Ford’s profits fell dramatically in 2014 after a very unfortunate year littered with recalls and failings in South America.
Troubles in Ford’s Venezuela sector
Although $3.2 billion sounds like a lot, it represents a 56% drop in profits for Ford in relation to the whole year. The fourth quarter of the year saw the sharpest fall with $800 million being invested in Venezuela. As a result, net income slipped to $52 million in this period alone, with there being right controls within the country regarding what can be built and sold along with the controls on the currency. Altogether, South America saw losses of $1.2 billion for Ford, thanks to Brazil’s weakening economy and Argentinian import restrictions. The American automotive company have taken action, ensuring that Venezuelan operations do not influence Ford profits in the future.
24 new Ford models being a factor
Ford saw last year as a great opportunity to refresh their line-up, with a record 24 new models being made worldwide. The most notable models were the new Mustang and the brand new aluminum F-150 pickup truck. It has been reported that over $1 billion on two factories in the United States to customise the F-150. The factories in question, the Dearbon and Kansas City plants will not start operations until the second quarter of this year.
Over $2 Billion down in pre-tax earnings
Profits fell further with $500 million being paid for warranty costs, with 850,000 vehicles being recalled thanks to defective air bags.The launch of Lincoln brand in Asia coincides with the development of five brand new plants in the continent as part of a heavy expansion plan. Pre-tax earnings were cut from $8 billion to $6 billion in Autumn. Eventually Ford profits hit $6.3 billion in terms of pre-tax earnings, which was a considerable decrease from $8.6 billion the previous year.
Impressive sales for Ford in 2014
However the company’s sales were very impressive in 2014. Altogether they sold 6.3 million cars and trucks throughout the year, which represents a small decrease of only 1%. Sales managed to increase in Europe, the Middle East and Asia but fell in North and South America.