Ford dips into $10.1 billion credit kitty after $5.9 billion loss

30 January 2009

Ford Motor Company suffered its worst loss in its 105 year history, when it lost $5.9 billion in the fourth quarter and $14.6 billion in 2008 but reiterated that it would not seek government bailout but dip fully into its $10.1-billion line of credit that it secured two years back.

The auto maker's 2008 loss of $14.6 billion surpassed its earlier record of $12.6 billion in 2006. Although it burned through $5.5 billion cash in the last quarter, Ford still has $13.4 billion on hand, making CEO Alan Mulally confident that it will still not seek a handout from the government.

In 2007, the Dearborn-based company posted a loss of $2.7 billion and 2008 total revenues dropped by 15 per cent to $146.3 billion from $172.5 billion the previous year.

With auto sector sales plunging steeply in the US, more so in the last quarter, Ford's sales declined by one-third to $29.2 billion with only 1.14 million vehicles sales globally in the quarter.

Its 2008 sales was 5.4 million vehicles, down by 18 per cent compared to 2007 as buyers turned to Japanese car makers for smaller and more fuel-efficient cars in the wake of soaring oil price and acute credit crunch, making it extremely difficult to secure auto loans.

Along with declining sales, Ford reduced global dealer stocks by more than 50,000 vehicles than in the previous quarter and now has the lowest days supply in the industry.