The MSM keeps telling me that auto sales are skyrocketing. They tout this as proof the consumer is back. Then why is Ford slashing their profit forecast by $1.5 billion? Why are their North American profit margins crashing? Why hasn’t their stock price moved at all in the last year? Why is their stock price 25% lower than it was in 2011? Why is GM’s stock price down 25% in 2014 YTD? Why is GM’s stock price still 20% lower than it was in 2011? Why are dealer lots overflowing with inventory?
The reason none of this computes is because the auto recovery is a farce. The “fantastic” sales are nothing but a debt financed bonanza created by the Fed’s easy money. Subprime financed auto”sales” are just pre-repossession gifts to deadbeats. Leases are nothing but short-term rentals to math challenged dumbasses which will be flooding dealer lots over the next few years. Even the legitimate sales are being financed at 0% for 7 years. This auto recovery is nothing but smoke and mirrors.
Ford sharply cuts full-year profit outlook
By Mike Ramsey
Published: Sept 30, 2014 8:21 a.m. ET
Just three months into the top job at Ford Motor Co., Mark Fields slashed the auto maker’s full-year profit outlook on rising troubles in emerging auto markets and costs from quality troubles and U.S. recalls.
Mr. Fields told investors on Monday the nation’s No. 2 auto maker by sales expects to report pretax profit this year of between $6 billion and $7 billion, approximately $1.5 billion less than it had forecast in July.
The largest factors: a roughly $1 billion larger tab for warranty and recall costs, a $300 million hit from declines in Russia, and a loss in South America that is $900 million larger than forecast. Better than expected unit volumes and pricing helped offset some of the shortfalls, it said.
Ford shares closed down 7.5% at $15.11 in 4 p.m. trading, the lowest close since March, and continued falling after-hours.
“The big shock today was the margin forecast given for North America,” said Brian Johnson, Barclays auto analyst. Despite high expectations for the 2015 F-150 pickup truck, Ford’s outlook for the rest of the year implies North American operating margins of between 8% and 9%, down from 11% last quarter.
The company now expects Europe to lose $1.2 billion on a pretax basis in 2014 and projects the red ink there would flow into 2015, although at a lower rate. Ford no longer expects European auto demand to return to prerecession sales levels even by 2020.
Ford also is suffering quality problems and has recalled 3.9 million U.S. vehicles so far this year, according to National Highway Traffic Safety Administration data.
Mr. Fields took over from former CEO Alan Mulally in July, and on Monday led a team of executives in laying out a road map for the business through 2020. While the company pointed out bright spots in Asia, North America and its Lincoln luxury brand,
Mr. Fields said the weak short-term outlook isn’t casting a shadow over his early days as CEO. He said the company is “looking at reality and dealing with it in a proactive way.”
