Ford loses £81.8bn in the last quarter of 2008
7 November 2008

The dire situation facing America’s car makers has been emphasized by the revelation that Ford could run out of cash next year if it doesn’t slash spending.

The company’s latest financial update revealed that it posted a loss of $129m (£81.8m) for the last quarter of 2008, with the worst performance coming from the north American part of the business. That’s less than the $380m (£241m) loss it posted for the same period last year, but the company’s running costs were $7.7bn (£4.9bn) during the last quarter.

That leaves Ford with cash reserves of just $18.9bn (£12.1bn) – enough to last for just seven months if it continues to spend money at the same rate. The plight of the 'big three' was further emphasised by GM's announcement it was suspending merger talks with Chrysler in the face of its own third-quarter losses.

>>Read Chas Hallett's blog on what the financial meltdown could mean for Chrysler

Ford is responding to the crisis with plans to conserve cash reserves with massive cuts. These will include reducing spending by up to $5.5bn (£3.5bn), doing away with all bonuses and slashing both engineering and advertising costs. Ford has already pulled all of its UK advertising across all mediums until the end of the year.

Despite the gloomy news in America, Ford of Europe made a profit (albeit down by $224m), and it’s south American operations posted an increased profit, up from $94m (£59.7m)to $480m (£304.9m). 

Dan Stevens

 

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Comments
8

10 November 2008

Eh Autocar, shouldn't your front New headline read "Ford lost $81.9m in last quarter"; NOT "Ford lost $81.9bn in the last quarter".....

How people can acuse the mediia of scarmongering is beyond me ;O)

10 November 2008

Perhaps if the General and Ford had concentrated on building decent cars instead of pushing the fantasy of every man owning his own truck (and then supplying millions of them @ 12 mpg), neither they nor their customers would be in such difficulty now.

Oh yeah, you've got the cars, in Europe, but you've brainwashed your US customers into believing that they'll turn gay if they buy them.

Much as I've enjoyed seeing the excesses of the turnpike cruisers and muscle cars (you have to admit, in their own context, they've been impressive) of the past five decades, the US car makers have only themselves to blame, they've been living on reality credit since the early 50s. Now the bills are dropping onto the doormat.

10 November 2008

Spot on, Phinehas. Only thing I'd add is that often the European arms of these companies are often excellent - Ford, in particular, has been the outstanding mass market European car maker of the 2000s - but they are being dragged down by blokes who think that a four tonne V8 pick up is the universal answer to personal transportation.

10 November 2008

Phinehas, you're right. Unfortunately, the bankruptcy of GM and FoMoCo is dragging down Opel and Ford of Europe. These are decent businesses, both of them. It's being reported in Germany today(according to the Frankfurter Allgemeinen Zeitung) that Opel have officially asked Chancellor Merkel for help.

They want Merkel to throw her and her government's full backing behind the proposal for a €40bn credit programme from the European Investment bank for the European auto industry and a German only plan for a scrapping premium for older cars to stimulate new car sales in Germany(although Germany is only down 2% YTD, compared to nearly 10% in UK), as well as effectively subsidised, below bank rate loans for new car financing.

If GM and FoMoCo do go down it could be that the European, German essentially, arms of these two get split off first, then taken over, rationalised, and digested into the indigenous German makers, in some form. That's what I think.

By the way, 'Phinehas' could sound like a compliment on a posterior.

10 November 2008

You can compliment my posterior as much as you want, but no touching.

I bet there's lots of people running round Ford Europe and Opel/Vauxhall trying to work out if there is any way they can cut the ropes. Unfortunately, you have to fear that both US managements will want to bleed them bone dry rather than let them fly the nest.

10 November 2008

If GM and FoMoCo do go down it could be that the European, German essentially, arms of these two get split off first, then taken over, rationalised, and digested into the indigenous German makers, in some form. That's what I think.

I would not want VAG running Ford Europe or Opel. To me that conjures up a white goods approach to our cars in future. There will be little technical differentiation between marques and the customer will have a bargain basement option from the Far East or a German offering marketed as a premium product but ultimately lacking in cutting edge design that nets the manufacturer and dealer higher margins.

10 November 2008

[quote Phinehas]I bet there's lots of people running round Ford Europe and Opel/Vauxhall trying to work out if there is any way they can cut the ropes.[/quote]

- yes, I hope so. And I hope they can make it work, as independent operations.

[quote Phinehas]Unfortunately, you have to fear that both US managements will want to bleed them bone dry rather than let them fly the nest.
[/quote]

Er, yes. To wit, Financial Times Deutschland reporting today that GM have told Opel to make savings of $750m next year. Now I wonder what they want the money back for. Ah, yes, Rick Waggoner and the boys' remuneration packages are flagging. Phallus-fellators.

16 November 2008

Phinehas

You're on the right track with that comment, the Ford F150 and F250 are shining examples of that dreadful philosophy to name but two models.

I think it was Dodge or GMC recently came up with a really good way to make Pick-ups economical by putting a Diesel in them - on paper it was a great plan until they went ahead and used commerical 6 cylinder 6.7 litre units which are usually found in Mid-size trucks and buses.

What has always baffled me about American motors is the simply awful fuel economy gained from large engines that have pathetic power returns. In Europe you can get reasonable grunt from most cars without having to have silly thirst and engine capacity plus they still burn fairly cleanly - bizarrely Ford and GM Europe can manage this quite easily yet don't appy it to the American market.

I heard a rumour a few days ago that GM may also be putting the paperwork in place in case they have to file for Chapter 11 (Commercial Bankruptcy). The sickening thing about this whole issue is that the workers that keep the factories turning will be the ones that lose out big time and may not be able to make ends meet.

Meanwhile the execs, as always, will walk away with their bank balance looking flush having given text book examples of how not to manage a large company, car producing or otherwise. The same thing happened to MG Rover; the Directorate walked away with over £1m a piece.

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