Ford to undergo facelift as poor sales continue
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Ford to undergo facelift as poor sales continue
Ford Motor has unveiled an ambitious facelift for its troubled North American operations aimed at shifting its focus from big pick-up trucks and sport-utility vehicles towards smaller, more fuel-efficient cars.
But the number-two Detroit carmaker also underlined the magnitude of the challenges it faces, announcing a record quarterly loss of $8.7bn and warning that it does not expect an upturn in the US economy before 2010. The latest loss includes pre-tax special charges of $8bn from writedowns in assets and the lease portfolio of its financing arm, Ford Credit.
Analysts voiced concern at the deterioration at Ford Credit, which reported a $294m loss, compared with a $112m profit a year earlier. The slump in the pick-up and SUV market has pushed prices for used vehicles below lease residual values, requiring higher depreciation rates. Delinquencies on car loans have also risen.
The second-quarter cash outflow of $3.1bn, including payments to Ford Credit, was also higher than expected.
The carmaker cautioned that this year's cash drain will be greater than it had initially projected.
Ford shares sank more than 9 per cent to $5.50 shortly before noon yesterday. Under the revised transformation plan, Ford will bring six small European models to North America, and convert three existing truck and SUV assembly plants to small cars. The conversions are in addition to plans announced earlier to cut SUV and pick-up production for the remainder of this year.
The carmaker also plans to accelerate the introduction of a new fuel-efficient V6 engine and to double four-cylinder engine capacity. Alan Mulally, chief executive, said the moves were designed to respond "to the rapidly changing business environment".
Ford's US sales volumes shrank by 14 per cent in the first half of 2008 from a year earlier, including a 28 per cent dive in June, due largely to plummeting sales of former mainstays such as the F-Series pick-ups and the Explorer SUV. By contrast, demand for the small Focus saloon is up by more than a quarter so far this year.
By the end of 2010, two-thirds of spending will be on cars and crossover vehicles, up from 50 per cent now.
In a telling break from the past, Ford will convert the Explorer, the US's top-selling SUV for many years, from a truck to a car platform.
North American operations reported a pre-tax loss of $1.3bn between April and June, up from a $270m loss a year earlier.
But Ford Europe more than doubled earnings to $582m from $262m, due mainly to improved volumes and vehicle mix, as well as lower costs. Profits in South America grew to $388m from $255m.
*Ford-owned Volvo's loss grew from $91m to $120m, due to sagging sales, an unfavourable vehicle mix, lower prices and adverse currency movements.
But the number-two Detroit carmaker also underlined the magnitude of the challenges it faces, announcing a record quarterly loss of $8.7bn and warning that it does not expect an upturn in the US economy before 2010. The latest loss includes pre-tax special charges of $8bn from writedowns in assets and the lease portfolio of its financing arm, Ford Credit.
Analysts voiced concern at the deterioration at Ford Credit, which reported a $294m loss, compared with a $112m profit a year earlier. The slump in the pick-up and SUV market has pushed prices for used vehicles below lease residual values, requiring higher depreciation rates. Delinquencies on car loans have also risen.
The second-quarter cash outflow of $3.1bn, including payments to Ford Credit, was also higher than expected.
The carmaker cautioned that this year's cash drain will be greater than it had initially projected.
Ford shares sank more than 9 per cent to $5.50 shortly before noon yesterday. Under the revised transformation plan, Ford will bring six small European models to North America, and convert three existing truck and SUV assembly plants to small cars. The conversions are in addition to plans announced earlier to cut SUV and pick-up production for the remainder of this year.
The carmaker also plans to accelerate the introduction of a new fuel-efficient V6 engine and to double four-cylinder engine capacity. Alan Mulally, chief executive, said the moves were designed to respond "to the rapidly changing business environment".
Ford's US sales volumes shrank by 14 per cent in the first half of 2008 from a year earlier, including a 28 per cent dive in June, due largely to plummeting sales of former mainstays such as the F-Series pick-ups and the Explorer SUV. By contrast, demand for the small Focus saloon is up by more than a quarter so far this year.
By the end of 2010, two-thirds of spending will be on cars and crossover vehicles, up from 50 per cent now.
In a telling break from the past, Ford will convert the Explorer, the US's top-selling SUV for many years, from a truck to a car platform.
North American operations reported a pre-tax loss of $1.3bn between April and June, up from a $270m loss a year earlier.
But Ford Europe more than doubled earnings to $582m from $262m, due mainly to improved volumes and vehicle mix, as well as lower costs. Profits in South America grew to $388m from $255m.
*Ford-owned Volvo's loss grew from $91m to $120m, due to sagging sales, an unfavourable vehicle mix, lower prices and adverse currency movements.
