> used to sell it - interestingly, GM took almost three years to be
> able to figure out a competitive advantage the truck had over the
> competition and to sell it to the public in its ads. By that time,
> Ford matched GM's fuel economy advantage.
>
> GM has had the same manager in charge of the company for eight years
> and the same "product czar" for six - a man who personally took credit
> for developing the moribund Buick LaCrosse and Lucerne in his blog;
> he also oversaw the development of the Pontiac G6 which couldn't
> be brought to market with a full model line in its first year. With
> those two gentlemen having been in their offices over six years,
> GM has offered stale and underperforming products. These are the
> two men who clung to moribund brands, didn't forsee the change in
> market and economy (like Mulally did with the financing deal while
> credit markets were still lending), etc.
>
> In the end, the reason Ford will more likely survive than GM is because
> its managers "get it" and have been willing to change since 2006.
> GM's management is still partying like its 1999 and unwilling to
> accept the situation that they themselves created.
>
> The seminal article here was very weak - it failed to even offer
> a glimpse at the main reason Ford will "make it" - PRODUCT - 2010-2012
> Ford products will give every Toyota and Honda model direct competition
> on quality, fuel economy, and price. I know Honda and Toyota owners
> will smirk, but the facts will bear this out. Already the quality
> gap has disappeared and price certainly has as well.

Why Ford Will Make It

The marketplace appears to view Ford's software applications on the jointly developed 6-speed transmission to be far superior to the approach that GM took. Read any review and you will find glowing remarks regarding the smooth shifts in the Ford application while reviews of GM's applications have been criticized for the lack of refinement. Maybe Ford should buy more of GM's blueprints and improve upon them.

It is obvious that you are a GM fan and will go out of your way to paint them in some kind of positive light. But perhaps you need a dose of reality. Yes Ford has more total debt on their balance sheet but $65 billion of that is offset by receivables due to Ford Motor Credit. In case you haven't heard, GM sold off a majority stake in GMAC so the debt associated with the financing of vehicles is not included in the total debt number for them, nor are the receivables. Ford's net debt after receivables is $90 billionish as of the 4th quarter. The majority of that debt that is not secured by collateral (bonds) is trading at 30 cents on the dollar or less. Hence the reason Ford is trying to retire a portion of that debt at premium to it's current value. Pay $10 billion in cash and stock and get rid of $30 billion + in debt sounds like a pretty good deal for Ford. Not so good for the current shareholders that will see their stock holdings diluted. But it's moves like this that will keep Ford from taking the same path as GM and Chrysler. You might want to look at "cash flow from operations" for the last year. That is the true indicator of how strong a company is relative to competitors since that demonstrates whether or not you are bringing in more than is going out in whatever business you are in. You won't like what you see but you should go take a look anyway.

On Feb 27 12:18 PM Miken wrote:

> Mr. Chester
>
> I was on the team that negotiated the deal with Ford on the six speed.
> GM gave them the blueprints and Ford paid the money. That was the
> joint development.
>
> I am very aware that the transmission is being jointly produced.
> The Ford version is being produced at the Sterling plant and the
> GM version is being produced at their Warren, MI plant and in Ramos
> Arizpe, Mexico.
>
> The electronics are basically the same except that Ford chose to
> move the controller outside the transmission while GM stayed with
> their original design and kept the controller internally to save
> wiring costs as well as being able to calibrate the electronics to
> each particular transmission. Bosch is the supplier for both. Don't
> assume you know about this by reading Wikipedia.
>
> The software is somewhat different. I'm sure each company thinks
> they did the better job of calibrating the product.

Ford's the Strongest of the U.S. Automakers: So What?

Most of that $165 billion is backed by loans due to Ford Credit. Ford's real debt that is held against assets is in the $45 billion range. A little worse than GM but GM doesn't have a lineup coming out in the next year that will put their vehicles in the status of best in class in almost every segment of the market like Ford does. GM has not demonstrated strong cashflow from operations as Ford has until the fourth quarter of 2008 either.

This author appears to be another idiot that thinks Toyota is invincable. Maybe the author should look at the debt load that Toyota has taken on in order to expand plant capacity around the world. Capacity that they don't need. At the end of the last quarter posted by Toyota they had debt of $55 billion with even less cash than Ford. And their lackluster lineup does not appear to have potential for more sales but much less when compared to Ford's upcoming lineup.

Q: Which economy looks even more dire than the U.S.? A: Japan's does. Fortunately due to the protectionist environment that does not allow Ford to be competitive in Japan, Ford has much less exposure to the dead Japanese economy while Toyota has a heavy reliance on Japan for most of their profits. By keeping competition out, the Japanese manufacturers are able to extort extremely high margins from their people. The Japanese culture is much more inclined to save their earnings instead of spending their way out of a recession which means the recovery won't come soon. So while Japan went into a recession long before the U.S. and they will come out of it long after the U.S. does. It seems very likely that there will be a few major banks fail in Japan due to their attempts to save companies like Toyota in order to keep the land of the rising sun a prominent force in the global economy. The potential failure of the Japanese economic model will be good a thing in the long run. Perhaps the impending implosion of the Japanese economy will demonstrate the benefits of truly free trade to the Japanese and they will open up their borders to cheaper product that will allow their own people to get more bang for their buck which would help fend off future implosions like the one about to take place. Or maybe they will luck out and the global slowdown will recover fast enough to continue to hide the precarious postition their protected industries are truly in. Time will tell. The one thing that is certain is the fact that Toyota is going to feel the pain this time around much moreso than in past recessions.

Detroit: Please Bring Back the Stripped Car

The Fiesta is not going to come over as a stripper. The majority of it's sales will be at prices above where the bottom end Focus currently sells. The allure for the car in Europe is due to the high-end feel of the car along with it's superior driving dynamics. Most likely that won't change once we get it over here.

This article is completely flawed. Demand is what dictates residuals. The fact that a large percentage of import loyalists demand more Camrys and Accords is why they have higher residual values. When you start "dumping" more cars on a market than there is natural demand the tranaction prices have to come down to move the product. This is the game that the Big 3 were forced to play due to inflexible UAW contracts that made it slightly more profitable to keep churning them out instead of paying the workforce to sit idle. The long-term ramifications of this strategy is why the Big 3 currently trail the competition in residuals. Along with a flawed perception of materially higher quality for the imports. GM still uses this approach on certain models (Impala, and Pontiac) and Chrysler has no choice but to do so. When they don't follow this model you see sales numbers down 50%+. The only fleeting that Ford is aggressive at is "fleet only" models such as Crown Vic. Through June 2008 Ford was down to 13.58% rental fleet. Chrysler was 27.45% and GM a much improved 15.60%. The king of residuals, Honda, was at .75% rental fleet. Yes, point 75 percent. Honda's retail demand in the marketplace is where anybody in the car business should want to be. The company that is most aggressively moving toward fleet dumping is Nissan they came in at 13.07% and very likely will fall behind Ford in the next survey.

You can't manufacture demand you have to earn it. Ford and GM for the most part are doing the things necessary to earn it but as always perception lag can exist for many years. Fortunately, for Ford, the lag is already into it's 3rd year and the tide may be turning for them sooner than Honda and Toyota would like.


On Jan 07 12:00 PM tirereviews wrote:

> I think Ford gets it, albeit a little late. The subcompact Ford Fiesta
> sold in Europe (not to be confused with the crappy Festiva we had
> in the 90s) should be arriving on our shores within a year or two.
>
>
> Chevy had the right idea coming out with the outsourced Aveo, but
> it was absolutely sub-par compared to the Toyota Yaris, Nissan Versa,
> and hello! -- the very successful Honda Fit. The Japanese may have
> copied Detroit in the 60s and 70s, but they have been and still are
> leading innovation and "what people want".