Ford stock soars as profit report provides glint of optimism
November 3, 2009Ford stock soars as profit report provides glint of optimism in downtrodden auto industry
It’s been eons since the auto industry has had a dash of truly good news, so this morning’s announcement that Ford earned $998 million in the third quarter — and expects to be “solidly profitable” next year — was great reason for optimism. “Optimism” and “auto industry” are rarely heard together in the same sentence.
Everything just seems to be going right for Ford, and for that matter, CEO Alan Mulally, above, with the Fusion (except for the inexplicable UAW, which just rejected a deal to put Ford on par in labor costs with GM and Chrysler). Ford’s market share in the U.S. rose, which will pay dividends as overall auto sales continue to rise. Helped by the government’s “Cash for Clunkers” program, Ford’s hybrid sales rose 73% this year while hybrid sales in the industry overall have fallen 14%. Shares of Ford — the only U.S. automaker still pblicly traded — shares were up 8.6% in midday trading, hovering around $7.60 a share. Ford has made smart bets on its new vehicle offerings, too:
It introduced a full-size Taurus, a car in which it can take pride (unlike the last version), although it’s yet to be seen how well the new one sells. Ford has boosted its footprint in China, the market that has served General Motors well for so many years. It’s got a bunch of new, European-inspired small cars on the way.
In the end, Ford benefitted from a combination of smarts and luck, recognizing its financial problems earlier than competitors and acted well ahead of them to avoid bankruptcy reorganizations. Consumers are likely to remain wary of GM and Chrysler until they are solidly reestablished, and Ford will benefit.
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