A nice little jump in consumer sentimentbodes well for automobile companies, according to CNBC's Phil LeBeau. The outlook for the industry looks extremely good with fresh models from automakers (F, GM, TM, FIATY.PK, HMC, NSANY.OB, VLKAY.PK) coinciding with structural pent-up demand and the uptick in sentiment. [View news story]
That is an interesting point. The US automakers severely cut back on production capacity, including closing many assembly and component plants, and in paring back the Supplier base to a minimum, in order to be profitable in the US in the next Recession down to 10M units per year.
Now that the SAAR suggests we may be headed back to 16-17M units sooner than later, due to pent-up demand as cars and trucks on the road are now aging into their teens on average, the US automakers are stretching the limits of mass production just to keep up with demand, with little to no incentive discounts. It may present the Asians with a grand opportunity to flood the US market with replacement vehicles, imported and/or domestic transplants.
$17B in forgiven debt may be small potatos for a US Treasury awash in multi-Trillion-dollar debts. But for large-cap automakers like GM it represents essentially two years' worth of profits, for doing nothing more than claiming to be destitute, and passive-aggressively threatening to take down the whole automotive industry, and the national economy with it, if they don't get more bailout cash. Isn't that a kind of extortion?
Interestingly, some look at the heads and shoulder patterns on the chart for the last 6-9 months and see Ford arriving at $16 or higher by the end of the year and praise the CEO for utter brilliance (shares are already playing around with a $15 plateau), while others look at the same charts and see a (seasonal?) pull-back to or under the $12 floor, blaming the CEO for gross incompetence.
Ford: Is Yen Depreciation A Strong Negative Catalyst? [View article]
Japan and Korea are pretty much outliers when it comes to heavily protectionist practices for their indigenous auto manufacturing. China, India, Thailand, and other countries have been very receptive in welcoming the outside expertise from the US and European manufacturers. That said, they do tend to require partnership agreements, and insist on local production, with very limited imports allowed without heavy taxation.
So, for example, most of the vehicle design and engineering would be done in the States or in Europe, and when that work is complete, then the partners in China or India or wherever will get help in setting up factories to produce those US or Europe designed cars, for local consumption and for exporting to other nearby nations who do not have such factory capacity.
But yes, automakers spend billions developing all new platforms, and hundreds of millions in periodic updates to existing vehicles, and they have to sell a great many at modest 5-10% operating margins to keep feeding the product development factory.
Regardless, Automakers will build vehicles wherever they think they can earn a decent profit doing so, and they will close down factories where the profits just aren't there.
Ford (F) says it will pass its full-year record for hybrid sales this month as demand for the new C-Max and electric Fusion looks strong. In April, the automaker delivered 35,034 Fusion hybrids compared to the 3,257 Camry and 19,889 Prius hybrids Toyota moved. What to watch: Analysts are still bickering over the impact of lower gas prices on hybrid demand heading into the summer, but Ford appears poised to grab even more hybrid market share. [View news story]
RX: "By the way the Fusion and C-Max are all European design. So far no noteworthy hybrid in the Ford line-up is a homegrown design. How come?"
Your question assumes some very false premises. First of all, Ford developed the original Escape Hybrid (2004-2012) and Fusion Hybrid (2010-2012) exclusively in the US
For 2013 and beyond, the Hybrid Powertrain Systems (Regular and Plug-In versions) in both the C-Max and the Fusion were developed exclusively in the US, not in Europe. Those hybrid powertrains are not even available in Europe yet.
While the current C-Max body and platform were originally developed in Europe, the integration of the Hybrid Systems required a redesign of the body structure to support the extra weight, and to meet crashworthiness requirements. That redesign for extra strength was done in the US, and is to be fed back to the European versions.
While the previous Fusion/Mondeo ("CD3") was developed in Europe, but heavily revised in cooperation with Mazda for the US market, the New Fusion/Mondeo ("CD4") was developed exclusively in the US on an all new platform, and is also not available yet in Europe.
Ford (F) sees demand for SUVs in India helping its EcoSport make a strong debut there despite the stalled automobile market in the nation. The automaker will hedge its bet a little bit by manufacturing EcoSport cars for both right-hand and left-hand drive markets and make it available for export. [View news story]
India has their own huge market. But surely neighboring countries around south-east Asia that don't have their own Ford plants will get dibs on some of India's production lot.
Self-clarification of the clarification - those debt and interest earnings and expense numbers were from the first quarter financial report, as of March 31st, and the effective APRs were (obviously) projected forward for a full year at the same level, and meant to be for reference only.
To clarify Ford's debt situation, as ordinary data mining by robots and amateurs fails the sanity test, Ford's Consolidated Debt stood at $107.356 billion.
But wait - Ford's Automotive debt, which is what would be compared to other automakers that do not own their own in-house bank, is $16.005B - only about 15% of the total.
The other 85% is the operating accounts in Ford Motor Credit Corporation. Ford Credit's commercial low interest debt - $91.351B - is loaned out in turn to Consumers and Dealerships to finance the purchase of cars and trucks. That "debt" earned Ford Credit $1.952B in interest income - effectively about 8.5% APR - and cost them $706M in interest payments - effectively about 3.1% APR. That is an effective 5.4% return on investment, and a constant, steady stream of income, provided that the dealers and consumers pay their bills. More than 99% do so reliably, and Ford Credit has a more than adequate default reserve to cover the rest.
The more money Ford Credit borrows commercially and loans out retail, the more money they earn. This is Good Debt - and it is earning them billions. It should not be treated the same as Ford Motor's Automotive Debt, which is invested in capital expenses and such: building factories and tooling, and also spent on research and development and such. Even so, the interest rates are pretty similar (Ford is now investment grade debt), and the vast majority is on 30 year terms.
General Motors Vs. Ford: What's In The Cards For Their Future? [View article]
Think what Bob meant was that Ford put up essentially all assets, including the Blue Oval, as security for the $23.5B commercial "home improvement" line-of-credit loans and guarantees taken out in 2006. That high interest "credit card account" was paid off and closed about a year ago, many years ahead of schedule.
General Motors Vs. Ford: What's In The Cards For Their Future? [View article]
Actually Ford does owe the US Treasury about $5.5B in loans from the Department of Energy, money borrowed during the Great Recession and used to develop and build up production capacity of fuel efficient cars and trucks. These funds were originally offered by the G.W.Bush administration as part of a $15B initiative from the DOE to spur development of fuel efficient cars, electric vehicles, etc., to reduce the national dependency on foreign oil.
Initially that DOE fund was oversubscribed - Ford originally asked for $9B, and ended up with about $6B. GM and FiatChrysler (never mind Nissan, Toyota, Honda, Hyundai, etc.) together asked for billions more than was available, but then GM and Chrysler dropped out as they got their billions in free cash money in the form of pre-bankruptcy gifts from The Regime and the Taxpayers, later forgiven and forgotten in the "quick rinse" bankruptcy proceedings which wrote off all previous loans and obligations.
Anyway something worked: Oil imports to the US have dropped from a peak of about 456M barrels per month in August 2006, to around 300M barrels per month "now" in 2013 and for the last 6 months or so. That is a savings is about a third, some 150M barrels, or somewhere around $14B per month!
Is Ford About To Go On A Major Run? [View article]
rnah - If you paid $42 for Ford shares, then either you were ripped off horribly, or it was before Ford spun off the Visteon business, which was about a third of Ford Motor Company at the time. The spin-off amounted to about a 4 for 3 share split.
At the split, the price for Ford was immediately corrected downward by a third from the previous day, and shareholders received either 1/3 of their Ford share holdings as new Visteon shares, or they received about $15 per share that they held at the time of the split, in cash.
Anyway you cannot compare share prices before and after splits. The standard charts show when the splits happened, and correct for them, so you will see that Ford shares never reached $42 on a comparable pre-post split basis. The all time peak was $37.08 in March 1998.
Even with that, there were barely a billion Ford shares in circulation, with a market cap of nearly $40 billion. Now there are 4 billion shares in circulation with a market cap over $55.5B . What Ford could do is a 1 for 4 reverse split, turning some 4 billion shares into an even billion, and then have Ford shares priced at $55 and change. That is the number that you would compare to the March 1998 peak, and your $42 memory from 20 years ago.
Is Ford About To Go On A Major Run? [View article]
Chuck - you need to understand is some if not all of that "insider" selling of shares by company executives is simply to pay their taxes on the annual bonus stock awards and options. Those awards were handed out in the first quarter.
When executives and upper management are awarded company shares as bonuses, they must pay cash income taxes on the value of those awards. Those taxes are withheld immediately, so those receiving the stock awards often have to sell a third to half of the awarded shares just to pay the IRS bill.
The same thing happens when they exercise options on purchasing shares. An executive may have an option to purchase and own a million shares at $10 each. If the street price is $15 that day, the executive may pay the $10M for the shares, and turn around and sell 666,667 shares at $15 (to raise the $10M), and keeping the other 333,333 shares (valued at $5M). But then they would have to sell another 100,000 shares, again to pay the taxes on the $5M in gains.
In the end, they may only get to keep a quarter to a third of their bonus awards, and they have to sell shares to pay the bills.
Yesterday's doubled-digit gains in April auto sales for the Big Three (GM, F, FIATY.PK) is another indication that the tables have turned in the automobile industry. The Detroit automakers increased their U.S. market share by 150 bps to 46.2% in just a year at the expense of Japanese automakers (NSANY.OB, HMC, TM). The trend has become so entrenched that Nissan is cutting prices and Toyota is reeling from the realization that its powerhouse Camry is now "boring" to consumers. [View news story]
Seeing as GM's Market Cap is $44.1B and TM's is $188.3B - well it might be a bit of a stretch.
Ford (F) plans to use excess capacity from a plant in Thailand strategically to avoid the kind of costly mistakes it made in Europe. The automaker will stay nimble in the region and wants to join a Thai program to build energy-efficient models after new licenses become available. What to watch: Ford and GM see Southeast Asia as a potential area to grow sales rapidly with Japanese automakers currently holding a dominant 80% of the market. [View news story]
Wondering exactly what were those "costly mistakes it (Ford) made in Europe"? Participating in the economy there, by building cars and trucks for Europeans? Allowing the Socialistic nations there to over-extend themselves on unfunded welfare entitlements for the chronically unemployed and freeloaders, on the backs of those actually working and trying to run businesses? Being forced to sign union contracts where they could not significantly and nimbly reduce redundant headcount when the Great Recession hit Europe?
A nice little jump in consumer sentiment bodes well for automobile companies, according to CNBC's Phil LeBeau. The outlook for the industry looks extremely good with fresh models from automakers (F, GM, TM, FIATY.PK, HMC, NSANY.OB, VLKAY.PK) coinciding with structural pent-up demand and the uptick in sentiment. [View news story]
Now that the SAAR suggests we may be headed back to 16-17M units sooner than later, due to pent-up demand as cars and trucks on the road are now aging into their teens on average, the US automakers are stretching the limits of mass production just to keep up with demand, with little to no incentive discounts. It may present the Asians with a grand opportunity to flood the US market with replacement vehicles, imported and/or domestic transplants.
The Market May Favor Shorting Ford [View article]
The Market May Favor Shorting Ford [View article]
Ford: Is Yen Depreciation A Strong Negative Catalyst? [View article]
So, for example, most of the vehicle design and engineering would be done in the States or in Europe, and when that work is complete, then the partners in China or India or wherever will get help in setting up factories to produce those US or Europe designed cars, for local consumption and for exporting to other nearby nations who do not have such factory capacity.
But yes, automakers spend billions developing all new platforms, and hundreds of millions in periodic updates to existing vehicles, and they have to sell a great many at modest 5-10% operating margins to keep feeding the product development factory.
Regardless, Automakers will build vehicles wherever they think they can earn a decent profit doing so, and they will close down factories where the profits just aren't there.
Ford (F) says it will pass its full-year record for hybrid sales this month as demand for the new C-Max and electric Fusion looks strong. In April, the automaker delivered 35,034 Fusion hybrids compared to the 3,257 Camry and 19,889 Prius hybrids Toyota moved. What to watch: Analysts are still bickering over the impact of lower gas prices on hybrid demand heading into the summer, but Ford appears poised to grab even more hybrid market share. [View news story]
Your question assumes some very false premises. First of all, Ford developed the original Escape Hybrid (2004-2012) and Fusion Hybrid (2010-2012) exclusively in the US
For 2013 and beyond, the Hybrid Powertrain Systems (Regular and Plug-In versions) in both the C-Max and the Fusion were developed exclusively in the US, not in Europe. Those hybrid powertrains are not even available in Europe yet.
While the current C-Max body and platform were originally developed in Europe, the integration of the Hybrid Systems required a redesign of the body structure to support the extra weight, and to meet crashworthiness requirements. That redesign for extra strength was done in the US, and is to be fed back to the European versions.
While the previous Fusion/Mondeo ("CD3") was developed in Europe, but heavily revised in cooperation with Mazda for the US market, the New Fusion/Mondeo ("CD4") was developed exclusively in the US on an all new platform, and is also not available yet in Europe.
Ford (F) sees demand for SUVs in India helping its EcoSport make a strong debut there despite the stalled automobile market in the nation. The automaker will hedge its bet a little bit by manufacturing EcoSport cars for both right-hand and left-hand drive markets and make it available for export. [View news story]
Ford Shares Ready To Shift Gears [View article]
Ford Shares Ready To Shift Gears [View article]
But wait - Ford's Automotive debt, which is what would be compared to other automakers that do not own their own in-house bank, is $16.005B - only about 15% of the total.
The other 85% is the operating accounts in Ford Motor Credit Corporation. Ford Credit's commercial low interest debt - $91.351B - is loaned out in turn to Consumers and Dealerships to finance the purchase of cars and trucks. That "debt" earned Ford Credit $1.952B in interest income - effectively about 8.5% APR - and cost them $706M in interest payments - effectively about 3.1% APR. That is an effective 5.4% return on investment, and a constant, steady stream of income, provided that the dealers and consumers pay their bills. More than 99% do so reliably, and Ford Credit has a more than adequate default reserve to cover the rest.
The more money Ford Credit borrows commercially and loans out retail, the more money they earn. This is Good Debt - and it is earning them billions. It should not be treated the same as Ford Motor's Automotive Debt, which is invested in capital expenses and such: building factories and tooling, and also spent on research and development and such. Even so, the interest rates are pretty similar (Ford is now investment grade debt), and the vast majority is on 30 year terms.
General Motors Vs. Ford: What's In The Cards For Their Future? [View article]
General Motors Vs. Ford: What's In The Cards For Their Future? [View article]
Initially that DOE fund was oversubscribed - Ford originally asked for $9B, and ended up with about $6B. GM and FiatChrysler (never mind Nissan, Toyota, Honda, Hyundai, etc.) together asked for billions more than was available, but then GM and Chrysler dropped out as they got their billions in free cash money in the form of pre-bankruptcy gifts from The Regime and the Taxpayers, later forgiven and forgotten in the "quick rinse" bankruptcy proceedings which wrote off all previous loans and obligations.
Anyway something worked: Oil imports to the US have dropped from a peak of about 456M barrels per month in August 2006, to around 300M barrels per month "now" in 2013 and for the last 6 months or so. That is a savings is about a third, some 150M barrels, or somewhere around $14B per month!
http://1.usa.gov/xwmjTj
Pumping The Brakes On Ford [View article]
Is Ford About To Go On A Major Run? [View article]
At the split, the price for Ford was immediately corrected downward by a third from the previous day, and shareholders received either 1/3 of their Ford share holdings as new Visteon shares, or they received about $15 per share that they held at the time of the split, in cash.
Anyway you cannot compare share prices before and after splits. The standard charts show when the splits happened, and correct for them, so you will see that Ford shares never reached $42 on a comparable pre-post split basis. The all time peak was $37.08 in March 1998.
Even with that, there were barely a billion Ford shares in circulation, with a market cap of nearly $40 billion. Now there are 4 billion shares in circulation with a market cap over $55.5B . What Ford could do is a 1 for 4 reverse split, turning some 4 billion shares into an even billion, and then have Ford shares priced at $55 and change. That is the number that you would compare to the March 1998 peak, and your $42 memory from 20 years ago.
Is Ford About To Go On A Major Run? [View article]
When executives and upper management are awarded company shares as bonuses, they must pay cash income taxes on the value of those awards. Those taxes are withheld immediately, so those receiving the stock awards often have to sell a third to half of the awarded shares just to pay the IRS bill.
The same thing happens when they exercise options on purchasing shares. An executive may have an option to purchase and own a million shares at $10 each. If the street price is $15 that day, the executive may pay the $10M for the shares, and turn around and sell 666,667 shares at $15 (to raise the $10M), and keeping the other 333,333 shares (valued at $5M). But then they would have to sell another 100,000 shares, again to pay the taxes on the $5M in gains.
In the end, they may only get to keep a quarter to a third of their bonus awards, and they have to sell shares to pay the bills.
Yesterday's doubled-digit gains in April auto sales for the Big Three (GM, F, FIATY.PK) is another indication that the tables have turned in the automobile industry. The Detroit automakers increased their U.S. market share by 150 bps to 46.2% in just a year at the expense of Japanese automakers (NSANY.OB, HMC, TM). The trend has become so entrenched that Nissan is cutting prices and Toyota is reeling from the realization that its powerhouse Camry is now "boring" to consumers. [View news story]
Ford (F) plans to use excess capacity from a plant in Thailand strategically to avoid the kind of costly mistakes it made in Europe. The automaker will stay nimble in the region and wants to join a Thai program to build energy-efficient models after new licenses become available. What to watch: Ford and GM see Southeast Asia as a potential area to grow sales rapidly with Japanese automakers currently holding a dominant 80% of the market. [View news story]