| 777 | Date: Thursday, 28 Oct 2010, 11.45 | Message # 1 |
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User ID: 777
Joined: 18 Oct 2010
Messages: 1035
| I'm hardly the first to point this out, but in light of recent news it bears repeating: Ford alone among Detroit automakers didn’t take any bailout money. Thankfully, Ford has found an old-fashioned way to pry money out of Americans -- by building cars and trucks that people want to buy. Envious gazes from GM and Chrysler turned a deeper shade of green today as Ford announced a third-quarter profit of $1.7 billion. That's up a staggering 68 percent from the same quarter in 2009, an admittedly dismal year for the industry overall.
While Ford isn’t fully out of the woods, this was the sixth straight profitable quarter for the Dearborn, Mich., automaker. Market share likewise rose, by two percentage points, bringing it up to 15 percent. But here’s the stat I liked best: Ford buyers paid an average of about $30,600 for every Ford and Lincoln in September, with buyers spending generously on options such as Ford’s Sync-enabled audio and navigation systems. Loading up on options is a sure sign that people like what they’re seeing at dealerships; these are cars that don’t sell on bargain-basement discounts, but on their merits. You only slap leather and a nav system on a car you’re proud to own, not one you’re settling for. Certainly, aggressive cost-cutting is still the big reason that Ford is earning more money even as global sales have dipped. But boosting per-vehicle profits is core to the strategy of not just Ford, but GM and Chrysler as well. Since these downsized companies are going to be selling fewer cars even when the economy recovers, it’s critical to make more money from each vehicle, from the most affordable econobox to the richest luxury car.
As ever, Ford’s turnaround has been led by products: the Fusion sedan; the Fiesta subcompact; the Edge crossover; the venerable Mustang. And don’t forget the F-150 pickup, somehow invisible during most conversations about Ford's success despite being not just the top-selling Ford, but the top-selling car or truck in the entire industry.
Ford has also shed its millstone of unprofitable luxury brands -- Aston Martin, Jaguar, Land Rover and Volvo -- that distracted it from its real business of designing and selling cars for the masses. Mercury, the ultimate redundant brand, is being put out to pasture as well. Ditching those brands should allow Ford to focus resources on reviving the Lincoln luxury brand as a true luxury brand after a four-decade decline in sales and prestige.
Motown’s automotive turnarounds tend to be short-lived, but Ford shows signs that this time, it knows how to sustain momentum. The next-generation Focus, rightly acclaimed as one of Europe’s best small cars, finally will go on sale here next year. Ford’s electrification strategy will bring an all-electric Focus in 2011, followed by a plug-in Ford Escape Hybrid. If Ford can breathe life into Lincoln and try to set industry trends, rather than react to them, the company will be profitable and sustainable for years to come. And it should be noted that GM and Chrysler, despite all the negative publicity, have been adopting the same efficient strategies. Fewer brands, models, dealers and factories are, paradoxically, the keys to higher sales and profits. Smaller companies, but healthy companies; that beats big and bankrupt every time.
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