Let’s begin by explaining that $2 billion first quarter drop, via the Detroit Free Press:
The company reported Tuesday that first-quarter earnings before interest and taxes — adjusted EBIT — was negative $632 million, down from a positive $2.4 billion in the first quarter of 2019 and $2.2 billion a year earlier. Net income was negative $2 billion, down from a positive $1.1 billion in the same quarter last year, when it slipped from $1.7 billion in 2018.
And then things get worse, as the Detroit News reports:
On the heels of a disappointing 2019, Ford had released guidance saying it expected to post between $5.6 billion and $6.6 billion in earnings before interest and taxes in 2020. But because of the virus-induced shutdown, the automaker earlier this year withdrew all guidance for 2020. It also stopped paying dividends to shareholders.
But in Tuesday’s release, Chief Financial Officer Tim Stone said while conditions remained “too ambiguous” to provide full-year guidance, he expects second-quarter adjusted pretax earnings to be a loss of more than $5 billion: “We believe we will see the largest impact of this crisis in the second quarter.”
Were it not for the virus and the economic slowdown it has delivered, he added, Ford would have been on track to post adjusted pretax earnings of at least $1.4 billion.
It is times like these when I wonder, how is it that the company that makes the most popular vehicle in America, the F-Series pickup, a vehicle that is profitable as all hell, can’t seem to make a profit? I wonder.... Hm. I just may never know.
This news broke on Monday but I think you can see why it’s still worth bringing up, as the Freep reported:
The cumulative compensation for the six top executives at Ford Motor Co. — $70 million — exceeded the automaker’s annual net income of $47 million in 2019, a year that included a botched Ford Explorer launch and billions in warranty costs.
On Feb. 4, when reporting that annual profits plunged from $3.7 billion one year earlier, Chief Financial Officer Tim Stone characterized the situation as “not OK.”
Who are these execs? The Freep lays it out:
- CEO Jim Hackett: $17.36 million in 2019, slightly down from $17.75 million in 2018.
- Executive Chairman Bill Ford: $16.76 million, up from $13.83 million in 2018.
- Stone, who was hired April 15 and assumed his CFO role on June 1: $8.32 million.
- CFO Bob Shanks, who was replaced by Stone: $8.32 million, down from $8.42 million in 2018 when he was the only CFO.
- Jim Farley, then-president, New Business and Technology and Strategy: $8.36 million, up from $5.86 million in 2018.
- Joe Hinrichs, then-president, Automotive: $11 million, up from $5.81 million.
Ford seems to be having a hard time with even the normal, straightforward stuff. But what about new tech projects? How are those?
Somehow the goalposts of autonomous driving keep getting moved back, and Ford just announced that it won’t be kicking off any commercial projects with autonomous vehicles when it thought. What once was 2021 will now be 2022, as Automotive News reports:
Ford previously planned to launch self-driving vehicles for commercial use, such as package delivery, at some point in 2021. The company, in partnership with startup Argo A.I., has been testing autonomous vehicles in Miami, Detroit, Washington D.C., Pittsburgh, Palo Alto, Calif., and Austin, Texas. It had announced Washington, D.C., Austin and Miami would be launch markets.
It has been testing a number of customer-focused initiatives, including piloting autonomous pizza delivery with Domino’s and package delivery through Postmates and Walmart.
“Given the challenges of the current business environment, as well as the need to evaluate the long-term impact of COVID-19 on customer behaviors, Ford made the decision to shift the launch of its self-driving services to 2022,” Ford said in a statement. “Understanding customer behavior is a critically important part of building a new mobility service built around trust and making people’s lives easier.”
I can’t think of any reason in particular why Ford should be a troubled company at the moment, but here we are.
Meanwhile, in Japan, things are also not great for Nissan, which is having a time, as Reuters reports:
Nissan Motor Co. plans to cut the number of cars it produces in May in Japan by 78 percent from last year as the impact of the coronavirus pandemic shakes the troubled automaker already struggling with falling sales.
As automakers around the world reel from plunging sales amid lockdowns imposed in many countries to curb the spread of the virus, the hit is particularly severe for Nissan, whose profitability has been deteriorating as it grapples with the turmoil that followed the ousting of Carlos Ghosn as chairman.
According to internal documents, Nissan plans to manufacture around 13,400 vehicles next month, compared with nearly 61,000 in May 2019.
I don’t expect that coronavirus will lead directly and immediately to a Mad Max future where there are no new cars and people harpoon each other over old muscle cars, but I am definitely thinking about it and checking my local Craigslist.
Nio is a hard company to get a sense of in the United States. Its cars look very serious and professional for a startup, but since Nio doesn’t even offer any vehicles for sale in the U.S., it’s hard to gauge how well the company is doing at any given time. We can see Teslas on the roads here, but Nio is elusive.
In any case, the company has been through hard times financially, and just got another nearly billion bucks, as Reuters reports:
A 7 billion yuan ($989 million) investment by investors into Nio China, a new entity controlled by Chinese electric vehicle maker Nio Inc, will smooth its cash flow and guarantee future product developments, its CEO said on Wednesday.
The investors include state-controlled Hefei Construction Investment Holding (Group) Co Ltd, CMG-SDIC Capital Management Co Ltd, and Anhui High and New Technology Industrial Investment Co Ltd.
He said the coronavirus epidemic has had an impact on Nio’s supply chain and sales in the first quarter this year but said the negative impact had passed.
Nio delivered 3,838 vehicles in the first three months this year, and sales and production were recovering in March compared to February.
In a statement, the firm said Nio will inject its core businesses and assets in China, which are valued at 17.77 billion yuan, into Nio China and invest 4.16 billion yuan in it.
Whatever it is, I am glad I am not in charge of keeping that company afloat.
On April 29, 2004, the last Oldsmobile comes off the assembly line at the Lansing Car Assembly plant in Michigan, signaling the end of the 106-year-old automotive brand, America’s oldest. Factory workers signed the last Oldsmobile, an Alero sedan, before the vehicle was moved to Lansing’s R.E. Olds Transportation Museum, where it went on display. The last 500 Aleros ever manufactured featured “Final 500″ emblems and were painted dark metallic cherry red.
If your last name was suddenly Ford, a Mustang sat in your drive, and you had an executive parking spot in Dearborn, what would you change? Is there anything for Ford to do in a time like this?