Popular models drive profit up, debt down for Ford
DEARBORN, Mich. – Ford is on a roll.
Its popular new cars and trucks are grabbing a bigger share of the U.S. market. It’s about to erase a big chunk of its health care debt. And it’s adding a significant number of jobs for the first time in five years.
On Tuesday, the automaker said it made $1.7 billion from July through September, a jump of nearly 70 percent from a year earlier and its sixth consecutive quarter in the black.
The news puts Ford further ahead of its rivals as the U.S. auto industry slowly turns around. Chrysler has yet to make a profit after a stay in bankruptcy last year. General Motors is making money but losing market share – and still partly government-owned.
“They’re in the best shape that they’ve been in for years,” Gimme Credit analyst Shelly Lombard said of Ford.
Among the company’s stars is the F-Series pickup, the top-selling vehicle in the U.S. The Ford Edge and Ford Escape are two of the country’s best-selling small utility cars, while sales of the Fusion mid-size car are up 20 percent this year.
Ford turned a big profit in part because it’s making more money on its highly rated cars and trucks. Buyers shelled out about $30,600 on average for a Ford in September, 10 percent more than in 2005, according to Edmunds.com.
Ford has also been able to cut back on costly incentives as buyers pay more for premium options. For example, 80 percent of people who buy the Ford Fiesta subcompact also spring for the Sync in-car communications system, a $395 option.
The Ford brand came in 10th place Tuesday in Consumer Reports’ annual reliability rankings, just behind Lexus and a far better showing than four years ago.
It adds up to a bigger slice of the U.S. market for Ford – 16.7 percent, up from 15.2 percent a year ago, according to AutoData Corp. It has switched places with Toyota as the No. 2 automaker, after GM, by U.S. sales, as Toyota struggled with a series of safety recalls.
“The strength of the product is propelling our business results,” Lewis Booth, Ford’s chief financial officer, said in a conference call with media and analysts.
As a result, Ford announced it would hire 500 new workers for a shift at the Chicago plant that makes the new Ford Explorer, its first significant hiring in years. And it has promised millions in new investments at various plants.
Ford got its financial house in order after mortgaging everything down to its blue oval logo four years ago to pay for a huge restructuring. It paid off $2 billion in debt in the third quarter and expects to pay off $3.6 billion more for retiree health care later this week.
The company now expects to end the year with as much cash as debt, reaching the goal a year earlier than it had forecast. It still owes about $22 billion, far more than Chrysler’s $11 billion and GM’s $8 billion. Those two companies shed billions in debt while under bankruptcy protection.
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