Ford Posts $2.3 Billion Profit

Ford BOGO

So Ford posts a $2.3 billion dollar profit today for the 2nd quarter of 2009 and already the official industry experts are chiming in.  I already have  a view point on why Ford managed to get in the black for the second quarter and it has nothing to do with vehicle offerings.  That’s right, I don’t think hybrids and fuel economy had anything to do with the recent numbers published by Ford.

In my opinion Ford manged to turn $2.3 billion in profit because they received the support of the American consumer.  The regular Joe blows saw that this corporation was not taking a hand out and decided to show their support through their wallets.  The American consumer, when faced with countless options on car lots, decided to choose a Ford vehicle over GM, Chrysler, or Toyota.  It’s a sign that the majority of Americans don’t support the bail out plans in Washington.

Another driving force in sales will be whether or not the vehicle you buy now will be supported 5 or more years from now.  If you have a major component go out on your car after the warranty has expired, will parts be radically expensive, or supported by the manufacturer.  Vehicles that are discontinued generally see higher replacement parts in generic and OEM form, why put yourself in that kind of a position.

I thoroughly realize that $2.3 billion in profits is a far cry from where a company this size needs to be, especially to keep the stock holders happy.  However, in this economic environment every ray of sunshine helps to swallow the negative news around every corner.  It’s a move in the right direction and I hope Ford can prove themselves again next quarter and the American people continue to voice their opinions with their wallets.

2 thoughts on “Ford Posts $2.3 Billion Profit

  1. Scott

    Great article on Ford’s recent success. In addition to the points mentioned Ford had a few other things going for it including a top notch management team responsible for moving the company forward in the right direction.

    Ford began doing things right well before the Wall Street meltdown, which ended up burning both Chrysler and GM, forcing both to seek huge government handouts.

    One big difference was that Ford had already secured its long term financing before the financial meltdown As a result, Ford did not experience short term cash flow difficulties during the crisis and therefore did not require a government handout to meet it’s short term capital needs.

    GM and Chrysler however were not as fortunate since both were impacted by the credit crunch crisis and unable to secure badly needed financing to cover their short term capital requirements. Simply put, neither had insufficient cash on hand to sustain their daily cash burn through rate. As a result, both companies needed a government hand-out to meet their short term capital requirements.

    In addition Ford was already well ahead of the GM and Chrysler in several other areas:

    One being that Ford’s management team was already well down the road in refocusing and restructuring the company on their core brands and dumping product lines and product divisions that did not. For example Ford had already sold off Jaguar, Volvo and Landrover well before the Wall Street meltdown.

    Another difference between the big three was that Ford was ahead of both GM and Chrysler in new product development and redesign with new products already in production and hitting the market, whereas the other two were well behind the curve. GM was looking at 2011 as the entry point for many of their new product lines and Chrysler was even further behind with a product line in desperate need of new products and redesign.

    Last but not least was the decision of Ford’s management team to focus on making significant quality improvements. This in combination with a well positioned marketing strategy has made good headway in convincing consumers that Ford vehicles are every bit as good if not superior, in quality and value, to it’s competitors including the import brands.

    While its great to see Ford turning a nice profit, lets hope all three are solidly in the black in 2010!

    Reply
  2. Christopher Post author

    I’m with you Scott, I hope all 3 get turned around and start growing again. The idea of domestic manufacturers losing market share and pushing production over seas makes me a little sick inside.

    Reply

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