Ford 2nd quarter profits

[Bossxr8]

https://www.cnbc.com/2021/07/28/ford...s-q2-2021.html

Ford raised its earnings guidance for the year after reporting a surprise profit in the second quarter.
Its revenue slightly missed expectations due to the ongoing global shortage of semiconductor chips, which continues to cause cuts to the automaker’s production.
Ford raised its expectation for full-year adjusted earnings before taxes by about $3.5 billion, to between $9 billion and $10 billion.




Lost 700,000 cars due to the semi-conductor shortages, and still managed to make a decent profit. Remarkable really.

[jpd80]

Originally Posted by Bossxr8

https://www.cnbc.com/2021/07/28/ford...s-q2-2021.html
Ford raised its expectation for full-year adjusted earnings before taxes by about $3.5 billion, to between $9 billion and $10 billion.




Lost 700,000 cars due to the semi-conductor shortages, and still managed to make a decent profit. Remarkable really.

Well it’s often said that F Series sales are 75% of Ford US profits, last quarter kinda proved it.
The chip shortage also forced Ford to prioritise production to a higher trim mix in all vehicles
and to also sell down a ton of inventory….

[MITCHAY]

I think I read somewhere that they built a lot without the chips and that perhaps they will ship them to dealers to fit them.

[jpd80]

Originally Posted by MITCHAY

I think I read somewhere that they built a lot without the chips and that perhaps they will ship them to dealers to fit them.

That’s correct, it’s around 45,000 F Series but all are drivable, dealers will finish chip installation in dash.
Ford just got a big delivery of chips just over a week ago so there’s movement finally…
Progressive deliveries to dealers of around 11,000 per month so all should be done by November.

[Dr Smith]

Originally Posted by jpd80

That’s correct, it’s around 45,000 F Series but all are drivable, dealers will finish chip installation in dash.
Ford just got a big delivery of chips just over a week ago so there’s movement finally…
Progressive deliveries to dealers of around 11,000 per month so all should be done by November.

Did any chips head over to Europe...by the time they build my wife's Escape it will be fully paid off

[jpd80]

Originally Posted by Dr Smith

Did any chips head over to Europe...by the time they build my wife's Escape it will be fully paid off

The Japanese factory that had the fire early this year is now back to full production,
the chip issue has to do with entertainment/ information systems in vehicles rather than ECU.

As usual, F0E will supply as much as it can to its dealers before worrying about ROW supply.

[Bossxr8]

Originally Posted by jpd80

Well it’s often said that F Series sales are 75% of Ford US profits, last quarter kinda proved it.
The chip shortage also forced Ford to prioritise production to a higher trim mix in all vehicles
and to also sell down a ton of inventory….

Looks like they plan on keeping lower inventories in future, and be more build to order.


https://fordauthority.com/2021/07/fo...mpanys-future/


For many years now, most automakers have built a host of vehicles, shipped them to dealers, and sold them in that manner, though some buyers choose to go through the process of ordering a vehicle to their own specification. However, the semiconductor chip shortage has shaken up that old business model, to the point that Ford CEO Jim Farley now says that the automaker will shift to more of a build to order approach.



“We are really committed to going to an order-based system and keeping inventories at 50 to 60 days’ supply,” Farley said during Ford’s Q2 2021 earnings call with investors. “I know we are wasting money on incentives.”

Historically, vehicles that wind up languishing on dealer lots often require heavy incentives to sell, particularly near the end of a model year. The chip shortage, however, has forced automakers including Ford to slash production, leading to record-low inventory on dealer lots.


But this crisis has also forced Ford to focus on producing its higher-margin products, which boosted revenue by nearly $5,000 per vehicle in Q2 and added $1.5 billion to the automaker’s operating profit. Additionally, average transaction prices increased by approximately $6,400 in June, year-over-year, at $47,800 per vehicle.

Ford recently admitted that its inventory will never return to its pre-COVID-19 highs and that the pandemic had taught it how to turn inventory faster. Shifting to a build to order approach while also increasing inventory turns will undoubtedly continue to have a positive impact on the automaker’s profit, particularly when the chip shortage is over.



Farley recently stated that the chip supply was beginning to improve, and reiterated that on Ford’s earnings call as well, saying that he’s “seeing signs of improvement in the flow of chips now in the third quarter, but the situation remains fluid.”

[Franco Cozzo]

Originally Posted by Bossxr8

Looks like they plan on keeping lower inventories in future, and be more build to order.


https://fordauthority.com/2021/07/fo...mpanys-future/


For many years now, most automakers have built a host of vehicles, shipped them to dealers, and sold them in that manner, though some buyers choose to go through the process of ordering a vehicle to their own specification. However, the semiconductor chip shortage has shaken up that old business model, to the point that Ford CEO Jim Farley now says that the automaker will shift to more of a build to order approach.



“We are really committed to going to an order-based system and keeping inventories at 50 to 60 days’ supply,” Farley said during Ford’s Q2 2021 earnings call with investors. “I know we are wasting money on incentives.”

Historically, vehicles that wind up languishing on dealer lots often require heavy incentives to sell, particularly near the end of a model year. The chip shortage, however, has forced automakers including Ford to slash production, leading to record-low inventory on dealer lots.


But this crisis has also forced Ford to focus on producing its higher-margin products, which boosted revenue by nearly $5,000 per vehicle in Q2 and added $1.5 billion to the automaker’s operating profit. Additionally, average transaction prices increased by approximately $6,400 in June, year-over-year, at $47,800 per vehicle.

Ford recently admitted that its inventory will never return to its pre-COVID-19 highs and that the pandemic had taught it how to turn inventory faster. Shifting to a build to order approach while also increasing inventory turns will undoubtedly continue to have a positive impact on the automaker’s profit, particularly when the chip shortage is over.



Farley recently stated that the chip supply was beginning to improve, and reiterated that on Ford’s earnings call as well, saying that he’s “seeing signs of improvement in the flow of chips now in the third quarter, but the situation remains fluid.”

Yes, because having poor availability has always worked so well in the automotive industry

Isn't someone here already waiting months for their new Escape?

Let's see what the next CEO of Ford has to say in 6 months when they change CEO again.

[Bossxr8]

Originally Posted by Franco Cozzo

Yes, because having poor availability has always worked so well in the automotive industry

Isn't someone here already waiting months for their new Escape?

Let's see what the next CEO of Ford has to say in 6 months when they change CEO again.

Did you even read the article?


This relates strictly to North America, and they plan on keeping 50 to 60 days inventory.

[jpd80]

Ford Credit earned $1.6 billion before tax, I think that’s what really kept the ship afloat.

Automotive earnings before Tax
North America…………$194 M
South America…………($86 M)
Europe……………………..($284 M)
China……………………….($123 M)
IMG………………………….$204 M
TOTAL………………………($84 M)

[jpd80]

Originally Posted by Bossxr8

Looks like they plan on keeping lower inventories in future, and be more build to order.


https://fordauthority.com/2021/07/fo...mpanys-future/


For many years now, most automakers have built a host of vehicles, shipped them to dealers, and sold them in that manner, though some buyers choose to go through the process of ordering a vehicle to their own specification. However, the semiconductor chip shortage has shaken up that old business model, to the point that Ford CEO Jim Farley now says that the automaker will shift to more of a build to order approach.



“We are really committed to going to an order-based system and keeping inventories at 50 to 60 days’ supply,” Farley said during Ford’s Q2 2021 earnings call with investors. “I know we are wasting money on incentives.”

Historically, vehicles that wind up languishing on dealer lots often require heavy incentives to sell, particularly near the end of a model year. The chip shortage, however, has forced automakers including Ford to slash production, leading to record-low inventory on dealer lots.


But this crisis has also forced Ford to focus on producing its higher-margin products, which boosted revenue by nearly $5,000 per vehicle in Q2 and added $1.5 billion to the automaker’s operating profit. Additionally, average transaction prices increased by approximately $6,400 in June, year-over-year, at $47,800 per vehicle.

Ford recently admitted that its inventory will never return to its pre-COVID-19 highs and that the pandemic had taught it how to turn inventory faster. Shifting to a build to order approach while also increasing inventory turns will undoubtedly continue to have a positive impact on the automaker’s profit, particularly when the chip shortage is over.



Farley recently stated that the chip supply was beginning to improve, and reiterated that on Ford’s earnings call as well, saying that he’s “seeing signs of improvement in the flow of chips now in the third quarter, but the situation remains fluid.”

Before 2020, F Series inventory was normally around 250k which really confused me
in that so many of F150 are retail sales, why do the need so much inventory and then
it struck me why, as soon as the trucks are built, they’re already assigned to dealers and
the revenue is booked even before delivery to the dealer.

Reducing inventory and tightening supply means no more big cash incentives on run out year model sales.
Ford is starting to treat American buyer the same way as global customers, paying higher prices and waiting longer.

[Dr Smith]

Originally Posted by Franco Cozzo

Yes, because having poor availability has always worked so well in the automotive industry

Isn't someone here already waiting months for their new Escape?

Let's see what the next CEO of Ford has to say in 6 months when they change CEO again.

Yes, my wife, ordered on 19 Dec 20 with $1k deposit...no build date as of this week....

[Dr Smith]

Originally Posted by jpd80

Ford Credit earned $1.6 billion before tax, I think that’s what really kept the ship afloat.

Automotive earnings before Tax
North America…………$194 M
South America…………($86 M)
Europe……………………..($284 M)
China……………………….($123 M)
IMG………………………….$204 M
TOTAL………………………($84 M)

Didn't realise Europe, China and S. America were such sinking anchors to the bottom line currently.

[jpd80]

Originally Posted by Dr Smith

Didn't realise Europe, China and S. America were such sinking anchors to the bottom line currently.

They have been for quite a while, the only two profit earners have been Nth America and Asia Pacific (IMG).
For a few years they tucked China under Asia Pacific in the hope of hiding all the red ink but that didn’t work.
Heck, they even split North Africa (Middle East?) out trying to tease out some regional profit figures.

They even credited IMG’s $204 million result as being due to Ranger and Everest sales,
that’s a huge tell tale in a sea of global red ink, Europe sells tons of vehicles for little profit.

[hayseed]

Originally Posted by jpd80

Ford Credit earned $1.6 billion before tax, I think that’s what really kept the ship afloat.

I thought that had always been the Case... Especially Pre GFC..

They Pulled out of Australia (Along with GMAC) post GFC..

[jpd80]

Originally Posted by hayseed

I thought that had always been the Case... Especially Pre GFC..

They Pulled out of Australia (Along with GMAC) post GFC..

I’m surprised at the resilience of income from financing, it truly is like printing money for Ford.

[hayseed]

Originally Posted by jpd80

I’m surprised at the resilience of income from financing, it truly is like printing money for Ford.

The factory can only sell a vehicle Once.!
Ford Credit Can (& Does) Finance That same Vehicle Several Times..!

[jpd80]

Originally Posted by hayseed

The factory can only sell a vehicle Once.!
Ford Credit Can (& Does) Finance That same Vehicle Several Times..!

It’s much shrewder than that, financing is on the non-discounted price so the true cost of
financing a vehicle is hidden thanks to buyers only looking at their monthly payment.
More interest is paid on the first two to three years than the rest of the term,
so offering 72 month terms sustains that higher interest in the first three years.