YPSILANTI TOWNSHIP, MICH.—The Detroit-area factory where Rosie the Riveter showed that a woman could do a “man’s work” by building Second World War-era bombers, making her an enduring symbol of American female empowerment, will be demolished if money can’t be found to save it.
The Willow Run Bomber Plant, a 135-hectare former Ford Motor Co. factory west of Detroit that churned out nearly 9,000 B-24 Liberator bombers during the Second World War, is slated to be torn down unless a group can raise $3.5 million by Thursday to convert at least some of the structure into a new, expanded home for the nearby Yankee Air Museum.
“The younger generation needs to know what people went through and be able to go and see what they did and how they did it for our country,” Larry Doe, a 70-year-old Ypsilanti Township resident who has given to the cause, said recently before joining other donors for a trip on a B-17….
DEARBORN, Mich. — Ford reported better-than-expected second quarter earnings and raised its profit and sales forecasts for the year as strong U.S. pickup truck demand and growing sales in China offset persistent — but narrowing — losses in Europe.
Its shares rose 3 percent in premarket trading.
Ford Motor Co. (F) earned $1.2 billion in the April-June period, propelled by a $2.3 billion profit in North America. U.S. pickup truck sales have jumped 22 percent in the first six months of this year, or nearly three times the pace of total industry sales. That benefits Ford, whose best-selling vehicle in the U.S. is the F-Series pickup.
Ford also reported a best-ever profit of $177 million in Asia. Ford’s sales jumped 47 percent in China the first six months of this year, or more than four times faster than total industry sales growth of 17 percent, as the company introduced popular new vehicles like the EcoSport and Kuga SUVs.
Ford raised its forecast based on the April-June results. The Dearborn, Mich.-based automaker now expects its full-year pretax profit to be equal to or better than the $8 billion it reported a year ago. Previously the company had expected to match that profit.
Ford also expects sales in the U.S., Europe and China to be in the upper end of its previous forecasts.
In Europe, Ford narrowed its expected full-year loss to $1.8 billion from $2 billion. The company lost $348 million in Europe in the second quarter, which was $56 million better than a year ago.
Ford’s earnings amounted to 30 cents a share in the latest quarter, the same as a year ago. Without one-time items, including separation payments in Europe, where Ford is closing several plants, the company earned 45 cents a share. That surpassed analyst forecast of 37 cents, according to FactSet.
Revenue was up 14 percent to $38.1 billion, beating analyst forecasts of $34.9 billion.
Its shares rose 53 cents, or 3.1 percent, to $17.47 in premarket trading.
1558 – Battle of Gravelines: In France, Spanish forces led by Count Lamoral of Egmont defeat the French forces of Marshal Paul des Thermes at Gravelines. 1935 – Richard Strauss resigns as chairman of Reichskulturkammer 1938 – Kroller-Muller museum opens in Holland 1968 – French government-Couve de Murville forms 1987 – Federal judge throws out Bette Midler’s $10 million suit against Ford Motor Co, who used a sound alike voice for their TV commercials 1991 – Bob Milacki and 3 other Balt Oriole pitchers no-hit A’s 2-0
1773 – Wilhelm H Wackenroder, German writer (Fantasies about Art) 1864 – John Jacob Astor IV, American entrepreneur (d. 1912) 1901 – Mickey “Toy Bulldog” Walker, welterweight boxing champ (1922-26) 1941 – Robert Forster, Rochester NY, actor (Lady in Red, Alligator) 1973 – Ariel Silvio Zárate, Argentine footballer 1974 – Deborah Cox, Canadian Randamp;B singer
574 – John III, Italian Pope (561-74), dies 1105 – Rashi, [Rabbi Shlomo Yitzaki], Jewish intellectual, dies 1705 – Titus Oates, English Protestant conspirator (b. 1649) 1807 – Henry Benedict Stuart, Jacobite claimant to the throne of England (b. 1725) 1956 – Vladimir Grigor’yevich Zakharov, composer, dies at 54 1958 – Karl Erb, German tenor, dies on 81st birthday
Most large global car companies still believe that China will not only remain the world’s largest car market, but also will be one of the fastest growing. But growth there has been unimpressive recently, and taxes imposed by the government on auto licenses may make that problem worse, damaging efforts by manufacturers who have increased investment in the People’s Republic.
March is usually a good month for car sales in China. However, sales rose only 11% to 2.01 million. That is down from a rate of 20% improvement in the first two months, according to The Wall Street Journal. And these low double-digit percentage numbers come after an anemic 2012.
The investments in China made by large car companies must be relying on the 20% number more than on 2012 growth rates, because they are so large in dollar terms. This is particularly true of America manufacturers. A year ago, Ford Motor Co. (NYSE: F) said it would invest $760 million in its operations in the People’s Republic. The money will go into a new plant in Hangzhou, set with its joint venture Changan Ford Mazda Automobile. And Bloomberg said of the investment in China by General Motors Co. (NYSE: GM):
GM‘s announcement at the Shanghai auto show this month that it is spending $11 billion by 2016 on new plants, products and people in China demonstrates a change in priorities. GM is investing $1.5 billion in North America this year, where it has a more modest factory footprint.
For the past two years, the primary concern about the growth of car sales in China has been based on whether its economy would slow, and its large middle class would move to its traditional habit of saving instead of consumer spending. As it turns out, that is not the most significant threat. Pollution is. And the People’s Republic has decided to attack the problem in part by high car license fees, most analysts believe. BusinessWeek reports on the cost of license plates in China:
Shanghai is one of four Chinese cities that limit car purchases by imposing quotas on registrations. The prices paid at Shanghai’s license auctions in recent months — 90,000 yuan ($14,530) — have exceeded the cost of many entry-level cars, the stronghold of Chinese brands such as Chery, Geely, and Great Wall. While residents with modest incomes may be able to afford an inexpensive car, the registration cost is often beyond their reach.
It is too early to know exactly what effect these license fees will have on sales, or whether they will be imposed more broadly. No matter what the reason, these new, high fees could scuttle the hopes that car sales in China will make it the Holy Grail for the industry.
Filed under: 24/7 Wall St. Wire, Autos, China Tagged: F, featured, GM
What Ford has done with its economies of scale in the last four years has been nothing short of impressive. It was the single most important reason that a mere one year after Detroit brethren General Motors and Chrysler claimed bankruptcy, Ford was posting its first profit since the recession. Ford went from $30 billion in losses between 2006-2008 – through a recession in which we saw vehicle sales tank mercilessly – to a profit in 2009. It’s also the single most important reason that its operating margins top the industry, and hit 11% – very strong for the auto industry – in North America in the first quarter.
By the end of this year the goal is to have 85% of global sales from nine core platforms, but what do they look like? Here’s the look of Ford’s future, and it aims to please the masses – and investor profits along with it.
Here’s a rundown of what you can expect from two of the most important platforms for global revenue growth going forward. I’ll cover another two tomorrow.
Fusion growth Ford’s stylish Fusion sedan is setting the accounting books on fire, posting over 80,000 in sales for the first quarter – a record for the model. It strikes a perfect mix between value and fuel efficiency. It’s received this year’s “Green Car of the Year” award recently in Los Angeles as well as U.S. News & World Report’s 2013 “Best Car for the Money”. Those two qualities will be absolutely critical for the Fusion to replicate its success here and overseas.
Ford recently unveiled the new Mondeo/Fusion at the 2013 Shanghai Auto Show. Ford is aiming to double its market share in China by mid-decade and for this to happen the Fusion needs to be a hit with the Chinese. So far it has been met with much fanfare and is expected to be very competitive – it stands out on the road in a stylish way.
Unfortunately even the 30,000 in U.S. sales we saw in March may not be sustainable at current plant capacity. Typically, automakers want to have 65 days’ supply of high-volume sellers, and WardsAuto estimated the Fusion to have as few as 40 days inventory before March sales took place. This is a good problem to have, and the company has plans for extra plant resources at Flat Rock, Mich., to produce more of the sedan as soon as this coming fall.
Mustanggrowth For growth purposes, it would have been easy to discuss the Focus or Fiesta here, but I think the Mustang offers unique potential among Ford’s vehicles. In 2012 it ranked seventh in Ford’s vehicle lineup for sales in the U.S and has slightly trailed the Camaro in the last three years. Its value isn’t limited to its sales figures, as the iconic American muscle car will always be a
But as always with Ford, its F-Series pickups are a big part of the story.
Ford’s cars are better than ever, but its pickups might still be its most important products In the U.S., Ford sells more of its F-Series pickups — the popular F-150 and its heavier-duty siblings — than any other vehicle. In fact, it’s the best-selling vehicle in America and has been for decades.
Lots of people will tell you that Ford builds a good truck. And while its No. 1 sales ranking occasionally benefits from rival General Motors‘ insistence on splitting its full-sized pickup sales between the Chevrolet and GMC brands, there’s no doubt that it’s an exceptionally popular and successful product.
What is somewhat less well known is that it’s a very profitable product as well. Some of that profit comes from sheer numbers: Ford sold 168,843 F-Series pickups in the U.S. in the first quarter of 2013, a 17.4% increase over the first quarter of last year. That’s almost as many sales as all of Ford’s popular SUVs managed — when added together.
But it’s also true that pickups in general have very good profit margins. Ford’s exact profit per pickup sold is a closely guarded secret. But there’s little doubt that it’s good: One leading Wall Street analyst said last year that the F-Series might represent as much as 90% of Ford’s global profit.
Ford made $2.4 billion in North America in the first quarter. (Ford’s total profit was lower because of losses and spending overseas, where Ford is still restructuring and expanding.) Clearly, a lot of those dollars came from pickup sales.
But here’s the interesting thing about Ford: As good as that North America profit number was — and it was Ford’s best in more than a decade — it could have been even higher.
Investing more of Ford’s profits for future growth Ford’s North American profit was very strong, and its profit margin was also very good at 11%, a big number for a mass-market automaker. But some analysts had expected a slightly higher profit, and a slightly higher margin — in part because of Ford’s strong pickup sales.
Ford could have arranged to post a higher profit. But its costs were up in the quarter, because the company is plowingmore of its money into developing new vehicles.
Ford CEO Alan Mulally is in the midst of a multiyear push to build more vehicles off shared
Car sales in Europe dropped 10.2% in March, according to the European Automotive Manufacturers’ Association (ACEA). The news not only shows how unlikely it is local car companies can rebound during the European recession, it also signals that revenue and profits from the region will cripple global earnings at General Motors Co. (NYSE: GM) and Ford Motor Co. (NYSE: F). GM continues to say it will keep operations in the region, though that becomes less practical by the month.
The specifics of the report on car sales in Europe showed a market falling relentlessly:
In March, demand for new passenger cars was on the decline for the 18th consecutive month, totaling 1,307,107 units. Over the first quarter of 2013, new car registrations amounted to 2,989,486 units, or 9.8% less than in the first three months of 2012.
The shocking news from the release was the slide in German car sales, which reached 17.1% in Germany, the region’s largest area market, which produced 281.184 unit sales last month. Germany is not only the home market for BWM, Mercedes and Volkswagen. It is also the core market for the largest and second largest U.S. car markers. The largest country in Europe by gross domestic product was supposed to dodge the EU recession. Car sales in Europe show that has not happened entirely.
GM and Ford’s European sales dropped more rapidly than the overall market. Sales of GM owned brands – particularly Vauxhaul and Opel – were down 12.6% to 110,800. Ford sales fell 15.8% to 107,954.
GM has lost money in Europe since 1999, a period over which red ink has totaled $18 billion. Last year, its pretax loss in the region was $1.8 billion, which sharply eroded global results. Ford’s European loss was $1.73 billion last year.
The industry’s focus about Europe continues to be on GM. Its management still insists that the market can be turned around. All the while, the company suffers double-digit sales losses. Worse, theses losses – both financially and in market share – are in a region in which the total industry is shrinking.
GM management believes that it cannot be a global company without significant presence in China, the United States and Europe. However, the plan breaks down badly where Europe is concerned. GM cannot offer any evidence that losses will not continue for years, or even longer. The idea of a three-legged global approach does not work when one leg is irreversibly broken.
GM needs to do what seemed inevitable a very few years ago. It needs to leave the European market to European car companies, many of which also lose money. They do, however, control the region, based on market share.
One method used by car companies to stem losses is the same as in most other industries – cut costs. However, powerful labor unions and local governments have leverage to prevent or slow such actions by GM. An orderly exit from Europe might convince these parties to change their stances. Nothing short of that will cause
Ford is under a lot of pressure to successfully revive its luxury Lincoln brand. It has been able to fix so many other company issues that caused massive losses and can now finally spend time fixing the Lincoln brand. Unfortunately for Ford, the brand needs fixing: The Lincoln MKZ – which had a lot of pre-sale hype – has completely stumbled out of the gate. Hands down, Ford and Lincoln failed its dealers so far.
Meanwhile, General Motors is enjoying great success with its Cadillac line, with a 49% rise in sales for March. If you’re counting, that makes it six consecutive months of gains for GM‘s luxury line. Let’s take a look at how Ford is trying to fix its MKZ flop, and explain how very important this is to Ford investors.
Super Bowl mulligan The Lincoln MKZ had received more interest than any other Lincoln vehicle since the ’90s. Dealers where promised the flashy new sedan would arrive by the end of December 2012. Turns out that didn’t happen, and dealerships missed sales for Christmas, New Year’s Day, Presidents Day, St. Patrick’s Day, and Easter. Suffice it to say that the $7.4 million spent on the Super Bowl ad was a waste – as was the spot during the Grammy’s. Part of the reason for this massive MKZ delay was due to the very successful Fusion.
Can’t halt the Fusion Lincoln executives know they only have one shot at reinventing the Lincoln line. For that reason they are inspecting every single Lincoln MKZ to make sure quality is top notch. Unfortunately this was being done at the same Mexicoplant that was producing the extremely popular Fusion, and it overwhelmed plant resources. The Fusion has been hailed by critics and consumers, winning numerous awards and setting record sales. Simply put, Ford couldn’t afford to halt the production of the Fusions because they’re selling out!
Too little, too late That caused lengthy delays for the MKZ, which has taken until now to get through the backlog of quality inspections. When it became obvious that the Mexicoplant couldn’t handle the inspections in time, Ford had the MKZs sent to another plant in Michigan but it was too little, too late. Now Ford is offering cash to dealers based on lost sales in addition to incentives on other Lincoln models. Unfortunately communication was poor between the factory and dealers causing some consumers to cancel pre-orders. It’s not only lost sales, but a frustrating start to a customer relationship that will be important in reviving the brand.
So what? You might be thinking “So what?”. After all, it’s only one model right? Ford has had great success with its fresh models of the Fusion and Escape even after multiple recalls. However the Lincoln MKZ is different. This was supposed to attract a new generation to a brand that
DETROIT — U.S. sales of sport-utility vehicles and pickup trucks jumped in March, spurred by rising home prices and an increase in housing construction, major automakers said on Tuesday.
The performance of SUVs and trucks outpaced gains in the broader U.S. auto market, but March is still expected to be the fifth straight month that the auto industry’s annual sales pace will be above 15 million vehicles.
General Motors Co. (GM) said the stronger housing market helped its sales to small businesses climb by nearly a third. The largest U.S. automaker also posted a 31 percent sales gain in crossovers vehicles, such as the Chevrolet Traverse, while its overall sales were up 6.4 percent.
Ford Motor Co. (F), the No. 2 U.S. automaker, posted a 16.3 percent rise in sales of its F-Series pickup trucks and a 15.4 percent spike in sales of SUVs, such as the Escape.
“The housing sector recovery is in full swing,” Ford economist Jenny Lin told reporters and analysts.
The U.S. housing sector is starting to contribute to growth after years of dragging down the broader economy. Rising home values are helping U.S. consumers feel more confident about buying a new vehicle, GM and Ford executives said.
Home prices in 20 metropolitan areas rose 8.1 percent in January from a year earlier, the biggest 12-month rise since June 2006. Meanwhile, U.S. home builders are breaking ground on more new houses this year, boosting sales of pickup trucks.
In about a month, GM will launch two new truck models, the 2014 Chevrolet Silverado and GMC Sierra. Ford is planning an overhaul of its F-150 next year.
Executives said pent-up demand also continued to fuel sales gains in March. The average age of vehicles on U.S. roads is more than 11 years, an all-time high, and many consumers can no longer put off buying a replacement.
“The economic picture looks pretty similar to the last couple of months, which helps explain why the industry has stayed in a relatively healthy range,” Kurt McNeil, head of GM‘s U.S. sales operations, said during a conference call.
“Business spending has picked up and pent-up demand for vehicles is offsetting any drag from tax or federal spending issues,” he added.
Ford Beats, GM Misses
Auto sales each month are an early indicator of economic health. The auto industry is in the midst of its fourth year of recovery from an economic downturn that pushed GM and Chrysler into bankruptcy in 2009.
Analysts polled by Thomson Reuters were expecting an annual sales rate of 15.3 million vehicles in March. GM estimated the rate would come in around 15.2 million.
DETROIT — U.S. car and truck sales are expected to hit their highest level in nearly six years in March, as buyers armed with tax refund checks were lured by flashy new vehicles and low interest rates.
Auto companies release U.S. sales figures Tuesday.
Analysts predict total sales of nearly 1.5 million cars and trucks, a number not seen since May 2007. That’s almost double the 855,000 vehicles sold in March 2009, the low point for sales during the economic downturn, according to Ward’s AutoInfoBank. Sales are expected to be up 3 to 5 percent over last March.
Alec Gutierrez, a senior market analyst with the car pricing company Kelley Blue Book, said the improving job market is boosting sales. The number of Americans seeking unemployment benefits fell to a five-year low during March. Low interest rates are also making new-car purchases more appealing, Gutierrez said. The average rate for a 60-month new-car loan is now 4.12 percent, down from 4.52 percent at this time last year, according to Bankrate.com.
And Gutierrez says tax refunds can also spur purchases. The average federal tax refund this year is nearly $3,000, or enough to cover the down payment on a three-year lease of a Toyota Camry hybrid or a BMW 3-Series sedan.
Full-size pickup truck sales are expected to rise nearly 15 percent in March, following big gains in February, Kelley Blue Book said. Construction companies are rapidly replacing their truck fleets as the economy improves and they win more business.
Gutierrez said incentive deals — such as the $7,500 cash back now offered for the Chevrolet Silverado pickup — are helping truck sales, and should continue for a while. General Motors Co. (Ford Motor Co. (GM wants to clear out older models before introducing its new Chevrolet Silverado in a few months.
"Consumers looking for a new pickup truck should not hesitate to pull the trigger," he said.
Crossovers are also gaining, thanks to redesigned models like the Ford Escape and Toyota RAV4. Small cars are down slightly, in part because gas prices are relatively low. Gas averaged $3.64 per gallon at the end of March, down from $3.78 at the end of February and $3.91 in March of 2012, according to AAA.
Looking today at week-over-week shares outstanding changes among the universe of ETFs covered at ETF Channel, one standout is the Consumer Discretionary Select Sector SPDR Fund (AMEX: XLY) where we have detected an approximate $95.4 million dollar outflow — that’s a 2.1% decrease week over week (from 84,553,252 to 82,753,252). Among the largest underlying components of XLY, in trading today Time Warner Inc (NYSE: TWX) is down about 0.1%, Ford Motor Co. (NYSE: F) is down about 0.8%, and Target Corp (NYSE: TGT) is higher by about 0.4%. For a complete list of holdings, visit the XLY Holdings page » …read more Source: FULL ARTICLE at Forbes Markets
A total of 20 Ford customers are suing the automaker in a class-action lawsuit for selling vehicles “vulnerable to unintended acceleration.” According to Reuters, the suit names 30 models built between 2002 and 2010 with electronic throttle control systems but without a brake override system. Those include the 2004-2012 F-Series pickups and the 2005-2009 Lincoln Town Car. Adam Levitt, a partner with the law firm of Grant & Eisenhofer says the plaintiffs in the case want “to be compensated for their economic losses by having overpaid for cars that contained defects.” Levitt contends that the plaintiffs would not have bought their vehicles or paid less for them had they known there was no brake override system in place.
Ford began installing brake override systems in its vehicles beginning in 2010. In response to the lawsuit, Ford has pointed to research by the National Highway Traffic Safety Administration that indicated that unintended acceleration is mostly caused by driver error, saying in a statement that, “NHTSA‘s work is far more scientific and trustworthy than work done by personal injury lawyers and their paid experts.”
DETROIT — Stray Cheerios beware. The new Honda Odyssey minivan is here — and it has a built-in vacuum cleaner.
Honda Motor Co. (HMC) showed off its updated Odyssey minivan Tuesday evening ahead of the New York International Auto Show. The 2014 Odyssey — last redesigned in 2011 — has a richer, more chiseled look, chrome-trimmed fog lights and other premium features.
But HondaVAC, the hand-held vacuum integrated into the cargo area, will likely be its most talked-about feature. Honda says it’s the first to offer this family-friendly tool, which it developed with heavy-duty vacuum maker Shop-Vac. Honda’s system includes nozzle accessories and a hose that can reach every corner of the vehicle. It doesn’t need an outlet for recharging, and can work continuously when the motor is running — or for up to eight minutes when the van is turned off.
Honda says the vacuum will be standard on the most expensive version of the Odyssey, and it will announce availability on other versions later.
Tami Giammarco, lead engineer on the van’s interior, said the vacuum idea came from the daughter of an engineer who saw how frustrated her father was when kids made a mess in his van. “‘Dad, you need a vacuum in here,'” she told her father, Giammarco said.
Minivan sales could use a jolt. They peaked at 1.4 million in 2000, but have fallen rapidly since as buyers shifted to popular crossover wagons like the Honda CR-V and Toyota Motor Corp.’s (TM) RAV4. U.S. minivan sales totaled 540,188 last year.
Still, sales outpaced the industry average last year, and should grow even more this year when Ford Motor Co. (F) rolls out its first minivan since 2006, the Transit Connect Wagon. And if Generation Y buyers in their late 20s and early 30s choose a minivan as they start families, business could boom.
Honda is eager to be part of the action. So far this year, the Odyssey is the third-best selling minivan in the U.S., behind the Toyota Sienna and the Dodge Caravan. Excluding sales to fleet buyers such as rental car companies, Honda is No. 1, said Mike Acavitti, senior vice president of marketing for American Honda.
Acavitti said the minivan segment should keep growing because of its utility, and he expects Honda’s share of the market rise with the revamped Odyssey.
“There is no more flexible vehicle,” he said.
Here are more details about 2014 Odyssey:
Outside: Honda sharpened the Odyssey’s looks with a more sculpted hood, two-tone mirror housings and other details. It also improved the structure so that the van can get top …read more Source: FULL ARTICLE at DailyFinance
The Indian unit of Ford Motor Co. has apologized for an advertisement depicting Italy‘s former Prime Minister Silvio Berlusconi with a trio of bound women in the trunk of a car.
The image appeared over the weekend on a website showcasing creative ads. Featuring Ford‘s logo, it showed three women bound and gagged in the trunk of a Ford Figo with Berlusconi smiling from the driver’s seat alongside the slogan “Leave your worries behind.”
Never used commercially, the ad was reportedly posted online by its creators at an ad agency hired by Ford.
The company said Monday that it regrets the incident, calling the images “contrary to the standards of professionalism and decency within Ford.”
A spokesperson said the company is investigating whether anyone at Ford ever saw the ad.
Volkswagen has recalled 384,181 cars in China, including Golf, Magotan, Sagitar and Audi A3 models. Bloomberg reports that the cost of this action to VW will be more than $600 million. The more important issue is whether recalls in China harm car manufacturer reputations as much as they can in more established markets like the United States. If so, VW has a problem much larger than a financial one.
Volkswagen and General Motors Co. (NYSE: GM) have held on as the top car makers in China by sales. Those positions are under assault by other large multinational manufacturers, particularly Ford Motor Co. (NYSE: F), Toyota Motor Corp. (NYSE: TM) and Nissan. The strength and breadth of this competition may allow the newcomers to rattle VW sales, if each company can trumpet its quality compared to VW. That only works until one or more of these car companies has a product recall of its own.
The likelihood of product recalls in any market and of any model may be what helps VW in China in the long term. For now, the recall of nearly 400,000 vehicles is unmistakably a blow to the German company. But the moment GM or Toyota have recall problems, VW‘s will be pushed further back in the memories of buyers.
The slew of other large companies that sell cars in China, which has been swelled by local firms as well as those from outside the People’s Republic, will have recalls. Based on the past four decades of recalls in the United States, every manufacturer will be hit eventually. The probable quality problems with all of these means VW‘s recall will be all but forgotten fairly soon.
Filed under: 24/7 Wall St. Wire, Autos, China Tagged: F, featured, GM, TM
Hundreds of thousands of cars made by major manufacturers have been recalled this year. The most outrageous of these is among the smallest. Chrysler recalled 4,459 Dodge Challenger V-6 models because their engines may actually catch on fire. The vehicles affected are 2013 models, and only 2,500 are on the road. The balance are held by dealers. The news shows just how wrong things can go with very modern cars, and that the risk of very dangerous cars, made dangerous by the car companies, continues to exist.
Honda Motor Co. Ltd. (NYSE: HMC) recently recalled 183,000 Pilot and Acura vehicles made in 2005 and 2006. These have a potentially dangerous brake defect. Toyota Motor Corp. (NYSE: TM) recalled 209,000 FJ Cruiser models because of seat belt issues. Chrysler had another recall – much larger than the Challenger one – last month. This one involved 370,297 pickups and SUVs in which there could be rare axle problems. Ford Motor Co. (NYSE: F) recalled about 6,000 Escape, C-Max and Focus models because of possible child lock problems. And, at the luxury end of the market, where the cars sold should be nearly perfect, BMW recalled 75,000 cars because of electrical problems that could cause the vehicles to stall.
None of these recalls are related insofar as the parts of the cars or defaults measured. That means that the points of failure on very modern cars can be across a very broad spectrum. Consumers cannot take any comfort in this. Any and every part of their cars, SUVs, crossovers or pickups might be at risk. No matter how good quality control is supposed to be among large manufacturers, it fails to catch relatively basic flaws.
So far, there have been no major injuries among people in the cars recently called back to the dealers. But, as recalls proliferate, the companies and drivers may not be that lucky.
DEARBORN, Mich. — Ford Motor Co. CEO Alan Mulally’s compensation fell 29 percent to $20.95 million in 2012 as the company’s board weighed record North American profits and quality improvements against heavy losses in Europe and lower market share in the U.S. and elsewhere.
Ford (F) reported Mulally’s compensation Friday in its annual proxy filing with the federal government. Mulally earned $2 million in salary, the same as he earned in 2011. But his bonus fell 27 percent to $1.3 million and his stock awards dropped by half to $6.8 million.
He received $7.5 million in stock options, the same as in 2011. His bonus under Ford’s incentive bonus plan for executives fell 28 percent to $2.6 million. Mulally also received $680,809 in other compensation, including the use of a private airplane, housing expenses and security. That was up slightly from 2011.
Ford reported a record $8 billion pretax profit in North America in 2012, as its sales rose and it made more money for every vehicle. But the company’s net income fell by $300 million to $5.66 billion, largely because of a $1.75 billion loss in Europe. The board noted that Ford is restructuring its European operations, but the company still expects to lose $2 billion in the region this year as it struggles with lower sales, closes factories and invests in new vehicles.
The company’s board also docked the pay of Mulally and other executives because the company didn’t meet market share goals in any of its global regions.
But the board noted several accomplishments. Ford resumed paying a dividend last year for the first time since 2006, and two ratings agencies returned the company to investment-grade status last spring. The board said vehicle quality — measured by warranty costs and other factors — also improved.
The Associated Press formula calculates an executive’s total compensation during the last fiscal year by adding salary, bonuses, perks, above-market interest the company pays on deferred compensation and the estimated value of stock and stock options awarded during the year.
The AP formula doesn’t count changes in the present value of pension benefits. That makes the AP total slightly different in most cases from the total reported by companies to the Securities and Exchange Commission.
Ford also announced in its proxy that its annual meeting will be held May 9 in Wilmington, Del.
Two key commercial airliner projects at Boeing Co. (NYSE: BA) today got new leaders. Development of the 777X project has been handed to Bob Feldman who previously led development of the 737 MAX. The 737 MAX program has been assigned to Keith Leverkuhn who had been in charge of the propulsion systems (engines) division. The engines division’s new chief will be Nicole Piasecki.
While these are all important projects for Boeing’s future, the company’s current issue with the 787’s electrical system needs immediate attention. CEO Jim McNerny has presided over the company and the 787 since 2005, with not a lot to show for his tenure but long delays, big cost overruns, and a buggy airplane.
We suggested earlier this week that Ford Motor Co. (NYSE: F) CEO Alan Mullaly, formerly the head of Boeing’s commercial aircraft division, should be on the speed dial of Kenneth Duberstein, the chairman of the company’s governance, organization, and nominating committee. Mullaly is due to retire from Ford in less than two years and Boeing could use his turnaround talents and familiarity with Boeing’s products to get the company back on track.
Boeing’s shares are trading up about 0.2% today at $81.19 in a 52-week range of $66.82 to $81.95.
Market penetration and bad PR have taken down Hyundai and stablemate Kia, which until recently were the hottest brands in the U.S. market. As sales of competitors rise, the two manufactures will find it nearly impossible to keep pace. Their reigns as the darlings of the American car industry are over.
Hyundai sales rose only 2.3% to 96,024 in the first two months of this year, compared to an overall industry increase of 8.4%. Kia sales dropped 3.4% to 77,807 in the same period.
By contrast, sales of the industry leaders — General Motors Co. (NYSE: GM), Toyota Motor Corp. (NYSE: TM) and Ford Motor Co. (NYSE: F) — all rose in the double digits. Chrysler’s sales were up 9.4% for the period.
One reason for the stagnation of Hyundai and Kia sales is likely the scandal over gas mileage claims. Car research firm Edmunds wrote in November:
Hyundai and Kia said they overstated the estimated fuel economy on about 900,000 2011-’13 vehicles, including the 2012 Hyundai Accent and 2012 Kia Soul.
The Korean companies will compensate owners for the inaccurate claims.
The EPA announced that its investigation into “inflated mileage claims” prompted the action by Hyundai and Kia.
Some models that the two companies sell face more competition from low- and mid-priced cars and light trucks. In the first two months of the year, Honda Motor Co. Ltd.’s (NYSE: HMC) Accord sales rose 51%. Ford Fusion sales rose 42%. Sales of the Ford Fusion and Toyota Corolla each rose 22%. All of these vehicles are in the top 20 in terms of U.S. sales. Hyundai has two cars in the group. Sales of one of those — the Sonata — dropped 8% for the period. Sales of its Elantra rose 15%. Hyundai is losing market share to several other companies in the battle among the most popular cars and light trucks.
The U.S. car market is the hottest large car market in the world. If global manufacturers want to take advantage of that, they need to make progress in 2013. Hyundai and Kia have not articulated much of a plan to regain their growth rates. That is because they have none.
The problems with electrical systems on the Boeing Co. (NYSE: BA) 787 Dreamliner are so severe that the plane may not fly for months. Production has backed up, and airlines almost certainly will ask for compensation. There is no doubt who is ultimately responsible for the failure — chairman and CEO W. James (Jim) McNerney, who joined Boeing in 2005, about the same time as the serious development of the 787 began. The board of Boeing cannot keep McNerney under these circumstances. The most logical person for them to turn to is Ford Motor Co. (NYSE: F) CEO Alan Mullaly.
Mullaly has engineered a spectacular turnaround at Ford and kept it from being the only one of the Big Three not to avoid bankruptcy. Ford already has begun to prepare for his retirement, which could come in little more than a year. Ford does not need a turnaround expert anymore. Mullaly’s efforts have been that successful.
Mullaly ran the Boeing Commercial Airplanes division until he was passed over for the CEO job, which went to McNerney. Mullaly left for Ford in 2006. With that background, Mullaly knows the airline industry as well as almost any executive in the world. He is an engineer who graduated from MIT and worked on versions of almost all the planes Boeing currently sells.
Boeing needs to make a move now so that it can address two problems. The first is that it must regain confidence with customers, shareholders and employees. McNerney cannot do that. His failures are too extensive. Boeing also needs a leader who can step into the job quickly and will not need months and months to learn about the company and its operations.
Today, Boeing is rudderless, perhaps the worst condition in which a large public company can find itself. Mullaly has been the rudder of Ford. It time for the Boeing board to hire him before its situation becomes much worse.
Filed under: 24/7 Wall St. Wire, Corporate Governance Tagged: BA, F