Tag Archive | "Ford Motor Co."

Ford, GM Make Moves for Self-Driving Vehicles


Ford Motor Co. and General Motors Co. are investing in Silicon Valley-area ventures as they try to stay in front of the fast-changing automotive industry.

Ford tapped former University of Michigan interim athletic director Jim Hackett to lead a new subsidiary, Ford Smart Mobility LLC, according to The Detroit News. That wing of the company will develop alternative transportation strategies and self-driving technologies in Dearborn and Palo Alto, California, Ford said Friday.

Also Friday, GM announced it will acquire Cruise Automation, a three-year-old San Francisco startup that will help GM test and develop driverless cars in city environments.

The moves – the latest in a series of similar announcements by both automakers in recent years – are part of an effort to transform into tech-savvy mobility companies to compete with newcomers like Uber, Apple and Google. They are intended to show Wall Street they are no longer the hidebound companies that nearly went out of business during the last economic downturn.

“They’re covering their bases,” said Jack Nerad, executive editorial director and executive market analyst with Kelley Blue Book. “Tomorrow might be a very different landscape, and they want to be ready.”

For the past 14 months, Ford has been working on a number of smart mobility experiments that test everything from car-sharing services to alternative forms of transportation like electric bicycles and drones.

Recently, Ford started an Uber-like shuttle service for its Dearborn employees, and partnered with Bridj, a shuttle service in Kansas City. It also launched a new app, called FordPass, that collects information such as parking space availability. Some of its mobility research includes development of autonomous vehicle technology.

Michelle Krebs, senior analyst at AutoTrader, said it’s a strategic business move.

“In addition to tapping into new revenue sources, Ford is establishing a framework for all work related to future mobility that allows the rest of the company to focus intently on the day-to-day core business of vehicle manufacturing,” she said. “Past efforts by Ford to transform to a mobility company failed because the company took its eye off its core business. Yet, the work that goes on within the new mobility subsidiary can feed back into the core business when appropriate if Ford does this right.”

Hackett – the former Steelcase vice chairman and CEO and recent UM athletic director – is leaving his position on the Ford board of directors to become chairman of the new subsidiary. He will report to Ford President and CEO Mark Fields.

During his time at Steelcase, Hackett helped transform the company from a traditional furniture-maker to one that understood the rise in popularity of open-office spaces and other trends.

“I’m so excited by it because it’s the wheelhouse of me, which is working on abstract, hard problems with great, smart people,” Hackett told The Detroit News on Friday. “This stint at UM is like the sorbet course of the meal, it cleansed my palate of one industry to do something different.”

Other automakers are creating separate business units as well. GM announced earlier this year it had created the Autonomous and Technology Vehicle Development Team, led by Doug Parks, its former vice president of global product programs.

GM’s acquisition of Cruise Automation will help it further develop driverless cars. The three-year-old technology company will act as an independent unit within the Autonomous Vehicle Development Team. Cruise Automation will continue to be based in San Francisco. The deal is expected to close in the second quarter; terms were not disclosed.

Since the start of the year, GM has announced it was investing $500 million in the ride-sharing service Lyft; launched its own Zipcar-like car-sharing service in Ann Arbor called Maven; and established a separate unit for autonomous vehicle development.

“The Cruise acquisition shows that GM is serious about autonomous driving, as is almost every other auto manufacturer,” said Akshay Anand, analyst at Kelley Blue Book. “Like it or not, autonomous cars are coming, and coming fast.”

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Congress Sets Hearing on Takata, Automakers Expand Recalls


Five automakers on Thursday widened recalls of cars and trucks with Takata Corp air bags and the U.S. Congress set a hearing next week on the safety issue that has been linked to six deaths, reported Reuters.

Takata last week complied with demands of U.S. safety regulators and doubled the vehicles to be involved in air bag recalls to 34 million, making it the largest recall in American history. The total number globally is more than 53 million vehicles.

The air bags are at risk of exploding with too much force and spewing metal fragments inside the car, regulators say. All six deaths linked to the problem were in Honda Motor Co Ltd vehicles.

The recalls announced on Thursday by Fiat Chrysler Automobiles, Honda, BMW, Ford Motor Co and Mitsubishi Motors Corp are included in the figures issued last week by Takata and U.S. regulator the National Highway Traffic Safety Administration.

Automakers, regulators and Takata have yet to identify the root cause of the problem.

A hearing billed as an update on the Takata safety issue will be held next Tuesday afternoon by the U.S. House Subcommittee on Commerce, Manufacturing and Trade.

U.S. Representative Fred Upton, a Michigan Republican, said on Thursday: “When an air bag – a device built to enhance motorist safety – is actually putting families in peril, we can’t wait years for a fix.”

U.S. lawmakers have complained that both Takata and NHTSA were mishandling the air bag safety issue. NHTSA has tried to show its bite under new head Mark Rosekind, who took the helm in January.

Rosekind will appear before the subcommittee next week. The panel will also hear from Takata Executive Vice President Kevin Kennedy, two leaders of automaker lobbying groups and the director of an independent testing organization.

Fiat Chrysler on Thursday expanded its recalls of vehicles with Takata air bags to about 5.22 million worldwide, involving the 2003 to 2011 model years. About 4.5 million of those vehicles are in the United States. Most of the vehicles have been involved in previous recall campaigns, FCA said.

Ford widened its recall of vehicles with Takata air bags to 1.51 million vehicles globally, including 1.38 million in the United States. The worldwide figure is up from 543,031 before last week’s announcements by NHTSA and Takata, Ford said.

Honda expanded its recall of vehicles with Takata air bag inflators by 350,000 in the United States and 340,000 in Japan.

Since 2008, Honda has recalled about 20 million vehicles worldwide with Takata air bag parts.

BMW said it is widening U.S. recalls of models with Takata air bags to 420,661 vehicles from 140,696.

Mitsubishi Motors Corp widened its recall of vehicles with Takata air bags to 82,784 in the U.S. market.

Nissan Motor Co told NHTSA that it will not expand its recall of U.S. recalls equipped with Takata air bags.

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Ford Executive Indicates Desire for Level Playing Field on Labor Costs


Ford Motor Co’s Americas chief indicated on Wednesday that the No. 2 U.S. automaker will be looking to bring its labor costs in line with those of its smaller rival Fiat Chrysler Automobiles when it opens talks this summer with the union representing its hourly workers, reported Reuters.

Joe Hinrichs, speaking at a Bank of America Merrill Lynch conference, said the subject of entry-level workers, who are paid less than their veteran co-workers, will be a subject of talks with the United Auto Workers. Ford, Fiat Chrysler and General Motors Co will negotiate new deals to replace ones expiring in mid-September.

Hinrichs, who declined to discuss the pending talks in detail, said Ford needs to remain competitive in order to maintain its investment in U.S. plants, and pointed to the UAW’s desire for a deal that is similar at all three automakers in helping Ford lessen the advantages Fiat Chrysler gained during its 2009 bankruptcy.

As part of the bankruptcy reorganizations at GM and FCA, the UAW agreed to no cap on the number of entry-level workers those automakers could hire, while Ford, which did not enter bankruptcy, has a limit.

“Ideally, some of those discrepancies that exist because of the bankruptcies at two of our competitors will play themselves out as part of that pattern bargaining process,” said Hinrichs, who added the talks would be a “delicate balance.”

Asked what Hinrichs meant, a Ford spokeswoman said, “We need to have a total labor cost that is competitive with other automotive manufacturers producing in the U.S. We’re open to discussing many options with our UAW partners.”

Entry-level workers earn about $16 to $19 an hour compared with veteran workers, who make up to $28.50 an hour. Twenty-eight percent of Ford’s hourly U.S. workforce are entry level, while GM is at 19 percent and FCA is at 43 percent.

UAW leaders have said they want to bridge the gap between the entry-level and veteran workers’ pay.

Labor cost estimates show that Ford pays its workers an average of $57 an hour, including benefits, compared with $58 at GM and $48 at FCA, according to the Center for Automotive Research.

“There’s certainly an understanding that for the investment levels to continue and the great job growth numbers that we’ve had in the U.S. to continue, we have to maintain a level of competitiveness that makes sense,” Hinrichs said.

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BlackRock Reports 5.4% Stake in Ford


BlackRock Inc. on Monday reported a 5.4% stake in Ford Motor Co., less than two weeks after the No. 2 U.S. auto maker reported a sharp drop in fourth-quarter profit, reported The WSJ.

BlackRock, the world’s largest asset manager, said a year ago that it had a stake of 5.2%, which represents the total amount owned by the firm’s different funds.

The move comes as Ford has told investors it will have a major rebound in 2015 from a struggle in 2014. Ford reported last month a steep drop in profits as a result of removing Venezuela from its consolidated earnings, but also had a 4.5% decline in revenue related to launching its F-150 pickup in the U.S.

BlackRock, the world’s largest asset manager, didn’t disclose plans for the stake.

Ford has forecast that pretax profits, the operating measure that Ford uses with Wall Street, will be up as much as 50% in 2015 and that it will growth sales and market share on a global basis.

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Ford’s Profits Drop in Q3


DETROIT – Ford Motor Co. reported net income of $835 million in the third quarter, a drop of about 34 percent from earnings of $1.27 billion in the year-ago period, reported MLive.

Pre-tax profit fell to $1.2 billion in the third quarter of 2014 from $2.6 billion in the comparable quarter last year. Ford said in an earnings release Friday the pre-tax profit decline is due to lower volume, higher warranty costs and adverse balance sheet exchange effects.

Wholesale volumes were 3 down percent year-over-year in the quarter. Ford’s revenue slid 2 percent to $34.9 billion in the period.

The overall declines were expected, as Ford rolls out a slew of new global product launches, not the least of which includes the 2015 Ford F-150.

“During the third quarter, we continued to introduce an unprecedented number of new vehicles and invest heavily in the new products and technologies that will deliver strong profitable growth beginning next year,” Mark Fields, president and CEO, says in the earnings release. “We also addressed business challenges head-on using our proven One Ford plan. Everyone at Ford remains focused on accelerating our pace of progress, while delivering product excellence and innovation in every part of our business.”

Ford’s pre-tax profit outlook of $6 billion for the year remains unchanged.

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Ford Profit Driven Down By North America, Warranty Costs


Via Reuters

Ford Motor Co posted a lower-than-expected first-quarter profit on Friday as the No. 2 U.S. automaker saw $400 million in higher warranty costs in North America, sending shares down 3.4 percent.

The company also saw incentives in North America rise in the quarter due to heavy competition and an aging lineup of vehicles it will address with the launch of 16 new models in the region this year.

Fitch Ratings analyst Stephen Brown called 2014 a transition year for Ford and said earnings will improve in the second half.

“They’ve got a few challenges out there, but … the company has a lot of new products coming online this year. They haven’t seen the benefits (of the new vehicles) on dealer lots yet.”

Ford Chief Executive Alan Mulally, 68, told analysts on a conference call that there was no change to plans for him to remain at the company through the end of the year. Earlier this week, a source said that Ford will soon name Chief Operating Officer Mark Fields as Mulally’s successor.
While Ford adjusts its warranty reserves every quarter, Chief Financial Officer Bob Shanks said the total was larger in the first quarter because the company has seen more field service actions, such as safety recalls and addressing customer complaints, over the last two years. He said that was a trend in the industry as vehicles become more complex.

The company affirmed its forecast for pretax profit for 2014, a year in which it is launching a record 23 new vehicles globally. It also said it is amending and extending its revolving credit facility.

Shanks said the underlying business remains strong.

“The run rate is very healthy and we feel that we’re moving forward very nicely in terms of what we expect for the year and setting us up for stronger growth and stronger profitability in 2015 and beyond,” he told reporters at the company’s Detroit headquarters.

Net income fell 39 percent to $989 million, or 24 cents a share, from $1.61 billion, or 40 cents a share, in the year-earlier period.

The quarter included the $400 million in additional costs for warranty reserves in North America for vehicles from as early as the 2001 model year, and $100 million in costs related to higher freight and other items due to the harsh winter in North America. It also included previously disclosed costs of $400 million, mostly due to the currency devaluation in Venezuela. All three items totaled 17 cents a share.

Excluding one-time items for European restructuring, Ford earned 25 cents a share, 6 cents below analysts’ estimates in a poll by Thomson Reuters I/B/E/S, or about the same amount as the warranty reserves. Weather costs accounted for another two cents.

Revenue was up slightly at $35.9 billion, above the $34.06 billion analysts had expected.

EUROPEAN LOSS NARROWS

Ford, which still expects a pretax profit this year in the range of $7 billion to $8 billion, said its credit facility is expected to grow to about $12 billion, from $10.7 billion after its completion at the end of the month. It sees operations in South America weaker than it previously forecast for the year, while Asia Pacific’s profit will be higher than last year.

Shanks said various global launches, including its redesign for the highly profitable F-150 full-size pickup truck, remain on track.

Net pricing in the quarter was up only $175 million as incentives increased $471 million over last year. Most of those higher incentives were offered in North America, where net overall pricing actually declined $139 million.

The North American operating profit fell by more than a third to $1.5 billion. RBC Capital markets analyst Joseph Spak said that was below Wall Street’s expected consensus of $2.2 billion and the company’s profit margin in the region was weaker than expected.

The North American operating margin fell to 7.3 percent from 11.1 percent last year as Shanks said the warranty and weather-related costs took a bite of 2.5 percentage points. However, Ford affirmed its outlook for a full-year margin in the region of 8 to 9 percent.

Overseas, business was more positive as demand continued to increase in China, the world’s largest auto market, and the company’s losses in Europe narrowed and were lower than expected according to analysts.

Stifel analyst James Albertine said the outlook in Europe trumped the overall profit miss. “EU growth may come more quickly than anticipated,” he said in a research note.

In China, Ford said its market share hit a record 4.5 percent, up from 4.4 percent in the fourth quarter. The profit in Asia Pacific rose to $291 million from a year-ago loss of $28 million, and the company’s profit margin in the region was a far stronger than expected 11 percent.

The company’s loss in Europe, which has been a drag on Ford profit for several years, was $194 million, down from $425 million a year ago.

Shanks affirmed the company’s previous outlook that it will return to profitability in Europe in 2015, helped by its own cost-savings actions as well as a rising European auto market.

The loss in South America, however, deteriorated to $510 million from a loss of $218 million last year due to the currency devaluation in Venezuela and Argentina. Ford now breaks out Middle East and Africa as its own region and its profit there rose 15 percent to $54 million.

Ford shares were down 3.4 percent at $15.77 on the New York Stock Exchange on Friday morning.

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