Ford's Reduced Cash Burn Nothing to Celebrate

Discussion in 'OT Driven' started by TriShield, Apr 26, 2009.

  1. TriShield

    TriShield Super Moderator® Super Moderator

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    Ford Drops $1.4 Billion in Q1; Faces “Rabbit in a Python” Problem

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    By Robert Farago
    April 25, 2009

    You may have noticed that TTAC hasn’t joined the MSM’s (mainstream media) celebration of Ford’s Q1 financial report. While FoMoCo didn’t lose as much money as analysts predicted—”only” dropping $1.4 billion in Q1—danger lurks around every corner.

    For one thing, the “it wasn’t as bad as everyone expected” rejoicing represents exactly the same logic GM deployed as it slouched towards Bethlehem. Look how well that turned out. For another, as we also pointed out during GM’s Long March to C11, you can’t cut your way to profits. At some point, Ford’s going to have to build something the North American car market really really wants. The forthcoming Transit van, turbo’ed Taurus, Fusion, etc. ain’t it. Fiesta? I wouldn’t don those sombreros just yet.

    And even if Ford’s products suddenly prove popular, the US new car market has to recover (thing three) for that to meme anything. Some pundits are [still] predicting that new car sales have . . . wait for it . . . bottomed out. Q3 and Q4 will see a lift. Maybe. Probably not. And even if the recovery clocks in on schedule, or Uncle Sam juices the market with cash for clunker mania, there’s the fourth item on our agenda of despair: Chrysler and GM’s “restructuring” (i.e., death and dissolution). More specifically, The Mother of All Fire Sales.

    At some point soon, there will be an AWFUL lot of new cars going for peanuts. All the inventory marked HUMMER, Saab and Pontiac are about to go for cheap. And then there’s everything else Chrysler and GM makes.

    The Detroit News taps JPMorgan analyst Eric Selle to make the point (in the last sentence of a story entitled “Mulally: Ford plan working”): ”The threat to our Ford model is the potential for its competitors to file for bankruptcy and slash prices to maintain volumes.” In other words, Ford will have to compete with Chrysler and GM products going for a song. Say goodbye to the possibility of maintaining Ford’s margins (should they even exist).

    There’s more potential fallout from the fallout. Never mind the supplier collapse problem; the feds have shown themselves willing to keep the big 2.8’s parts makers in business, come what may (or may not). How about the Chrysler/GM fire sale’s effect on “the perception gap”? Chrysler and GM redux will have sealed for all time their rep as discount brands. Can Ford’s “we didn’t take any bailout bucks” mien protect them from a more general “domestics are cut rate automobiles” branding problem?

    As always, cash burn is the best way to judge Ford’s prospects.

    Ford burned through $3.7 billion in cash in the first quarter, down from $7.2 billion in the fourth quarter of 2008. That left the company with $21.3 billion in cash to fund its automotive operations.

    If you multiply Ford’s Q1 cash burn by four, assuming that the market doesn’t get worse, that’s $14.8 billion per year. Assuming Ford needs a $5 billion “pad” (low-balling) to keep the lights on, The Blue Oval Boys will be down to their last couple of billion in just over a year. Just in time for another bailout?
     
  2. Mofolicious

    Mofolicious New Member

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    where's your toque, eh?
  3. Girth

    Girth ¯\_(ツ)_/¯ OT Supporter

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    maybe I should go look at Ford trucks instead. :noes:
     
  4. GochuBoy

    GochuBoy OT Supporter

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    fucked up thing is that they probably did celebrate
     
  5. Priapus

    Priapus Banned

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    Transit van is awesome. If gas prices go up like they should, a diesel Transit van will sell well.

    Makes more sense than a full size truck for a lot of people who actually do work with their vehicles.
     
  6. Xin

    Xin OT Supporter

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    lol
     
  7. Y2kAccord

    Y2kAccord Everything happens for reasons I just dont know

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    in better shape than GM
     
  8. PHXDEMON

    PHXDEMON Taints N Beans OT Supporter

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    In for a 15k G8 :cool:
     
  9. popnfresh

    popnfresh Cuddle Bitch

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    new mustang looks like ass in real life

    theres a bunch of bulges and lines that dont go or end anymore and look kinda stuck on there dare i say, flame surfaced
     
  10. Girth

    Girth ¯\_(ツ)_/¯ OT Supporter

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    when I went to the lot today, they had 5 GTs and a single GXP. :naughty:
     
  11. Y2kAccord

    Y2kAccord Everything happens for reasons I just dont know

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    why doenst GM offer a 10/100k instead of that ghey ass 5/100 and say they have the best warranty in the business?

    Also copying Hyundai with the buyers assurance program
     
  12. Girth

    Girth ¯\_(ツ)_/¯ OT Supporter

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    I think GM is a bit more reliable than Hyundai. Hyundai is doing it as a trap to sell you cheap ass cars.
     
  13. Y2kAccord

    Y2kAccord Everything happens for reasons I just dont know

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    Hyundai quality I would say is equal if not better than GM..
     
  14. TriShield

    TriShield Super Moderator® Super Moderator

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    They are extremely nice cars, too bad your wife wouldn't rock one.
     
  15. ZAQ786

    ZAQ786 BMW: The reason Lexus is still 'In the pursuit of

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    prices?
     
  16. Girth

    Girth ¯\_(ツ)_/¯ OT Supporter

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    GTs were stickered for $30,000 and the GXP was a whopping $40,000!!! But the GXP had a $1,700 gas guzzler tax on it too. :rofl:
     
  17. Girth

    Girth ¯\_(ツ)_/¯ OT Supporter

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    Maybe I'll trade the Lexus sooner or later for a Range Rover :dunno:
     
  18. Y2kAccord

    Y2kAccord Everything happens for reasons I just dont know

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    you are concerned about reliable cars and you want to buy a LR :rofl:
     
  19. ZAQ786

    ZAQ786 BMW: The reason Lexus is still 'In the pursuit of

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    Wow, those will sit for a while.
     
  20. ZAQ786

    ZAQ786 BMW: The reason Lexus is still 'In the pursuit of

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    People should be allowed to learn from their mistakes.
     
  21. Girth

    Girth ¯\_(ツ)_/¯ OT Supporter

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    much rather pimp a LR than a Hyundai. :)

    EDIT: my wife wouldn't let me trade her car in anyway... she likes her Lexus. Asians tend to stick w/ their own brand. :mamoru:
     
  22. RDB

    RDB Blinded By Subpar Modulators

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    sign me up for a transit

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  23. PHXDEMON

    PHXDEMON Taints N Beans OT Supporter

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    I personally think i would rather have a GTO because I hate 4 doors but I haven't driven a G8 yet :o
     
  24. Girth

    Girth ¯\_(ツ)_/¯ OT Supporter

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    I'm sure you can jew 'em down on the price... that was just the sticker.
     
  25. TriShield

    TriShield Super Moderator® Super Moderator

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    Same thing with four doors and vastly better steering and handling.
     

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