OT: Ford Motor Co's future? Merger with VW?
Brutal Q1, Q2 will be worse (projected $5B loss). Had to cancel electric Lincoln project with Rivian. After discontinuing all their sedans, the Electric Mustang SUV (Mach-E), Bronco Sport, and Bronco flagship have been delayed. Freep quotes a MS banker who floats a merger with VW. What would a merger mean for Michigan? Will the Michigan Central Station revitalization in Corktown Detroit still be completed?
Ford went from the best run most solvent big 3 to potentially the worst. Getting rid of all the sedans was dumb.
It would be interesting if Elon made a move to buy Ford for pennies on the dollar.
The way the company stock is structured, it's not possible to "buy out" Ford in a hostile takeover. The family holds a type of preferred stock so they'd have to agree in order to sell. It's not a zero chance that they would, but unlikely. Bill Ford said "hell no" when asked about a VW merger in a meeting with the entire company last week. Ford has not cut any salaries yet while other companies have, such as GM, Chrysler, Honda, etc, they only delayed the effective date of merit increases. .
April 28th, 2020 at 10:24 PM ^
Back in 1997, Mike Armstrong, the CEO of GM, was asked if he planned to sell Hughes Electronics as had been rumored. He responded by saying, (paraphrasing) ‘I’ll bet a year of my salary against a year of yours. We’re not selling Hughes Electronics!‘ A week later GM announced they were selling the defense portion of Hughes to Raytheon. I suppose he wasn’t completely lying. The market decided that GM got the better of Raytheon as Raytheon’s stock fell from 90 to 19 almost overnight.
April 28th, 2020 at 11:55 PM ^
Mike was CEO of Hughes, not General Motors. John Smith was GM's CEO in 97.
Good, I was scratching my head at that name. Never heard of him.
The Ford family will never sell the company.
Although Henry is probably looking up from hell giddy at the prospect of a joint venture with VW.
Jawohl!
With what? His looks?
Tesla has been a massive failure as a car manufacturer. It's only success is in selling carbon credits to actual car companies that make actual cars people actually buy. If the car industry dramatically contracts and production goes way down, he's deader than everyone because they won't need to buy his carbon credits.
People don't buy sedans anymore. Every company is reducing/eliminating sedans from their lineup. Ford is lucky they have a golden goose in the F-150. Volkswagon has been trying to get into the truck market for years and the two companies were teaming up on a Euro market truck not that long ago.
Honda sold 325k civics last year in the USA, many of which were sedans. That’s around 50k more than they sold in 1999.
Good sedans sell. Ford’s sedans weren’t good.
How many SUV's and trucks did Honda sell?
(Quite a few, actually. 384,000 CRVs last year, and another 135,000 Pilots. The Ford Exporer sold 180k. FWIW the F series usually sells 900k a year).
Ford has fine sedans. People don't want Fords, they want Hondas and Toyotas. Same reason F-150s outsell the competition. Are they very good? Yes. Are competitors very good? Yes. Do people just want F-150s? Yes. People want trucks that are Fords the way they want Sedans that aren't Fords (or Chevys or Dodges, etc).
Ford was never going to win the basic sedan market, which is shrinking rapidly anyway, so they got out.
April 28th, 2020 at 10:28 PM ^
Was deep sixing the Taurus for the 500 a mistake? I always thought it was dumb to kill a brand name like that but I’m not a business person so ??♂️
While arguing on the internet with someone who thinks that they know everything about everything is great fun, I’ll not engage this time.
April 29th, 2020 at 11:29 AM ^
Thanks for making sure everyone knows that you're not engaging. A couple notes:
1. You've made this comment before, which is interesting. It is possible for people to have opinions on topics in multiple fields. Unless, I guess, they are someone you don't like, in which case you'd rather toss out rather weak ad hominems than actually have real discussion.
2. The last time you griped about this was when there was a discussion about Cleveland Clinic, which was reported to have said that they expected to be overwhelmed within 10-14 days of an email that was reported on here. I suggested that it was a good example of how touchy numbers are, since expectations were all over the map. I mentioned the governor of Minnesota and models done here, among other things. The gist? I didn't believe that Ohio was going to get overwhelmed in 10-14 days.
You didn't have anything substantive to say, but you made a point to make a similar back-of-the-classroom remark to the one here.
The result? Cleveland Clinic was not overwhelmed in 10-14 days. In fact, two weeks after that thread, they posted a statement that they were loaning staff to hospital in Michigan and New York, and would bring them back if they got overwhelmed later.
Guess I just got lucky.
Ford isn't in the shape it's in because of the sedan decision. GM made the exact same choice and they've fared far better. They reported a $7B profit for 2019 while their production was down for nearly 2 months from the strike while Ford barely broke even without any sort of production stoppage. GM had a 6% market share advantage over Ford's F-Series in Q1 sales. Ford's losing ground on even their bread and butter. Hackett was a great AD but is just not a good CEO.
Getting rid of all the sedans was dumb
I used agree with that.
But where do they sell outside of the midwest?
I cannot tell you the last time I saw a newer Ford sedan in any of my travels.
April 28th, 2020 at 11:13 PM ^
It's because of the protectionist SUV tax foreign companies have to pay, and with that Ford can make 4k a SUV. And make little to no money on sedans
One of Ford's problems is that they still have all of the legacy retiree costs to cover because they never went thru bankruptcy. GM and FCA shed these costs years ago.
Come on Lions, the Fords need you this year....
They have quite a bit of cash still
Don't worry, the Ford family will always have plenty of money no matter what happens to the company.
Merger talk is overblown right now. This is entirely the speculation of a guy at Morgan Stanley who notes that Ford and VW aren't really competing in many products and might make sense to combine.
There's no way there won't be more bad quarters, though, and bad news for all the major automakers. The economy is sinking like a rock right now. Who wants to buy a car? Ford's sales took a major dip based on only one month of bad sales, March. Wait till next quarter when people with no jobs don't buy vehicles in April, May, or June.
I mean, they might wind up in a position to merge with someone when this is all over, but right now this is just talk and we have no idea what's going to happen here. The downstream effects of the pandemic and the shutdown are huge, no way to fully predict them.
Make sure not to blame Ford's failures or situation on Covid - the implosion of Ford has been self inflicted over at least 5 years by bad leadership and really stupid decisions.
They were in trouble before the pandemic - screwed up the launch of the Explorer SUV, messed up a restructuring in late 2019, and plays constant musical chairs with their leadership. Their stock was in a freefall before Covid, when many already predicted they were headed towards bankruptcy.
If any VW or any company wants them - they will likely get them at fire sale prices before it all caves in...
April 28th, 2020 at 10:06 PM ^
Fair points. I'm a bit vague on how the restructuring last year blew up, can you give me a cliff's notes version?
April 28th, 2020 at 10:23 PM ^
Restructuring effort of $11 billion which started last year - Included sales of Pivotal software company that cost hundreds of millions in losses, and screwing up the right sizing of its international operations. Ultimately rolled into the failure of the Ford Explorer launch. One incompetent move after another - not good whatsoever, and then put a pandemic on top of it. Trainwreck.
I wish Mulalley was still running Ford or at least hung around for another 5 years.
Alan is a fantastic example of the impact great leadership can have on a company. As much as I'd like to say JHacket is on-par with Alan Mulally, it's not close. The Explorer launch was bad, the number of defective vehicles rolling out the assembly plant, being shipped to Michigan to get fixed is embarrassing and a sign of poor management.
I don't follow the auto scene as much as I used to not being in the state, but a merger with VW seems a bit premature. As noted in the article, Ford has one of the few brands (Lincoln) that saw an uptick in the last quarter. There will be liquidity issues and I don't think we'll see a V-shaped economic recovery in most sectors of the economy, but of the Big 3 Ford seems best positioned to ride it out.
April 29th, 2020 at 10:04 AM ^
Lincoln may have had an uptick, but it is a tire fire and should be dumped entirely. The Continental was a very poor decision and should never have been made.
In April 2015, five years ago, Ford's stock was at $15.80. Today - the stock is at $5.38. Absolutely pathetic. I have never seen a company that is so damn slow, bureaucratic, poorly operated, and just makes one stupid decision after another.
Stick a fork in them - they are done...
Yet still, Ford CEO Jim Hackett banked over $17 million last year. How did he ever even get the gig? At Steelcase he shipped all the factories to Mexico and ran the company into the dirt.
Matt Millen made $5 million per year, was the worst GM in the history of the NFL, and ran the Lions into the ground while leading them to a 0-16 season.
Jim Hackett made $17M last year and is absolutely botching the Ford CEO job while sending them towards bankruptcy.
What is the common demoninator in this? Easy to figure out...
April 28th, 2020 at 10:22 PM ^
You are so SPOT ON!!! The same ford family that has SCREWED UP the lie-downs for 60 years is running the ford motor company no where. The ford family is akin to the British Royal Family, lot of intrigue, drama, kowtowing, nepotism, but they really do and produce NOTHING.
Say what you will about about GM, but no one has a gilded career there because of their last name!
April 29th, 2020 at 10:05 AM ^
Dave Brandon says "hold my beer"
April 28th, 2020 at 10:47 PM ^
And 2 years ago it was $12.68/share. I'm not some big defender of Ford but it's never been a company with high stock value (I think their peak value ever was something like $33/share back in the 90s).
Buy Ford stock while it’s still cheap.
April 28th, 2020 at 10:24 PM ^
....or wait and it will get cheaper!
April 28th, 2020 at 10:31 PM ^
Cheaper suggests a bargain - believe the word you are looking for is "lower". As used in the incorrect conclusion: "Damn, Ford stock has now dropped to $5.13 - it certainly can't go any lower!"
April 29th, 2020 at 10:07 AM ^
Uh, zero is lower...
edit: F just gave direction that they expect to lose $5B in the 2nd qtr. Holy crap. Yeah, good idea buy a lot of that stock. It's cheap. Quite a bargain.
April 29th, 2020 at 10:16 AM ^
It may go lower in the short term. I fully expect it to recover nicely. The new Bronco is legit and it’s going to take a huge hunk of the Wrangler market. Also, the next gen F-150 will be arriving shortly with the full electric model to follow in 2022.
The CEO is the same guy many on this board wanted to have a statue made and placed next to Bo's when he was acting AD. What a fickle fan base.
April 28th, 2020 at 10:32 PM ^
Well he was a great AD. Maybe he’s not a great CEO.
Hiring Harbaugh was a LITTLE simpler than running a huge manufacturing company. The guy found he level, and it wasn’t “ceo of ford.”
Does VW have production facilities in the US? If not, then it could make sense.
April 28th, 2020 at 10:06 PM ^
VW has a large plant in Chattanooga, TN. that makes the Passat and Atlas.
I don't know if they have any other production facilities in the U.S.
April 28th, 2020 at 10:07 PM ^
Yes, significant ones. My brother-in-law works at a massive one in Chattanooga.
April 28th, 2020 at 10:47 PM ^
Bring back the Escort.
Or the beloved Pinto!!