Mulally Spurs Ford Growth With $2,700 More Revenue per Vehicle

[davidlane]

Nov. 3 (Bloomberg) -- Ford Motor Co. Chief Executive Officer Alan Mulally, after cutting nearly half the automaker’s North American employees, is commanding $2,700 more revenue per vehicle as he looks to put the company on a path to growth.

Mulally posted his first back-to-back quarterly profits at Ford yesterday with a $997 million net income. The carmaker was expected to make a $632 million loss, based on the average of eight analyst estimates. Ford’s U.S. market share grew even as it cut discounts, delivering $1.9 billion in additional revenue, 74 percent of it in North America.

That progress, boosted by Consumer Reports magazine declaring Oct. 27 that Ford’s quality is now “world-class,” had a bigger effect on the bottom line than the additional $1 billion in savings the automaker recorded in the quarter. New models, like the redesigned Ford Taurus and Fusion sedans, also sold with more options, like voice-controlled audio systems.

“During the worst of times when we were restructuring ourselves to the lower demand to get back to profitability, we also continued to invest in a new product line,” Mulally said on Bloomberg Television yesterday. “It’s both having the vehicles that people really do want as the economy recovers but also having a very competitive cost structure to compete with the best.”

Ford will again seek savings from the United Auto Workers union, whose members rejected proposed concessions yesterday. And it is continuing work to strengthen its balance sheet, seeking to raise as much as $3.3 billion in convertible notes and common stock.

Ford gained 58 cents, or 8.3 percent, to $7.58 yesterday in New York Stock Exchange composite trading. The shares have more than tripled this year.

Growth Begins

Ford has already begun growing. It increased its U.S. market share 2.2 points to 14.6 percent in the third quarter over last year, the automaker said. The biggest growth, though, came in pricing power. Ford reduced discounts and boosted prices to gain $1.4 billion in higher payments for its models in North America, equating to $2,700 per vehicle.

This year, Ford has posted a net income of $1.8 billion and a pretax operating loss of $1.3 billion.

Mulally has now promised that the Dearborn, Michigan-based automaker will be “solidly profitable” in 2011. Analysts and investors say he’s being conservative.

“He’s under-promising in hopes of over-delivering,” said Bernie McGinn, president of McGinn Investment Management of Alexandria, Virginia, which owns about 320,000 Ford shares. “He has enough good news out there, why spoil people? But I absolutely do expect profit in 2010.”

First Annual Profit

If so, it would be Mulally’s first annual profit since he arrived at Ford from Boeing Co. in October 2006, just as the automaker was sliding into the biggest crisis since the Great Depression. Shortly after taking over, Mulally, 64, signed off on a plan brought to him by then-Chief Financial Officer Don LeClair to mortgage the entire company for $26 billion in loans.

Those loans, which came just before credit markets froze, saved Ford from needing a government bailout and falling into bankruptcy like General Motors Co. and Chrysler Group LLC.

He also focused Ford on its namesake brand and sold off European luxury lines Jaguar, Land Rover and Aston Martin.

Next to go is Volvo. On Oct. 28 Ford said it selected as its “preferred bidder” a team of investors led by Geely Holding Group Co., China’s largest private automaker. Geely is offering about $2 billion, less than a third of what Ford paid for the Swedish automaker a decade ago.

...Showroom Test

The real test of Mulally’s plan, though, starts now as new products roll into showrooms. The early results are good.

Sales of the redesigned Taurus increased 60 percent in September over the old model that was once popular in rental-car fleets. Sales of the Fusion family car are up 14.5 percent this year, when the overall U.S. auto market is down 27 percent so far this year. Ford’s total U.S. sales are down 22 percent through September.

Ford has said its data shows it is attracting buyers who are impressed that it didn’t take a bailout or go bankrupt. Mulally’s challenge now is to hold onto those buyers with better offerings than Ford has had in a long time, said Jeffrey Spotts, a New York-based portfolio manager at the $250 million Prophecy Fund, which has been accumulating Ford shares since February.

“The image of not going into bankruptcy is great,” said Spotts. “But they’re just making better cars now and that’s really the message that Mulally has to get out.”

http://www.bloomberg.com/apps/news?p...YFJv8HA&pos=12

[wescoent]

Ford, GM, and Chrysler can't compete by out-Hyundai-ing Hyundai. They have to build BETTER vehicles, and charge more for them accordingly.

Seems to be working.

[K-1]

And:


+$4,000 average transaction.

[wescoent]

Well, coming off the rental queen Malibu that preceded it, that wasn't hard.

The 2007 to 2008 Taurus saw a near $10,000 average transaction price boost... which was NOT a credit to the 2008 Taurus, if you get my drift.

[K-1]

Originally Posted by wescoent

Well, coming off the rental queen Malibu that preceded it, that wasn't hard.

The 2007 to 2008 Taurus saw a near $10,000 average transaction price boost... which was NOT a credit to the 2008 Taurus, if you get my drift.

Definitely. Better product + lower fleet sales + lower rebates = better revenue/car.

Having the gov't kick in a $3,500-4,500 rebate helps too.

[LeSabre]

Is it me or is the Malibu's front fascia becoming dated rather quickly??

Seeing the head on pic in K-1's post gave me that feeling/distinction.


!!!

[Canyonaro]

Good for them, they have to start somewhere.

(When will the Ford guys show up?)

[civilzues]

Originally Posted by LeSabre

Is it me or is the Malibu's front fascia becoming dated rather quickly??

Seeing the head on pic in K-1's post gave me that feeling/distinction.


!!!

YES!

[All-Or-Nothing]

Originally Posted by LeSabre

Is it me or is the Malibu's front fascia becoming dated rather quickly??

Seeing the head on pic in K-1's post gave me that feeling/distinction.


!!!

Nope it's not just you. I thought it was a Cruze at first.

[LeSabre]

Originally Posted by All-Or-Nothing

Nope it's not just you. I thought it was a Cruze at first.

ty.

the Cruze's fascia looks like crap.
the crossbar is too high. The sides/top of the headlights need to be pulled down & not trying to stretch/crawl up the fender.
Then again, the over all design of the Cruze is Korean which IMO isn't a good thing. YUCK!

I guess the design of a given car/brand should be of the origin of the brand/co. though at the same time pleasing to the eye.



!!!!

[PAULSTS1]

Originally Posted by LeSabre

Is it me or is the Malibu's front fascia becoming dated rather quickly??

Opening this thread that was my first impression; The facade does appear somewhat dated! I still like the body style but, it is perhaps the contrast between the all new Taurus and the couple of years old Malibu that made the distinction.

[K-1]

Those are both Malibus.

[All-Or-Nothing]

ooops posted the wrong pic

[All-Or-Nothing]

Nevermind don't feel like loading the right one

[All-Or-Nothing]

Originally Posted by K-1

Those are both Malibus.

Stupid Iraq internet.