Ford's (F) Small Cars Selling More Like Cold-Cakes
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Price: $14.71 --0%
Overall Analyst Rating:
SELL (= Flat)
Dividend Yield: 5.8%
Revenue Growth %: -3.0%
Overall Analyst Rating:
SELL (= Flat)
Dividend Yield: 5.8%
Revenue Growth %: -3.0%
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"Okay, now gas prices need to shoot back up to $4," said Ford Motor (NYSE: F) to absolutely no one.
According to reports Wednesday, consumer taste may have shifted back to trucks and SUVs, causing a (figurative) pileup of smaller vehicles for Ford.
Years ago, Ford, along with rivals General Motors (NYSE: GM) and Chrysler, LLC, would practice using heavy incentives and discounts to move cars from lots. Following the recession of 2008, and some government intervention, the three have stayed true to that pledge, notes the WSJ.
But, Ford dealerships are seeing an overall stockpiling of 1.5 to 2.0 times as many Fiesta and Focus models that it typically likes to see on lots and in showrooms.
One solution is a double-edged sword: cut production at small car plants to control inventory, or keep production and aim to ship more, as automakers book revs when cars are shipped to dealers. Obviously, the second scenario would only happen if demand is there.
At the end of 2011, Ford had a 92-day supply of Focus at dealer lots, and 126-day supply of Fiestas. By comparison, GM had supplies of 68-days for its Cruze, and 61-days for the new Chevy Sonic. Typically, the auto industry likes to see inventory of about 60- days, meaning there's a bit of a glut going on.
Slowing production isn't an easy option; both Ford's Fiesta and Focus are in important consumer segments, and will also help Ford to keep overall fuel economy standards in-line with government regulations.
Who knows, production might work itself out. On Tuesday, CFO Lewis Booth issued comments that certain Ford segments will be in the red following flooding in Thailand which knocked out some production.
Ahead of the bell, Ford shares are indicated lower.
According to reports Wednesday, consumer taste may have shifted back to trucks and SUVs, causing a (figurative) pileup of smaller vehicles for Ford.
Years ago, Ford, along with rivals General Motors (NYSE: GM) and Chrysler, LLC, would practice using heavy incentives and discounts to move cars from lots. Following the recession of 2008, and some government intervention, the three have stayed true to that pledge, notes the WSJ.
But, Ford dealerships are seeing an overall stockpiling of 1.5 to 2.0 times as many Fiesta and Focus models that it typically likes to see on lots and in showrooms.
One solution is a double-edged sword: cut production at small car plants to control inventory, or keep production and aim to ship more, as automakers book revs when cars are shipped to dealers. Obviously, the second scenario would only happen if demand is there.
At the end of 2011, Ford had a 92-day supply of Focus at dealer lots, and 126-day supply of Fiestas. By comparison, GM had supplies of 68-days for its Cruze, and 61-days for the new Chevy Sonic. Typically, the auto industry likes to see inventory of about 60- days, meaning there's a bit of a glut going on.
Slowing production isn't an easy option; both Ford's Fiesta and Focus are in important consumer segments, and will also help Ford to keep overall fuel economy standards in-line with government regulations.
Who knows, production might work itself out. On Tuesday, CFO Lewis Booth issued comments that certain Ford segments will be in the red following flooding in Thailand which knocked out some production.
Ahead of the bell, Ford shares are indicated lower.
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