Uphill drive for Ford Motor Company, but hope continues

Chennai: The industry-wide pressure on retail prices, the intense competition offered by General Motors Corporation and the reduced demand in North America are set to negate the benefits of revitalisation plans of the global auto major Ford Motor Company.

Ford is pursuing the revitalisation plans following a dismal performance last year. Part of the plan is to deliver pre-tax profit of $7 billion per year by mid-decade; bring the North American operations to profitability and transform the European operations; grow the premium brands offering better margins (the Lincoln, Jaguar, Land Rover and the Volvo); and cut costs and improve quality.

Significant progress has been made in certain areas, such as enhancement of product quality measures. According to Ford, next 18 months will see a slew of new launches. The Asia Pacific region will witness new launches like the Ford Falcon, Ford Everest, Ford Fusion and the Ford Escape.

In terms of cost reduction, the company has reduced $2-billion corporate non-product costs. The European operations saw a turnaround.

Furthermore, largely reflecting stronger-than-anticipated industry demand, Ford has been exceeding its modest initial goal of consolidated pre-tax breakeven earnings in 2002. Although an important element of Ford’s long-range plan has been expansion in relatively high-margin luxury vehicles, the performance of the brands within its Premier Automotive Group has been mixed.

On 25 October 2002, Standard & Poor’s (S&P) Ratings Services lowered its long-term ratings on Ford and Ford Motor Credit Company (Ford’s financial subsidiary) to BBB from BBB+, and removed these ratings from CreditWatch, where they had been placed few days before.