Ford's (F) Fields Says Shift to Smaller Vehicles Will Crimp Margins
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Ford Motor (NYSE: F) thinks consumers are absolutely nuts.
...nuts about smaller cars, that is.
According to North America President -- and soon to be COO -- Mark Fields, consumers are happily downsizing from trucks to smaller vehicles, like the C-MAX and Focus. Those smaller vehicles also carry with them smaller margins due to lower prices, but input costs that are not leagues below larger counterparts. Consequently, North American margins are expected to compress from a recent range of 12 percent down to 8 percent to 10 percent "over time."
That's not to say the new models of smaller vehicles are drawing more from the consumer. Data from Ford shows that the new Escape SUV is garnering $4,200 more per vehicle, while the 2013 Fusion is getting about $3,700 more per vehicle.
Fields likes the current pricing environment, but noted that fourth-quarter margins will not be as strong.
No mention was made about the effect of fuel prices, meaning Ford is simply making solid vehicles that people want to buy.
Amid the news, Ford is down about 0.4 percent on Thursday's session.
...nuts about smaller cars, that is.
According to North America President -- and soon to be COO -- Mark Fields, consumers are happily downsizing from trucks to smaller vehicles, like the C-MAX and Focus. Those smaller vehicles also carry with them smaller margins due to lower prices, but input costs that are not leagues below larger counterparts. Consequently, North American margins are expected to compress from a recent range of 12 percent down to 8 percent to 10 percent "over time."
That's not to say the new models of smaller vehicles are drawing more from the consumer. Data from Ford shows that the new Escape SUV is garnering $4,200 more per vehicle, while the 2013 Fusion is getting about $3,700 more per vehicle.
Fields likes the current pricing environment, but noted that fourth-quarter margins will not be as strong.
No mention was made about the effect of fuel prices, meaning Ford is simply making solid vehicles that people want to buy.
Amid the news, Ford is down about 0.4 percent on Thursday's session.
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