Posted by on March 23, 2017 10:20 pm
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Categories: 1Q Business Economy Ford Ford Motor Company Gratuity Henry Ford Henry Ford family Inventory Sport utility vehicle Transport

Earlier this morning we noted Ford’s “CFO Let’s Chat” meeting with analysts before which Ford announced weak 1Q adj. EPS guidance of 30c-35c, coming in well below analyst estimates of 47c, which they blamed on higher costs, lower volume & unfavorable exchange rates. 

With the call now concluded, here are a couple of the key takeaways:

First, the bad…

  • Volumes will start to fall off this year, next year
  • Used car prices will drop for several years
  • European profit will fall this year
  • China sales down sharply in 1Q
  • India more difficult than expected
  • All options on table including traditional restructuring

…and the good-ish…

  • Favorable market factors offsetting higher commodity prices
  • Inventory levels “in very good shape”
  • Sedans play diminishing role in U.S. business; SUVs, trucks make up 73% of U.S. business
  • Not seeing anything to suggest economy will “tip over”

And while Ford is confident they’re not seeing “anything to suggest the economy will ‘tip over'” (which is good, right?), their own presentation slides would seem to paint a slightly different picture.

First, on Q1 2017 earnings by region, South America is expected to be flat…so that’s at least not negative, which is nice…


And while Ford pointed to their gross inventory days as a sign that the industry does not have an inventory problem, they snuck in at the very bottom of slide 9 the fact that overall industry inventory was up 13 days in February vs. last year…


…and industry incentive spending paints pretty much the same picture…


And for those of you holding out hope that current volumes aren’t simply the result of a massive auto loan bubble, we present to you some details behind Ford Motor Credit’s “consistent and predictable” U.S. loan portfolio.  To summarize, loan terms up, lease mix up, charge offs up massively…all great news


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