Ford profits not as rosy as they may appear 1

Ford’s first quarter profits were an outstanding achievement but they will be dampened by the fact that they have made tremendous losses outside of the United States.

The grass is greener on the other side

One major factor in Ford’s recent rise to prominence is the fact that they have dedicated themselves to pushing out more economical vehicles and technology. During times of record high prices on fuel, Ford have offered more sensible options when compared to most other auto manufacturers.

Performing poorly in Europe and Asia

Net income for Ford was said to have dipped to $1.34 billion. In total it is estimated that Ford have managed to lose $225 million in the European and Asian regions. The European market is proving to be a no go area for all mass car manufacturers. There are over capacity problems as demand is not meeting production. Heavy losses are being made by the likes of Peugeot, Vauxhall/Opel, Renault and many more. The Asian market has occurred tremendous loss figures for many automakers since the floods in Thailand. Joe Hinrichs was quoted in an interview saying “We certainly felt a significant effect in 2011 from both of the natural disaster. We continued to feel that effect in the first quarter.”

South America represents tough competition

The South America region is another disaster zone for Ford at present. There is increasing competition as foreign car makers attempt to flood the region as the country is showing signs of prosperity.

China

Ford are also reporting sluggish sales in China too. All of this has taken it’s toll on Ford’s stock which is down by 25% when compared to one year ago.

Ford’s financial rating

There is a silver lining for Ford however with their Fitch rating being increased. This will mean Ford’s repayments on loans taken from 2006 will be charged at a much lower rate.

Previous heavy financial losses

From 2006 to 2008, Ford lost a staggering $30.1 billion. Ford then managed to recover most of the over the next three years, earning $29.5 billion. Alan Mullay changed the fortunes of the company when he took over. Could the same be done this time round?

Many expect Ford to pick up sales and recover from making such huge losses overseas. Many see the companies new and improved models as a way of fighting back.