Ford has posted $1.6 billion in pre-tax earnings for the second quarter ($1.16B post-tax). Of that, however, only $83 million—5%—came from auto sales. Factor in special items of $140 million, including the restructuring of the investment in Ballard and restructuring in Europe, and Ford lost $57 million on its auto operations during the quarter.
The rest of the revenue came from the financing arm. Even though Ford auto sales were incrementally up year-to-year, the gross imbalance between the financing revenue and the automotive revenue gave many analysts pause, and Ford stock dropped on the news.
This comes at a time when Ford and GM both have extremely large inventories of unsold vehicles, are seeing sales drop and are losing market share. Fords second-quarter share of the US auto market dropped 1.2% from 19.3% in 2003 to 18.1%. However, Ford saw stronger results in Europe, especially in Turkey and Russia.
Copy of the earnings presentation is here.
By contrast, Toyota announced that it expected global sales to rise 9% this year, that it was increasing production 11% and that exports from Japan were up 8%. It also noted that it was working to increase the production of the Prius, specifically for delivery to the US.
Detroit Free Press. Toyota will make 130,000 Prius hybrid cars a year at the Tsutsumi factory in central Japan, [Toyota President Fujio] Cho said. Toyota now produces about 10,000 units a month, from 7,500 units before.
“I have received letters requesting for more Priuses,” Cho said. “Those Prius cars are being shipped to the U.S. and are on the way, which will help the shortage.” Cho said the company has no plans to produce hybrids in the United States for now, as there are some auto parts that are made only in Japan.
Toyota has been expanding market share and production while Ford has been reporting declines. Cho set Toyota a target of grabbing 15 percent of global automotive sales within a decade, from about 12 percent now. [Toyota displaced Ford as the second-largest global automaker—behind GM—last year.]
Ford has the opportunity to make a strong comeback in the US, especially with the advent of the hybrid Escape this fall. Ford has also proven that it can make comebacks;the solid improvements in Europe are a good example. To do so, though, Ford is going to have to focus (hmm, no pun intended) on a different type of marketing and sales than Big Trucks With Big Incentives. The hybrid Escape is an opportunity. For Ford’s sake, I hope they don’t blow it.