US:Ford Motor Co. CEO Bill Ford Says Company Poised to Regain U.S. Auto Market Share
AP Interview: Ford Motor Co. CEO Bill Ford Says Company Poised to Regain U.S. Auto Market Share
The Auto Channel
DEARBORN, Mich. The AP reported that despite rising fuel prices that threaten sales of Ford Motor Co.'s bread-and-butter trucks and sport utility vehicles, chairman Bill Ford says the nation's No. 2 automaker is poised to sustain a financial turnaround by increasing its retail sales in the crucial American market.
Ford acknowledged in an interview with The Associated Press that consumer purchases of smaller, more fuel-efficient vehicles could accelerate if oil prices stay close to the $50-a-barrel level reached for the first time this week. That could be bad news for Ford, which counts on high-profit trucks and SUVs for the bulk of its sales.
But Bill Ford is far from panic mode. For one thing, he said, the shift is likely to be gradual, with consumers opting, for example, for more economical mid-size SUVs rather than larger ones.
More important, he said, is the revamped vehicle portfolio Ford is rolling out, including the industry's first gas-electric hybrid SUV, a new flagship sedan and the fifth-generation of its iconic Mustang sports car. While he wouldn't provide specific market share goals for Ford next year or beyond, Bill Ford said he expects to "start seeing a difference" in 2005.
The wild card is uncertainty about future trends in fuel prices, according to the 47-year-old great-grandson of company founder Henry Ford.
"If you could tell a customer the price of gasoline is going to be $2.20 (a gallon) for the next five years, they may not like it, but at least they could plan for it," Ford said Tuesday in his 12th-floor office atop the company's world headquarters 10 miles west of Detroit. "It's hard to make a decision on a vehicle when you have no idea where the price of oil is going. We've had such a run-up in such a quick period. I think people are confused, and it confuses us because we're trying to satisfy them."
Bill Ford took control of the company nearly three years ago when it was mired in losses and plagued by eroding sales, questions about vehicle quality and the Firestone tire crisis. A massive restructuring ensued, marked by 35,000 job cuts and a handful of plant closings.
The impact was striking. Ford's U.S. market share has fallen from 25.7 percent in 1995 to below 19 percent today even as it ramped up spending on costly consumer incentives, according to the automotive forecasting firm CSM Worldwide. And Ford's stock now trades below $14 a share, about half of what it was five years ago.
At the same time, though, Bill Ford's restructuring did stem the financial hemorrhaging. After losing a combined $6.4 billion in 2001 and 2002, the company returned to profitability last year and has repeatedly said it's on track to post a $7 billion pretax profit in 2006. Ford reduced costs by $3.2 billion in 2003 alone and is on track to trim another $800 million this year.
"When I look back three years, we had fires raging everywhere," he said. "I sometimes wonder how I personally survived and how the company got through it. I feel differently today. I have a management team I really like. Am I satisfied? Not even close. We're only partially where I want us to go. But the good news is, the fire, the panic, the employees' loss of confidence -- all that is gone."
With the company's finances in better shape -- Ford has $26.8 billion in cash -- Bill Ford said his focus has shifted to selling more vehicles and trying to stem market share losses to ever-expanding foreign brands such as Toyota Motor Corp. and Nissan Motor Co.
The company, which turned 100 last year, is completing its biggest-ever product offensive among the Ford, Lincoln and Mercury brands. Ford has introduced nine new or revamped vehicles this year, including the Ford Escape Hybrid SUV and the flagship Ford Five-Hundred sedan. After largely ignoring sedans for several years, Ford dubbed 2004 the "Year of the Car," though U.S. car sales were down 14.2 percent for the first eight months of 2004 because of late-year launches for many of the new models.
Ford also has plans for at least two other hybrid vehicles -- another SUV and a midsize sedan -- in the next few years.
Skeptics still abound, however. Forecasting firm CSM is predicting Ford's U.S. market share will dwindle another three points to 15.9 percent by 2009.
CSM analyst Mike Wall said the simple reality is that as more automakers, particularly those from Asia, enter more categories with new vehicles, grabbing lost market share is a tough feat.
"Ford's been able to hold its own to an extent on the truck side with some very nice products like the F-150," Wall said. "But at the same time they've been losing share hand over fist on the car side. It's going to be difficult to bring people back from the Accords and Camrys and Altimas."
In its recent report card on global automakers, Standard & Poors said Ford's market share losses this year have been worse than expected, and S&P noted ongoing difficulties at Ford's luxury Jaguar brand, where a separate restructuring was announced this month.
As for Ford's goal of a $7 billion pretax profit in 2006, S&P analyst Scott Sprinzen said, "I can tell you simply we're skeptical that that will be achieved."
Bill Ford is more sanguine. "At a certain point we've got to turn it around, and I think our chance to start doing that is with these new products," he said.
Bill Ford said he thinks Wall Street analysts and others have made too big a deal about Ford's "quality of earnings" -- the fact that the financing arm has continually propped up the bottom line in recent quarters.
In this year's April-June period, for example, Ford Motor Credit reported record net income of $897 million, three-quarters of Ford's profit.
"In some ways, it's an argument that drives me a little nuts because if we weren't selling cars, we wouldn't have a finance company," he said. "Where that dollar is made to me is completely artificial."
And if interest rates continue to notch up?
"If they go up on a steady-but-slow basis, we can absorb that," he said. "I think the big issue for us is always shocks, big spikes. That's where we start to have indigestion."
My first car was a 67 Mustang Coupe, 2nd one was a 67 Cougar XR-7, 3rd one was a 66 Mustang Coupe. Why did I get rid of these cars for ? I know why, because I'm stupid, stupid, stupid.
My next Ford.....