Moosetang

http://www.detnews.com/apps/pbcs.dll...DATE/711080451

Strong overseas, and the pre-tax loss in North America was more than halved from last year. They still have a road ahead, but this quarter and their profitable Q2 make for some real encouraging results.

And they're making GM look bad, which is a bonus.

jsaylor

I'm not nuts about either companies (Ford or GM) plan, but at least Fords focuses on eventually turning a profit, and by this I mean prior to the year 2020, which is what I have been bantering about all along. Nice to see paper trails proving my point for me.

Still Ford has to do much, much better than this, and they can.

hi5.0

Umm, yay?

Hollywood_North GT

Exactly.

There's just something funny about the first line in that article >> "Ford Motor Co. surprised Wall Street this morning with better than expected financial results, posting a $380 million loss for the third quarter of 2007."

When you start talking enthusiastically about losses being less than expected, you know you've really lowered the bar of expectation.

This statement says SO much >> "Most of Ford's gains came from its foreign operations..." Time to get some of those Euro Fords over here.

And just how exactly is Ford making GM look bad? I don't see any CTS competitors coming from Lincoln.

Moosetang

GM posted a net loss of 39 BILLION for that quarter. That makes a $380 mill loss look fantastic by comparison. In addition, Ford's numbers are going in the right direction, their losses are shrinking and they have a chance to break even for the year. GM's loss was 11 times worse than expected. That's going in the wrong direction.

Noone's dancing naked in the Dearborn board rooms yet, but they're making positive strides. As for the CTS, it could be the greatest car ever, carved from Joy by Zeus himself, and in the end it won't mean beans if GM can't squeeze out a profit.

Hollywood_North GT

These companies have been operating primarily in the red for YEARS now, with MANY vehicles that have never made a profit...and yet they go on. How they really manage it, I'll never know. But they do - and since they seem to manage without making a profit, at least GM is bringing to market products that show significant improvement. It's called a long-term strategy, as opposed to short-term gain. Given that they've both been losing money for some time, at least GM is looking at the big picture. On the other hand, Ford of North America is good at over-promising and under-delivering, along with squandering time, energy and customer good-will building concept cars (427, Reflex, Interceptor, etc, etc.) that never see the light of day.

Before you can hope to attain sustained profitability, you have to invest in a long-term strategy of serious product improvement to regain customer trust. GM is doing this. Ford, meh, not so much.

There will be no sustained profitability for Ford if they keep pursuing quick profits at the expense of long term quality improvements. In fact, that's a big part of the reason they're in the mess they're in now. The public simply aren't fooled anymore.

Pay now, or pay later. And this is the overriding point that some people on this board don't seem to understand.

Evil_Capri

Why the "meh, not so much" comment?

Seems Ford is/had been moving in the right direction (albeit baby steps). Quality has improved, and losses have started to slow (hopefully stopping soon). There seesm to be a single vision starting to emerse the company in a positive manner that wasn't there 24 months ago.

I agree, I would like to see some stronger products, but I also don't want Euro Fords over here . . 'just because'. I am all for integration of products if/when it makes economic sense for the company and the buying public.

Hollywood_North GT

I agree Ford is making important quality/reliability improvements. That aside, this is what I see (and I think what the public may see, too) >>

Taurus? A decent vehicle let down by stodgy styling and an eleventh hour attempt to boost sales with a name change. Didn't work - sales are way down.

Fusion? Good solid vehicle worthy of continued refinement.

Focus? Improved, but hardly inspiring in this hotly contested market segment. Should be setting the trend, not dog-paddling to keep up with it (that's how you regain market share, with a strong offense, not a weak defense). We continue to get the first generation derivative while Europe gets the latest chassis iteration. I guess North Americans are too "stupid" to notice the difference.

Taurus X? I have a sneaking admiration for this vehicle in its updated form, but I don't think it's selling, again, probably to do with the styling more than any real shortcomings with the functional execution.

Escape? I guess they're selling reasonably well, but this is another vehicle that just feels "warmed over" as opposed to all new and inspired.

F-150? Nothing much to say here. Still the class leader, and rightfully so.

Explorer? OK.

Edge? Great vehicle. Fantastic looking design; exterior looks even better in light of the new Nissan Murano which was just unveiled. Only let down by some cheap interior bits and a dash design/layout/execution that doesn't really compete with vehicles like the aforementioned new Murano and a number of other CUVs. (Ford still lags behind the competition in interior design and materials.)

Flex? Remains to be seen, though from what we can glean from the early pictures, the interior APPEARS to be a big step in the right direction...finally. Will it reinvent the minivan market? I dunno.

Lincoln? Not sure why this division even exists. They're just re-badged Fords. And that goes double for Mercury. Complete waste of energy and redundancy of resources unless they actually offer something truly distinguishable from Ford's regular lineup.

Meanwhile, I suspect the new Malibu will walk the Fusion and Taurus; Ford has absolutely nothing to compete with the G8; Cadillac is WAY out ahead of Lincoln (new CTS is bona-fide hit and presages design for forthcoming Cadillacs); a full hybrid (Volt) is on the way; the Camaro will outperform the Mustang in a couple of years; Buick's Enclave is beautifully made and critically acclaimed (superior to any SUV from Ford - or Lincoln, for that matter)... I could go on and on.

jsaylor

Hollywood, with respect you are missing the boat entirely here. I don't like Ford's plan. It is, in many ways, destined for medicocrity, unless of course Mulally is simply meant to come in and hack off a whole lot of fat in preparation for a CEO who will then rebuild from there. We wont know if this is the case for some time. But that aside by all appearances they might be headed for potentially sustainable mediocrity. I don't expect to see much of a profit without a good deal more imagination in some areas and a little less 'imagination' employed in others, and to be fair their current plan could still lead to bankruptcy for that matter since it absolutely leaves a lot to be desired. But it does show some bright spots and if they can hold on for a bit you may indeed see a profit sometime in the near future, particularly if Mulally is the short term hatchet man I expect that he could be.

In contrast there is not now nor has there been in recent memory any reason to expect GM to be making a profit anytime soon. Sure we have some cool cars running down the GM development pipeline but virtually none of them are what one would call high volume pieces and some of them are problematic in terms of cost. Take a look at their strategy after setting your personal feelings for their new cars aside. First, we have to start with the reality mentioned above, that GM is having profitability issues, which should be very apparent to everyone by now. Frankly at this point the only other viable alternative explanation is that somebody flushed a few billion in cash down the corporate toilets last 1/4. Then take into account that their shiney new product is apparently making this situation worse.

We can argue that GM is introducing these loss makers to build good will for the future, but then you have to somehow explain how these loss makers will magically turn into profit earners five years down the road. Production numbers may go up but it takes a lot of production to transform a 20k HR or a 30k Acadia from a money losing proposition into a money maker. If these cars can be made to turn a profit in 2012 there is no plausible reason why they shouldn't be making money right now. The whole mess goes a good deal deeper than this with other factors coming into play, but the basics are easy to grasp.

Even worse than the above, for a company with profitability woes GM is making a great deal of decisions that don't seem likely to improve the same. For example, they can't make money on their fwd platforms developed, built, and sold here in the states so their grand plan is to let the Australians, who have't designed a car that started significantly below 30k in so long they have likely forgotten that those cars still exist, develop their sweeping new rwd platform after which time they plan to build some of these models in Australia and import them to America until they can set up a facility to produce them here since the pre-existing Catera platform would be too expensive to downgrade.

Hello!?!? Anybody home. The above is so ridiculous I wouldn't believe it unless I knew it to be true. I do worry that Ford is poised to make some of the same mistakes GM has, like developing their rwd platform in Australia. But by all accounts they are making enough monetarily sound decisions that the profitability picture for the company looks a good deal less bleak than it does for GM.

Finally, if I had to venture a guess I would say that you were probably taken by surprise at GM's recent loss....I wasn't, and I was even less surprised that they got creative to hide the reality of the situation. Of course they can only do this so long with such large amounts of money, and to be fair the loss was probably a good bit larger than it had to be since they probably took an even bigger hit than they actually had to so that they might be able to show some 'improvement' where there really isn't any in the next few quarters. But in the end what we have is GM going through the corporate playbook of how to best hide a very large sinking ship from view.

How much longer do the balance sheets have to say exactly what I say they are going to, and months before we ever see them at that, before you listen to what I am saying?

Hollywood_North GT

Once again, you're emphasizing short-term gain (the same tired old strategy that led these companies into mediocrity while the Japanese ate their lunch) over long term viability.

GM's loss came as no surprise to me whatsoever. You can't introduce this many promising new products this quickly without enduring some serious pain up front. As to these new vehicles "magically turning into profit generators five years down the road," hello, it takes time for consumers' perceptions and trust to be rebuilt. But you have to start somewhere. And mediocrity wasn't cutting it. Vehicles like the new Malibu are designed to be high volume tentpoles. I suspect that when it comes to success, as goes the Malibu, so goes GM. We'll see.

You're right when you suggest that GM still may not survive. That's a possibility. This may all be too little, too late. What's certain, however, is that the same old "business as usual" strategy propagated throughout the company for decades would have most decidedly sunk them.

jsaylor

Actually I'm not but I can't really explain the situation any better than I have so...The reality is that there is no grand long term scheme at GM, these car should be making money right now and consumer confidence doesn't explain why they aren't.

For GM's sake I hope that you and I are both wrong here, because the reality is that cars like the new Malibu obviously aren't really what the American consumer wants from Ford or GM. Hopefully both will figure this out before they drop too much dough on cars like trying to reach the level of the Japanese only to find that nobody wants them anyway.

Actually, IMO GM likely still has plenty of time to turn the ship around. But they are going to have to do things a lot differently than they have been.

V10

That huge loss was because of an accounting change and does not represent GM's current operating profit-loss.

jsaylor

I've heard that song and dance before, and from GM. Don't buy the hype.

Moosetang

3 points:

That "accounting change" was a charge related to them using tax credits to cover losses for the past 3 years. Basically, they had been propping up their numbers by deferring their tax payments, and the bill came due. It will happen again if they keep using tax credits that way.

Nowhere do they say that the entire loss was caused by the charge, they say it was big but do not say how big. If thye posted a breakdown and showed us, maybe their situation would look better. But then, maybe not.

Taking out the 1-time charge, taking out the rest of the General Motors Corporation and just focusing on cars, the loss for the automaker was at least $1.6 billion and that's 10 times worse than projected.



Like I said, I'm not painting a picture of smashing success at Ford. But they halved losses in NA and beat expectations. For the comapny that started its rebuilding far later than GM and which spun its wheels for far longer, that makes it look pretty darn good in comparison.

Hollywood_North GT

We're all so busy analyzing battles here, when we need to be looking at the overall war. And overall, GM is still more solvent than Ford, and its current and projected vehicle lineup over the next 24 months looks FAR more promising than Ford's.

Hollywood_North GT

Of course it explains why they aren't. Consumer confidence is the name of the game here, and the reason why Ford and GM have lost sales against the Japanese.

Can't believe you don't see this.

Huh? Camry and Accord are the chief moneymakers for Toyota and Honda respectively. It's a bastion the North American automakers have thus far been unable to crack. Malibu is the best American-made alternative I've seen yet...yes, even better than the Fusion, at least on paper.

We'll see how it does.

I hear you go on at length about how GM is doing entirely the wrong thing all the time, but not once have you offered up a tangible, quantifiable strategy that they "ought" to be following.

jsaylor

Its simple really. GM can improve their profitability on existing and new model lineups over time one of two ways.

1:They can lower the cost to produce each unit. This can be accomplished either by minimizing materials/assembly costs or they can sell more product improving economies of scale. The former isn't going to happen primarily because GM and Ford have already beaten suppliers to death over pricing and any further improvements here would likely be very small to say the least. The latter may occur with time, to a degree, as consumer confidence builds, but you aren't talking about briding a gap of a few hundred dollars per car here. As best as we can tell from the numbers GM is losing money at a ridiculous rate per car (it has to be well into four digits per car) and cranking out another 50,000 units a year isn't even going to come close to covering the kind of loss we are looking at.

2: They can raise the price they sell their cars for. Elimination of rebates would help here but as far as msrp is concerned GM is really no cheaper than the competition, which is a problem given the fact that they are simply doing what everybody else is doing. For example, while the new Saturn Aura is nice enough it will cost you about what a Camry or Accord would. Since it largely does what the Camry and Accord each already do, and do very well at that, what serious incentive is there for the consumer to switch over from Honda or Toyota. I have an answer for you...virtually nothing.

The one notable advantage they can claim over Toyota and Honda, wen rebates are in effect, is that there model is cheaper. But since they apparently can't make money that way and since consumers have no real reason to switch without that advantage I'd say GM is in a bit of a pickle here.

And it all makes no difference. Why would a happy Accord or Camry owner, and most of them are by all accounts happy, switch to a car which is effectively the same thing when push comes to shove without an incentive? It should have taught people something that Fusion and Taurus have had so little effect even with a rather sizeable advantage in price. With simlar pricing GM's upcoming mid size models stand no chance at all unless they simply eclipse the Accord and Camry in several respects. And frankly we all know from the Aura that we are looking at parity at best here.

In the forseeable future people who desire vanilla-grade mid-size transportation are going to go to the Japanese for it because the American auto makers can't do it significantly better or cheaper. Will people defect over time? Certainly. But we are ralking about a trickle that will take a long time to amount to much and last I checked we need improvement before 2020. And we haven't even discussed the reality that the Japanese have the money to buy back any advantage American auto makers manage to whittle down to parity.

Of course this should all be a non issue since trying to steal market share by doing the same thing that your well established competition already does very well is ridiculous. Nobody in their right mind would try to beat the Japanese at the game they perfected. Particularly not when other avenues exist for Ford and GM to get back into the game.

Not much point really. There are a few routes that Ford and GM could both follow which would lead to distinctive product which would bring people back into the showroom and minimize costs without sacrificing the notion of the American car company on the altar of fruitless consolidation. (in fact, that last part is actually a crucial component of what might actually get people back into the showrooms) But most people can't see beyond the status quo to be honest and the status quo is killing GM and Ford.

But, for the sake of argument..and using Ford as a model instead of GM since Ford is smaller in terms of brands which makes things easier. Ford could....

Import international Fords into America as Mercury models. Not a new idea by any means but one that is long overdue. While I have long argued that Mondeo, etc wont sell in the numbers Ford needs for the same to prove viable competition for Camry and Accord here in the States they wont have to if sold under the Mercury badge. It would be like an American VW only with cars that don't self destruct and which actually make a profit. This is the first part of the plausible realization of Mulally's desire to see a global Ford.

Since South America, Latin American, and Mexico already build and market a good portion of these cars it would be simple enough to build these potential Mecury models in these locales alongside their home market Ford twins. This should be a money maker all around since the extra demand created by selling these products in America as Mercury branded vehicles would allow production to be adjusted to meet the demands of either market ensuring that cars are produced and sold for the markets with the greatest demand maximizing profit and efficiency of operations while minimizing the need for rebates.

And investment would realistically be minimal since initially we are only talking about adding one model, the Mondeo, to South/Central American or Mexican production facilities that they don't already produce or aren't already planning to produce in one of those locales. For the sake of argument move the Fusion/Milan/MKZ trio out of Hermosillo and produce the Mondeo, and whatever it's Mercury badged twin will be called, there. While Mercury may not sell enough to rival the Accord or Camry their sales (even badged as a Mercury a unique mid-size Mercury should easily sell over 100k units per and then some year here in the States with no major incentives) combined with the Mondeo sales for all of South America, Central America, Mexico, and Canada should easily cover what Hermosillo could crank out. And we haven't even considered the fact that other EUCD vehicles, like Galaxy or C Max, would likely share a plant with the Mondeo.

A potential initial Mercury lineup based on this could easily include

Fiesta based small car in three and five door hatch

Focus based sedan and wagon

Kuga based SUV

Mondeo based sedan and wagon

C Max or Galaxy based van/vanlet...whatever you want to call them.

Mercury model year sales would likely double for the above and we still have twins for the Mercury models mentioned to minimize costs which means that Ford makes more money in South America on Ford products and in North America on Mercury models and in their respective home markets we managed to avoid the negative image of rebadging for all brand names involved since FOE Fords aren't sold or marketed here which means that Mercury would finally be a distinct brand which can stand on its own feet again. To be blunt that was easy.

For Ford..I've said it before and I'll say it again. Right now if I were to magically transform from armchair CEO to actual CEO I would make Ford rwd, with a very heavy emphasis on awd, across the board. I used to disagree with the notion of a rwd revival myself but after setting aside my pre-conceived notions I couldn't find any argument against it that stood up to scrutiny, not with the growing availability of and consumer desire for AWD. Without going into quite the same detail that I did above Ford could......

Move every model that isn't going to remain as a BOF truck to one of three basic, unibody RWD platform developed respectively to accomodate compact, mid-size, and large vehicles. At this point the only vehicles which should be BOF anyway are a potential Ranger replacement, a potential 'rugged' suv/bronco revival based on the same, F-Series pickups, Econoline vans, and the Expedition. That morphs a whole lot of cars into three basic platforms which should translate into serious economies of scale.

Further, there is no reason Ford can't minimize engine choices for America based product to two basic architectures, Duratec for V6 or even possible Lincoln V12 models and Boss/Hurricane for Inline/V4 and V8 models. And Lincoln could employ these same platforms as well which means we have full Ford and Lincoln lineups based on three platforms and two engine architectures. As for sellability and viability.....

Mustang has proven handily that Ford USA understands how to build a profitable RWD platform for cheap....Mustang, 300, and CTS have collectively proven that American consumers like the dynamics, performance, and appearance a rwd platform brings to the table....and the not long dead SUV boom combined with the evergreen full size truck market has proven handily that Americans in every market will gladly plunk down their hard earned cash for rwd based product if they like it and if awd is offered as an option for markets where rwd isn't a plausible option.

Further, in terms of reasonably priced small and mid-sized models Ford would be the only game in town....there are no alternatives. Ford could claim better dynamics in every respect for their cars due to their rwd basis and still have Hondam Nissan, and Toyota trumped in Nrothern markets through the extensive availability of inexpensive AWD. After giving it even a little thought it is virtually impossible to argue that Ford couldn't easily sell a few hundred thousand rwd based sedans the size of a 3 Series or Civic and a few hundred thousand more sedans the size of the 5 Series or Accord. Would the rwd platforms turn some people off? of course, but that is always the case no matter what you produce and with thoughtful execution and marketing the same would likely be minimal. What Ford stands to gain by offering dynamically superior cars which are once again distinctively American for a competitive price far outweighs the negatives.

Further Ford could move all production of these models to sites in the US letting the above-mentioned Mercury models and the International Ford vehicles upon which they are based take up any production slack in Mexico, etc. This would allow Ford and Lincoln to reassert themselves as American brands in a world where global quagmires are quickly becoming the norm. And consumers still want to buy American so long as they are giving a decent and genuine alternative. Even better, a Ford lineup like the one above would allow for a viable export market for models assembled here further globalizing the brand if not in the way Mulally wants.

While crude and quick the above makes far more sense than anything Ford or GM is doing, which is pretty depressing considering these guys are supposed to be the giants of industry and I am just lowly old me. Without question each could easily execute much like the above if they got their collective crap together long enough. I fully expect to get the same response
I've gotten before when mentioning this, but as arrogant as it sounds I am still right. Radical ideas are most often rejected by the masses no matter how viable, I expect no less. however, realistically speaking even assuming the market for rwd based product is limited...and like every market it is, but not nearly as severely as most think...being the only player in the rwd game cobined with the unprecedented availability of AWD (Ford says 50% or more of cars will be AWD before another ten years pass anyway if you buy into their research) would mean that Ford could easily rival Toyota and Honda in sales numbers so long as costs were kept under control. Frankly, I think Ford would surpass Toyota within a decade with a plan like the above, but we'll never know.

We will now resume our regularly scheduled debate..which fwd based appliance is the best weapon to employ against a sea of existing, established, and very well executed, fwd appliances?

V10

Ford has also taken a number of 1 time charges over the last few years.

I'm not saying what GM did was right or fully explains their loss. My point was comparing only the profit/loss #s of Ford's last quarter to GM's last quarter does not accurately represent what is really happening. Both companies have huge problems and are fighting for their survival.

Moosetang

You may besaying that, but others here (cough cough Hollywood cough) seem to think GM is sailing on a sea of good news to a future that looks alot like the 60s, I'm pointing out the errors in that theory.

Hollywood_North GT

And at least GM is using that loss to churn out promising products...today.