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Quality, reliability count. Q&A explains rationale
By Dee-Ann Durbin
Associated Press
Published on Wednesday, Nov 04, 2009
DETROIT: Ford has been riding a wave of positive public sentiment since it avoided bankruptcy and did not take federal bailout money — unlike General Motors and Chrysler.
How has Ford managed to outperform its Detroit competition — and what challenges lie ahead? Here are some questions and answers.
Q: How did Ford escape bankruptcy protection and federal aid, unlike GM and Chrysler?
A: In 2006, Ford mortgaged its assets — including plants and its blue oval logo — for $23.4 billion to fund its turnaround plan. The credit markets later froze, making it impossible for its rivals to obtain similar financing.
Q: What else sets Ford apart from its domestic competitors?
A: Ford gets consistently solid quality and reliability rankings.
The automaker won kudos last week with the release of Consumer Reports' 2010 vehicle reliability rankings. The Ford Fusion and Mercury Milan midsize sedans beat out Toyota's Camry and Honda's Accord, and 46 of 51 Ford vehicles had average or better reliability.
By comparison, less than half of GM's 48 models scored that well, and the Chrysler brand finished last out of 33 brands in the survey.
Q: How have Ford's sales fared in the tough economic climate?
A: Ford's U.S. sales were down 22 percent in the first nine months of this year, compared with the same period in 2008, as the industry struggled through its worst year in a quarter century. But Ford is siphoning customers from its rivals. It posted the largest increase in market share of any automaker in September, and expects an overall gain in U.S. market share in 2009, a feat it hasn't accomplished since 1995.
Q: Did the Cash for Clunkers program help Ford?
A: The Ford Focus and Ford Escape were among the top five sellers in the government's Cash for Clunkers program in late July and August. The program allowed Ford to spend less on rebates, and helped profitability as the company boosted production to replenish inventory. But sales slumped in September after the program ended.
Q: How could Ford's labor problems hurt its turnaround efforts?
A: Ford workers agreed to $500 million in concessions earlier this year, while workers at GM and Chrysler approved concessions that saved their companies more than $1 billion each.
Ford and a United Auto Workers negotiating committee agreed in October to contract changes that would bring Ford's labor costs in line with GM and Chrysler. But a ratification vote was defeated by Ford's 41,000 UAW members in part because workers view the company as healthier than its Detroit rivals.
Q: What other issues could hurt Ford's turnaround?
A: Ford had $26 billion in debt at the end of the second quarter, and has been unable to cut costs as deeply as GM and Chrysler were able to do in bankruptcy. Ford also has said its return to profitability relies, in part, on a recovery in U.S. and European sales, but it's unclear how quickly those markets will turn around.
Customers' continued shift away from profitable sport utility vehicles and pickups to lower-margin small cars also is a continuing challenge.
DETROIT: Ford has been riding a wave of positive public sentiment since it avoided bankruptcy and did not take federal bailout money — unlike General Motors and Chrysler.
How has Ford managed to outperform its Detroit competition — and what challenges lie ahead? Here are some questions and answers.
Q: How did Ford escape bankruptcy protection and federal aid, unlike GM and Chrysler?
A: In 2006, Ford mortgaged its assets — including plants and its blue oval logo — for $23.4 billion to fund its turnaround plan. The credit markets later froze, making it impossible for its rivals to obtain similar financing.
Q: What else sets Ford apart from its domestic competitors?
A: Ford gets consistently solid quality and reliability rankings.
The automaker won kudos last week with the release of Consumer Reports' 2010 vehicle reliability rankings. The Ford Fusion and Mercury Milan midsize sedans beat out Toyota's Camry and Honda's Accord, and 46 of 51 Ford vehicles had average or better reliability.
By comparison, less than half of GM's 48 models scored that well, and the Chrysler brand finished last out of 33 brands in the survey.
Q: How have Ford's sales fared in the tough economic climate?
A: Ford's U.S. sales were down 22 percent in the first nine months of this year, compared with the same period in 2008, as the industry struggled through its worst year in a quarter century. But Ford is siphoning customers from its rivals. It posted the largest increase in market share of any automaker in September, and expects an overall gain in U.S. market share in 2009, a feat it hasn't accomplished since 1995.
Q: Did the Cash for Clunkers program help Ford?
A: The Ford Focus and Ford Escape were among the top five sellers in the government's Cash for Clunkers program in late July and August. The program allowed Ford to spend less on rebates, and helped profitability as the company boosted production to replenish inventory. But sales slumped in September after the program ended.
Q: How could Ford's labor problems hurt its turnaround efforts?
A: Ford workers agreed to $500 million in concessions earlier this year, while workers at GM and Chrysler approved concessions that saved their companies more than $1 billion each.
Ford and a United Auto Workers negotiating committee agreed in October to contract changes that would bring Ford's labor costs in line with GM and Chrysler. But a ratification vote was defeated by Ford's 41,000 UAW members in part because workers view the company as healthier than its Detroit rivals.
Q: What other issues could hurt Ford's turnaround?
A: Ford had $26 billion in debt at the end of the second quarter, and has been unable to cut costs as deeply as GM and Chrysler were able to do in bankruptcy. Ford also has said its return to profitability relies, in part, on a recovery in U.S. and European sales, but it's unclear how quickly those markets will turn around.
Customers' continued shift away from profitable sport utility vehicles and pickups to lower-margin small cars also is a continuing challenge.
Comments
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Posted 08:48 AM, 11/04/2009
How many jobs did Ford take overseas? That could have helped.
Orrville, Oh
Posted 07:44 PM, 11/04/2009
Demanding Ford workers, consumers, and taxpayers; fund all stimulus packages, property tax abatement, tax incentives, tax credit, tax refunds, and tax exemptions; awarded GM and Chrysler. And pay for the more stock dividends (money). Hillarys, Chinese, Foreign and Domestic Investors and Stockholders (money marketers) market quarterly; in the wholesale and retail price; of EVERY product and service Human Beings; unemployed workers, casino, lottery, and keno losers, aliens, waitresses that pander for life for $2.00 per hour; insubordinate, low-income; defiant of realities demands; volunteers without wages; nonunion parasites willing to work for fewer wages than they can afford life; and righteous; with a faith-based belief; that it’s a sin; to engage in free, fair, and affordable commerce; or get an agreement (union contract); With a corporation, business, or nonprofit, tax-exempt, organization, or Church; Agreeing to comply with demands; Of natural law (what Mother Nature, God, or Whatever Power decreed to be the reality of the real world), God, democracy, capitalism, the US Constitution, and free, fair, and affordable commerce. Use for life. And Government needs to build, maintain, and operate schools; infrastructure; and provide government services; and national security. That gets only product or service. With money derived from wages or independent business profit.
This will bankrupt Ford Motor Company and make Human Beings life UNAFFORDABLE!
Los Angeles, CA
Posted 10:57 PM, 11/04/2009
Auto-industries was one of those which where badly hit by the economic crisis. And now, they are starting to show progress on their sales and it is a good sign that the economy is recovering. Ford, despite the fact that they survived bankruptcy, is now leading out its competitors. Maybe, one of their reason is that they don’t rely on cut corners in quality rather their will to survive.
