Tag Archive | "Ford Motor Co."

Ford Ramps Up Electric Vehicle Development and Production


DEARBORN, MI – Ford is adding new green jobs, doubling its battery-testing capabilities and speeding electrified vehicles to market by at least 25 percent, creating more fuel-efficient choices for customers.

“The good news for customers is that they not only have more choice, but they have faster access to Ford’s latest and greatest in fuel-saving technologies and vehicles,” said Joe Bakaj, Ford vice president of Powertrain Engineering. “This stems directly from our decisions to deliver true power of choice by expanding our dedicated electrified vehicle team and further investing in our facilities.”
Ford is investing $135 million in the design, engineering and production of key components – including advanced battery systems – for its next-generation hybrid-electric vehicles going into production this year. For example, Ford’s battery-testing capabilities will double by 2013 – to a total of 160 individual battery-test channels. This includes investing in more of the highly specialized machines that can test and simulate everything from power and performance to life and thermal behavior over a complete range of temperatures and possible operating conditions.
Also, Ford is dedicating a 285,000-square-foot research and development lab here to focus almost entirely on hybrids and electrification. The building, formerly known as the Advanced Engineering Center, has been renamed the Ford Advanced Electrification Center and houses most of the 1,000 engineers working on hybrid and electrification programs. Ford has also continued to build its electrified team, with 60 engineers hired in the past year and dozens more positions to be filled this year.
Ford is also reducing the cost of its current hybrid system by 30 percent versus the company’s previous-generation system. Plus, Ford is launching five electrified vehicles this year as part of its power of choice strategy to deliver leading fuel economy across its lineup, and plans to triple electrified vehicle production capacity by 2013.
“We know what it takes to build world-class hybrids and are building on that expertise,” said Kevin Layden, director, Ford Electrification Programs and Engineering. “We’re continuing to invest so Ford can continue to lead in the delivery of top fuel economy, durability and driving dynamics in our electrified vehicles.”

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Ford’s Profit Falls on Weak Performance Overseas


DEARBORN — Ford Motor Co. suffered a 57 percent drop in earnings in the second quarter as a result of expanding losses outside North America, and warned of continuing trouble in Europe for several more years.

The auto maker earned $1.04 billion, or 26 cents a share, down from $2.4 billion, or 59 cents a share, a year ago, as strong profits in North America offset a $404 million loss in Europe, a smaller loss in Asia and a big drop in profit in South America. Lower sales overseas caused revenue to fall 6.2 percent to $33.3 billion, according to The Wall Street Journal.

The problems in Europe are “structural in nature,” rather than the result of a cyclical downturn in the industry, Bob Shanks, Ford’s chief financial officer, said. He added that the company now expects European losses for the year to exceed $1 billion, up from an earlier $600 million forecast.

“We think this is a situation that we will have to deal with for the foreseeable future,” he said.

Mr. Shanks said Ford will take actions to slash costs and production capacity in Europe, despite the political and labor opposition to closures that make it difficult to shrink operations there. He suggested a downsizing in Europe could over time have positive results similar to those Ford has seen in North America, where the company restructured and now is producing near-record profits.

European auto sales have declined in each of the last four years and are on track to post a fifth drop in 2012, amid the European Union’s debt woes. As a result, many auto makers are operating more plants and employing more workers than they can keep busy.

“We have overcapacity now in Europe,” said Ford CEO Alan Mulally. “It isn’t going to come back fast and we aren’t going to be saved by volume.” Asked if Ford would try to close a plant in Europe, Mr. Mulally said it would examine “all areas of the business.”

Separately on Wednesday, France’s PSA Peugeot Citroën and Germany’s Daimler AG were dragged down by Europe’s woes. Peugeot already has said it plans to close one European plant; so has General Motors Co.’s Opel unit. GM reports its results next week and losses from Europe will be significantly higher than a year ago, a person familiar with the matter said.

Ford’s overall income came entirely from North America, where pretax profits hit $2 billion, up 5 percent from a year earlier, mainly as a result of strengthening sales of highly profitable pickup trucks. Ford’s 10.2 percent profit margin in North America was up slightly from a year earlier and the company said margins would stay high throughout the year. On average, Ford made $2,727 in operating profit on each of the 737,000 cars and trucks it produced in North America in the second quarter, $90 more than the year-ago figure.

In Europe, Ford already has slowed its plant production, laid off temporary workers and cut the length of work days. A year ago, Ford made a profit of $176 million in Europe, but falling sales and rising incentive costs made the operations unprofitable.

Ford has five assembly plants in Western Europe and derives about 25 percent of its global sales from the region, Mr. Shanks said. The company’s efforts to build global vehicles that are virtually the same in every market could make it easier for Ford to shut a plant because it could export cars from North America or elsewhere to Europe.

The company said its South American operations posted a $5 million pretax profit, down from $267 million a year-earlier as stiff competition forced it to lower prices or use incentives to sell cars.

A freeze in free-trade agreements between Mexico and Brazil and Argentina is hurting the business, Mr. Shanks said. Ford said it expects the region to remain profitable for the year.

Ford’s Asia and Africa operations also lost $66 million on a pretax basis as higher revenue from car sales were offset by heavy capital spending for new plants and products. A year ago, Ford eked out a $1 million profit in the Asia region.

Ford Motor Credit’s pretax results declined to $447 million, down from $604 million a year earlier. The lending arm is getting less revenue and profit from vehicles returned on leases.

Ford’s effective rate of 37 percent in the quarter reduced net income by about $600 million compared with a year ago. Its effective rate was 8 percent a year ago. The higher rate is connected to the release of a tax-valuation allowance last year.

Ford’s annual pretax profit and automotive operating margins are now expected to be lower than a year ago after earlier forecasts predicting equal or better performances.

Ford lowered its full-year profit forecast as well as its forecast for capital spending. Ford’s pretax earnings excluding charges were $1.8 billion, or 30 cents a share, were better than the 28-cent a share profit forecast by analysts. Mr. Shanks said the lower forecasts come directly from the eroding results from Europe and South America.

Capital-spending estimates were lowered to $5 billion from a range of $5.5 billion to $6 billion. Mr. Shanks said the lower capital spending came from efficiency improvements, and not from cuts to any car-development programs.

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Ford Says Software Fixes Too Late To Help J.D. Power Rank


Ford Motor Co., working to fix faulty dashboard touch screens, said the software upgrades offered to customers came too late to improve quality scores in J.D. Power & Associates’s new-car survey.

Ford was one of only five brands in the quality study to decline, according to survey results distributed today at a meeting of the Automotive Press Association in Detroit, reported Bloomberg.

“We’ll be about the same or slightly better,” Bennie Fowler, Ford’s group vice president of global quality, told reporters in Dearborn, Michigan, yesterday. “The dramatic improvement we’re expecting will come in the third quarter and, hopefully, we’ll see that in” next year’s survey.

Touch screens have lowered Ford’s quality scores. The automaker’s namesake brand slid to 27th from 23rd a year ago and fifth in 2010 in Westlake Village, California-based J.D. Power’s new-car quality survey. The company’s Lincoln luxury brand was 18th, its second-consecutive ranking below the industry average.

Chief Executive Officer Alan Mulally has made technology a pillar of his turnaround plan. Fuel-efficient, turbocharged engines and features such as voice-activated phones have attracted younger customers and pushed up prices. U.S. buyers paid an average of $31,995 for Ford’s models in the first quarter, up 26 percent from 2002, according to Edmunds.com.

Ford in March sent a software upgrade to 377,000 customers with the MyFord Touch and MyLincoln Touch dashboard controls. J.D. Power measures quality on new cars from November to February, Fowler said.

The upgrade included faster touch responses, simpler graphics, enhanced voice recognition and improved phone controls, said Jim Farley, Ford’s global marketing chief. Ford plans a further enhancement with the next upgrade so that outside temperature is displayed on the home screen, he said.

“The idea of an upgradeable car is right here, right now,” Farley said yesterday at a press conference. “We have a lot more to do as an industry and as Ford, but we’re headed in the right direction.”

Ford has said its quality performance this year will be “mixed” and fall short of its goal to improve on last year. The company has said it’s receiving complaints about a fuel- saving new transmission used in its Focus and Fiesta small cars.

The automaker’s touch-screen dashboard controls still receive poor marks from owners, even after improving the software, said David Champion, auto-test chief with Consumer Reports magazine.

“They need to get these innovations right or just dump ’em,” Champion said in a June 12 interview. “They’ve improved them slightly, but they’re still not right.”

The software fixes Ford made after J.D. Power completed its survey should help the automaker next year, David Sargent, J.D. Power vice president for global vehicle research, said today in a speech.

“The new system is a whole lot better than the previous system,” he said. “So we expect Ford to rebound.”

Other than the high-tech features, Ford’s basic quality remains good, Champion said. The automaker is seeing a reduction in the “basic things that break,” Fowler said.

“We’ve seen about a 40 percent improvement in our repair rate from this time last year,” Fowler said. “So we’re back on track in that regard.”

Warranty claims on MyFord Touch also have declined as Ford offered the software upgrades, Fowler said. Some of the problems have been caused by Ford customers not understanding the technology, he said.

“We’re working on continuing to explain to our customers how to use the technologies,” Fowler said. “We’re also going to continue to refine all of our software to better listen to what the customer is saying.”

Ford has provided upgrades for the new transmissions, Said Deep, a company spokesman, said in a statement today.

Ford gained 1.5 percent to $10.72 at 1:04 p.m. in New York.

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Moody’s Lifts Ford Debt Rating


Ford Motor Co. achieved a key financial goal on Tuesday as Moody’s Investors Service raised the auto maker’s debt rating to investment grade, its second such upgrade in a month.

The move by Moody’s to lift Ford’s debt one notch to Baa3, the lowest tier in its investment grade ranking, releases Ford’s most important assets as collateral for its outstanding loans and could result in lower interest costs for new debt. Fitch Ratings also upgraded the company last month, according to The Wall Street Journal.

The upgrades mean the Blue Oval, Ford’s trademarked symbol, can’t be seized if the company defaulted on its debts. Chairman Bill Ford Jr. signed off on a $23.5 billion package of loans in 2006 that put virtually all of the company’s assets, including its trademark, up as collateral. The final vestiges of that loan have now been removed.

Ford’s most actively-traded bond soared on Tuesday with yields plummeting about 100 basis points. Ford Motor Credit Co. 3.875 percent bonds due 2015 jumped $3.50 per $100 of face value to $104 following the upgrade. The spread to comparable U.S. Treasurys declined 108 basis points to just 189 bps, the lowest since it was issued. With two investment-grade ratings, the bonds are now eligible for inclusion in high-grade bond indexes.

The debt upgrade “was way up there on the highlight film,” said Chief Executive Officer Alan Mulally on a conference call on Tuesday. When the company borrowed the money, “we knew that a very important milestone was going to be getting back to investment grade.”

Mr. Ford disclosed the upgrade to all employees over the broadcast system, normally reserved for emergency drills, and the executives were planning to be photographed in front of the company’s headquarters with the entire corporate staff.

“When we pledged the Blue Oval it was enormously emotional. This is one of the best days I can remember,” Mr. Ford said.

The push by Ford back into investment grade came largely from its impressive financial performance in North America, the same place that used to be its biggest anchor. A few weeks ago, Ford reported a $1.4 billion first quarter profit and a strong, 11 percent profit margin in its North American region.

The margin was viewed as a significant achievement by analysts. And Moody’s said its restructuring efforts in its home market were key in moving the auto maker out of “junk” status.

“The key factor in our considering an investment-grade rating for Ford was whether or not the company would be able to sustain its strong performance,” said Moody’s Senior Vice President Bruce Clark. “We concluded that the improvements Ford has made are likely to be lasting.”

The ratings firm said one of Ford’s key strengths is its low North American breakeven level. Moody’s noted that since the 2009 restructuring of the U.S. auto industry and the adoption of a new labor agreement, Ford’s North American annual breakeven level has declined by approximately 45 percent to 1.8 million units.

Ford’s Chief Financial Officer Bob Shanks said it can make money in the U.S. even at industry sales of 10 million units, which is the deep low level that the industry had in 2009 that drove General Motors Co. and Chrysler Group LLC into government-backed bankruptcy restructurings.

Moody’s noted that for the 12 months March 2012, Ford’s North American wholesale shipments were 50 percent above its estimated breakeven point. Moody’s said this large margin as well as the improving outlook for U.S. auto demand and the $6.2 billion in North America’s segment profits last year reflect a healthy and sustainable business position.

Ford shares were off a penny at $10.19, while GM’s shares were off by 4 cents to $21.50, both in 4 p.m. New York Stock Exchange trading.

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Ford Reveals How Much Electric-Car Batteries Cost


One of the auto industry’s most closely guarded secrets—the enormous cost of batteries for electric cars—has spilled out.

Speaking at a forum on green technology on Monday, Ford Motor Co. Chief Executive Alan Mulally indicated battery packs for the company’s Focus electric car costs between $12,000 and $15,000 apiece, reported The Wall Street Journal.

“When you move into an all-electric vehicle, the battery size moves up to around 23 kilowatt hours, [and] it weighs around 600 to 700 pounds,” Mr. Mulally said at Fortune magazine’s Brainstorm Green conference in California.

“They’re around $12,000 to $15,000 [a battery]” for a type of car that normally sells for about $22,000, he continued, referring to the price of a gasoline-powered Focus. “So, you can see why the economics are what they are.”

Ford is currently promoting its $39,200 Focus EV at events around the country. It has a 23 kilowatt-hour battery pack. A Ford spokeswoman said Mr. Mulally’s comments were designed to provide a indication of the car’s battery costs.

Based on the price range that Mr. Mulally indicated, Dearborn, Mich.-based Ford appears to pay between $522 and $650 a kilowatt-hour for its electric-vehicle batteries. In the past, auto makers and battery makers have been reluctant to disclose the cost per kilowatt hour. Analysts have made projections that battery costs are between $500 and $1,000 per kilowatt-hour.

The U.S. Department of Energy, as part of its efforts to help promote plug-in hybrid- and fully-electric vehicles, has set a goal of lowering the cost of batteries to $300 a kilowatt-hour by next year. The DOE has helped to fund battery plants in the U.S. to install the capacity, and ideally lower the cost of batteries.

Ford hasn’t provided projections for anticipated sales of its EV, but has made the point that it doesn’t need to achieve high volumes because it is building the Focus EV on the same line as the gasoline-powered version. It sold just 10 to fleet customers late last year and now is building more of the vehicles at its plant in Wayne, Mich.

The Focus EV is a direct competitor to Nissan Motor Co.’s Leaf, which sold about 9,700 in 2011 in the U.S. The Leaf starts at $35,200 and has a stated range of 73 miles on a full charge. Ford says its Focus can go up to 76 miles on a full charge and can be recharged in 3 ½ hours using a 240-volt wall charger, or about twice as fast as the Leaf.

Other auto makers including General Motors Co. and Fisker Automotive Inc. have struggled with high prices and slow initial sales of their battery-powered vehicles, but have committed to building new models.

GM is planning to introduce its all-electric Spark subcompact later this year. Its roughly $40,000 Volt car has a small gasoline engine that kicks in when the battery runs low.

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Ford Says Market Share May Slip


DETROIT – Ford Motor Co. is likely to lose market share this year in the U.S., the first decline since 2008, the company’s head of North and South America said Wednesday.

Despite a market-share loss, Ford should generate higher than previously thought margins and profit in North America, Americas chief Mark Fields said at an investor’s presentation hosted by Bank of America .

Ford raised its forecast for U.S. industry sales to between 14.5 million and 15 million vehicles, including sales of medium- and heavy-duty vehicles, up from its previous target range of 13.5 million to 14.5 million, according to The Wall Street Journal.

Mr. Fields said capacity constraints because of the faster-than-expected growth may lead to the lower market share for Ford, but could also mean higher pricing and margins for its vehicles.

Ford gained market share in the U.S. for three straight years, touching 16.8 percent in 2011, after hitting a low of 14.4 percent in 2008. But in the first quarter of 2012, its share is off 0.8 percentage point compared with a year earlier. The company changed its forecast of a stable share to a declining share.

Ford this week reported that its U.S. sales rose 5 percent in March and that it had record deliveries of its compact Focus compact as well as strong sales of its full-sized F-series pickups.

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