Worldwide Automotive
- The automotive sector reported a pre-tax loss of $2.9 billion, compared with a pre-tax loss of $362 million during the same period a year ago due to lower volume and unfavorable mix, particularly for North America and Volvo.
- The deterioration was also driven by unfavorable net interest expense and related fair-market value adjustments, and lower net pricing, partly offset by favorable cost changes.
- Revenue was $27.8 billion, down from $36.3 billion a year ago, reflecting lower volume, the sale of Jaguar Land Rover, unfavorable product mix and lower net pricing, partly offset by favorable changes in currency exchange rates.
- Total vehicle wholesales were 1,174,000, compared with 1,487,000 units a year ago.
- North America reported a pre-tax loss of $2.6 billion, compared with a loss of $1 billion a year ago due to unfavorable volume and mix, and unfavorable net pricing, partly offset by cost changes.
- Unfavorable volume and mix primarily reflected a decline in the U.S. industry volumes, changing product mix, lower dealer stocks and lower market share.
Third quarter revenue was $10.8 billion, down from $16.7 billion a year ago.
- Wholesales were 462,000 units, down 187,000 units compared to the same period in 2007, primarily reflecting the decline the U.S. industry saw of 16.2 million units in the third quarter of 2007 to 13.1 million units, and a decline in U.S. market share from 13.4% to 12.4%.
- In addition, the firm reduced U.S. dealer stocks by over 80,000 units, compared to the reduction of less than 20,000 during the same period a year ago.
- South America reported a pre-tax profit of $480 million, compared with $386 million a year ago on higher net pricing, favorable volume and mix, and favorable changes in currency exchange rates, partly offset by higher net product costs.
- Revenue was $2.7 billion, up from $2.1 billion a year ago.
- Europe reported a pre-tax profit of $69 million, compared with $293 million a year ago due to unfavorable cost changes (unfavorable mark-to market adjustments for commodity hedges) and currency exchange, partly offset by net pricing.
- Revenue was $9.7 billion, up from $8.3 billion a year ago.
- Volvo reported a pre-tax loss of $458 million, compared with a loss of $167 million a year ago due to unfavorable volume and mix.
- Revenue was $2.9 billion, down from $3.8 billion a year ago.
- As part of its restructuring, Volvo plans a total reduction of 6,000 employees worldwide, including 1,200 agency employees.
- Wholesales were 66,000 units, down 36,000 from a year ago explained by lower industry volumes and market share, primarily in the U.S. and Europe, and lower dealer stocks.
- Market share in the U.S. was 0.4%, down 0.2% from last year, and this decrease reflects, in part, a decision to decrease emphasis on small vehicles that have become less profitable with changes in currency exchange rates and the market segmentation shift away from SUVs.
- Asia Pacific and Africa profit of $4 million compares with $30 million a year ago with the decline due to unfavorable volume and mix, partly offset by favorable net pricing.
- Revenue was $1.7 billion, down from $1.8 billion a year ago.
- Wholesales were 111,000 units, a decrease of 18,000 units compared with 2007, primarily reflecting stronger competitive activity in China and India and continues industry weakness in key markets.
- On Mazda the firm lost $1 million from its investment and associated operations in the third quarter, compared with a profit of $14 million a year ago.
Financial Services:
- Financial Services sector reported a pre-tax profit of $159.0 million, down $397.0 million from a year ago and other financial services reported a loss of $2.0 million, down $12.0 million from a year ago.
- Ford Credit’s pre-tax profits were $161.0 million, down $400.0 million from a year ago reflecting the non-recurrence of net gains related to market valuation adjustments to derivatives, a higher provision of credit losses, and lower volumes.
- These factors were partly offset by higher financing margins and the increase in credit losses primarily reflected higher severities and higher repossessions in the U.S. retail and lease portfolio.
Ford Credit’s managed assets were $130 billion, $18 billion lower than the year ago with the decline explained by lower North American receivables, the impact of divestitures and alternative business arrangements and changes in currency exchange rates.
- Ford Credit’s liquidity exceeded utilization by about $25.0 billion and its funding strategy included maintaining liquidity to meet short-term funding while having a substantial cash balance and committed funding capacity.
- Ford Credit plans to diversify its global asset-backed funding capabilities and renew global asset-backed funding capacity.
- Ford Credit expects to benefit from the global government sponsored programs both directly and indirectly in the U.S. and in Europe.
Production Outlook:
- In North America the fourth quarter production schedule is 430,000 units, down 211,000 units from 2007 and 40,000 units lower than the prior guidance, with most of this decline in SUVs and vans.
- For Ford Europe, the firm expects fourth quarter production of 400,000 units, down about 90,000 from a year ago and our prior guidance.
- In Volvo it expects fourth quarter production of 77,000 units, down 40,000 from a year ago and down 33,000 from our prior guidance.
Strategic Thoughts:
- Ford expects the U.S. market to continue to trend toward smaller, more fuel-efficient vehicles going forward.
- The firm is more focused than ever on implementing its transformation plan to respond to the significant challenges presented by the continuing global economic downturn.
- With a balanced portfolio of small, medium, and large cars, utilities, and trucks, and a sharp focus on the Ford blue oval brand across the globe, management is optimistic it can effectively operate through the current downturn.
- Despite the recent changes in the global market place, plans to invest in new smaller, fuel-efficient vehicles in a more balanced global-product portfolio remains in place.
Alongside business improvements, the firm expects the One Ford product development vision and process to enable it to deliver a range of highly acclaimed smaller vehicles and commercial van segments beginning in the middle of next year.
- New products will be assembled in plants featuring lean manufacturing techniques and in nearly all facilities flexible body shops will make them competitive with the best in the business. - Many of the power trains will be built in plants that can flex, among the I4, V6, V8, or diesel engines.
- While Ford Credit remains a strategic asset integral to Ford, the firm is releasing some of Ford Credit’s capital to Ford Motor Company, consistent with Ford Credit’s smaller balance sheet and a focus on core-Ford brands.
- It will continue to develop incremental sources of automotive funding, including divesting non-core operations and assets and implementing equity-for-debt swaps.
|
