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Carmageddon for Ford (Oh, not New Emissions & Fuel-Economy Scandal)



Much more troubling: vehicle sales in the US, China and Europe.

It is tempting to believe that Ford's Carmageddon is a new "diesel gate" after Ford announced last night that "a handful of workers raised a concern" about their fuel economy and emission certification test procedures. Well, Ford can be nailed. It is furious to try to get the nails less painful by announcing a series of actions and self-reporting this debate – well, the "potential concerns" – of the EPA and the California Air Resources Board instead of covering it.

Ford had to pay fines and face the case. It – along with other car manufacturers – has already been caught with the red-handed overstating fuel economy. No problem. It came through these debacles. Volkswagen came through dieselgate. Other car manufacturers go through, or have already settled, their own diesel gates. Business disturbances can be costly. But it blows over.

Falling vehicle sales are more difficult to fix.

This scandal is just a dimple compared to Ford's global problem. Its vehicle sales have been declining in Europe since 2008; they have mainly collapsed in China over the past two years; and they fell in the US over the last three years.

In addition to revealing the test debate last night, Ford also sent his annual report (1

0-K). It includes revised numbers, including global annual vehicle sales – the number of vehicles Ford sold to its dealers (which they then sell and deliver to their customers).

Ford's China sales have collapsed

Ford's annual sales through its joint ventures in China – the world's largest automotive market where GM sells more cars than in the US – peaked in 1,297 million vehicles in 2016, according to Fords 10-K. . But in 2018, Ford sold only 731,000 cars. A two-year-old male of 44%.

In all car manufacturers, the number of vehicles in China died 4% in 2018, when a solid start was wiped out by a sharp decline in the second half. 2017 had been a record year for the automotive industry. For Ford, both were Carmageddon. Its sales in 2018 were not so much higher than sales in 2012:

Ford's US sales dropped for the third consecutive year.

In 2018, Ford sold 2.54 million cars in the United States, according to its 10-K. It was the third consecutive year that sales fell and the total decline to 5% from the peak in 2015. This puts the sales volume in 2018 below where it had been in 2013:

CEO Jim Hackett, whom Ford promoted In May 2017, from his Silicon Valley concert at Ford Smart Mobility, runs around the media and analysts, and adds his "Fitness Redesign" termination and cost savings plan after his predecessor flagged his weapons wildly, pitching his own layoffs and cost Cut your turnaround plan before you get fired. These plans come with many billions of dollars in write-downs.

The idea of ​​smart mobility, Hackett's former concert, is to compete with Uber and Google and what not. The unit houses self-propelled ventures and a jewel called Chariot Transit, an app-based shuttle bus from Ford that was bought in late 2016. At that time, some vans ran around San Francisco to move people between residential areas to tech-work places. It expanded to other cities and countries. It competed directly with city buses. A month ago, the high-tech business was shut down. The Benefit of Europe's Long-Term Decline

When the euro area went through the financial crisis and the subsequent euro crisis, Ford's sales fell 37% between 2008 and 2013. So they recovered. In 2018, sales increased to 1.44 million cars. Quite an achievement for a company whose global sales are swooning. Vehicle global sales of cars dropped 10% in two years

Ford sells vehicles around the world, in North America, South America, Europe, Russia, Turkey, Asia and the Pacific, in the Middle East and Africa. These "Total Company" sales peaked in 2016 and have since fallen 10% to 5.98 million cars. This puts the sales just above where they had been in 2012 and 2011:

So just increase the prices.

How does Ford try to keep its US dollar from the same steep route unit sales? Jacking up the prices. And managers talk about keeping up the swooning stocks.

The metric they throw around is the average transaction price – the price the vehicle is sold to consumers after playing. During the fourth-quarter earnings call, CEO James Farley, Jr. on "double-digit increase in transaction prices last quarter" for the Escape and Focus models; and CEO Hackett bragged that the acquisition transaction prices were "about $ 2000 above segment average."

Increasing prices for falling volumes to cover up the volume decline is not an elegant solution in the long run.

Waiting for garbage.

19659002] In August, Moody's Ford beats Baa3 with negative views. This is Moody's lowest investment grade rating (here is my color-linked credit rating scale for the three major US rating agencies). Moody cited erosion in Ford's global position and the challenges it will face in implementing its Fitness Redesign program, which comes at a $ 11 billion cost.

A "trash" downgrade would make it easier to borrow and pose a slew of problems for Ford, so it tries to keep its margins intact by raising prices and doing other things to persuade rating agencies not to cut it to garbage.

But the real difficulty is in Ford's vehicle sales. The core of his business The fact that Ford seems to have trouble finding some buyers for their vehicles in China, that in the United States, has been selling his fall for three years, and that in Europe the decline has now been going on For over a decade, it is the real Carmageddon for Ford, not the evolving emission and fuel economy cheating scandal, for which it will be hit on the wrist at worst. algae, year after year, good luck.

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