OK... I'll Post 'Em: GM($1.4B) and Ford ($835M) 3rd Quarter Profits

[Cmicasa the Great]

DETROIT -- Ford Motor Co. CEO Mark Fields today delivered the first report card on his performance since taking over for Alan Mulally on July 1. He gave every sign that he’ll have more to show off next year.

Ford’s pretax operating profit in the third quarter tumbled 54 percent from a year earlier to $1.18 billion. Lower sales volume and higher warranty costs took much of the blame.

Net income fell 34 percent to $835 million, with comparisons skewed by one-time charges this year and last. Revenues fell 3 percent to $34.9 billion. 

Ford was profitable in its North America and Asia Pacific regions. But it lost money in South America and the Middle East & Africa. Europe fell back into the red after being profitable, briefly, from April through June.

 

 

Volume hurts N.A.

In the third quarter, Ford’s North American region posted a pretax profit of $1.41 billion, down 39 percent, hurt by higher warranty costs and lower volume. Revenues fell 6 percent to $19.9 billion, as wholesale volume slid 8 percent to 665,000 units.

The volume drop was due to mainly to product launches, including five weeks of downtime in the quarter at the Dearborn Truck Plant near Detroit for the launch of the redesigned F-150 pickup, and supplier parts shortages.

Regarding the F-150, Fields said, “Launches are a complex thing. We are absolutely on plan. We had eight weeks of down time. We now have mass production. We’re exactly where we expected to be. Employees are excited; they’re trained; they’re energized. We’re positioned to have initial sales by end of year as we planned.”

Despite the hurdles, Shanks said, “We still feel the business in North America is operating at an extremely high level.”

Ford’s North American operations were hurt by recall costs of $630 million, primarily due to a $500 million recall of 850,000 2013-14 models -- including Ford C-Max, Fusion, Escape and Lincoln MKZ vehicles -- that the company announced in September to fix electronic modules that control airbags, pretensioners and other safety restraints.

In Europe, Ford’s pretax loss widened to $439 million from $182 million a year earlier. Ford said the wider loss was more than explained by Russia, currency losses on its balance sheet, lower component pricing and the non-recurrence of year-earlier special gains.

European revenues rose 7 percent to $6.9 billion. In July, Ford posted its first quarterly profit in the region in three years.

Asia Pacific drops

In the Asia Pacific region, pretax profit fell 62 percent to $44 million, as revenues rose 4 percent to $2.6 billion on a more favorable mix of sales. The revenue figure excludes Ford’s joint ventures in China.

Finance chief Shanks said the profit decline was due to the costs of opening five new factories in the region in the next nine months plus the cost of launching the Lincoln brand in China. He said Lincoln recorded its first sale in China today. Eight Lincoln dealerships will be open by the end of 2014.

In South America, Ford swung to a pretax loss of $170 million from a pretax profit of $160 million a year earlier, as revenues slid 17 percent to $2.3 billion. Ford cited lower volume and currency losses for the red ink.

“Ford is working to manage the effects of slowing GDP growth, declining industry volumes in its larger markets, weaker currencies and high inflation, as well as policy uncertainty in some countries,” the automaker said.

In the Middle East & Africa region, pretax losses narrowed to $15 million from $25 million a year earlier, as revenues rose 5 percent to $1.1 billion.

Ford Motor Credit’s pretax profit rose 17 percent to $498 million, on higher volume. The company said Ford Credit saw increases in nearly all financing products, including consumer and non-consumer products globally and leasing in North America.

Negative cash flow

Ford’s automotive operating-related cash flow was a negative $700 million for the third quarter, the first time since the first quarter of 2010 it has been negative, Shanks said. That was due to unfavorable changes in working capital, including the effects of the downtime at the Dearborn Truck Plant.

Ford said it expects working-capital changes in the fourth quarter to be positive.

Ford ended the quarter with automotive gross cash of $22.8 billion, exceeding debt by $7.9 billion. Three months ago, Ford’s gross cash total of $25.8 billion was $10.4 billion more than debt

http://www.autonews.com/article/20141024/OEM01/141029892/fords-fields-takes-his-lumps-in-q3-looks-to-next-year

 

 

 

GM

 

 

 

DETROIT -- General Motors' record prices in North America and booming sales in China weren't enough to offset weakness in just about every other region, as GM's third-quarter operating profit fell 14 percent.

 

GM said today that its operating profit in North America surged 12 percent, to $2.45 billion, on stronger sales and stout pricing on its redesigned pickups and SUVs. Operating income from China rose 14 percent to $484 million.

 

But results from Europe, South America and GM's International Operations unit, excluding China, were all worse than a year ago.

Overall, operating income -- which is earnings before interest and taxes excluding one-time items, and is the figure that GM considers its best measure of underlying performance -- fell 14 percent, to $2.26 billion.

 

"Today we shared solid results that underscore our strong position in the United States and China, and we also showed resilience in the face of headwinds in other markets,” CEO Mary Barra told analysts during a conference call.

 

GM's net profit nearly doubled from the July-September period a year ago, to $1.38 billion when its bottom line was sharply reduced by expenses from a buyback of preferred stock. This year's third-quarter profit was reduced by about $320 million in special items, including asset impairments in Russia and cleanup costs from flood damage at its technical center in suburban Detroit.

 

Revenue edged up by less than 1 percent, to $39.26 billion.

GM shares slipped 38 cents, or 1.21 percent, to close at $30.93 in New York trading Thursday.

Highest transaction prices

 

GM in September had the highest transaction prices in its history: about $34,600, up about $2,500 per unit from a year earlier, the company said early this month, citing J.D. Power data. Transaction prices on pickups and SUVs have been running more than $4,000 higher than the last generation.

That improved pricing led to about $400 million in extra profit for GM in the third quarter. Truck sales accounted for about half of GM's increase in sales volume in North America during the quarter, GM CFO Chuck Stevens told reporters at GM's headquarters today.

http://www.autonews.com/article/20141023/OEM01/141029918/gm-posts-1-38-billion-q3-net-income-on-flat-revenue

 

[Cmicasa the Great]

Great job GM despite the recalls, the extra charges, and without currency manipulation Asian style.. profits are starting to regain. With this kind of momentum I can see immediate coming quarters in the $3-4Billion range. This is where a completely competitive Cadillac/Buick/GMC will easily compliment the strides that Chevy, and a resurgent Opel are making. A strong Luxury/Premium/Mainstram group, utilizing a synergized production and platform share could put GM on proper footing with VW in profits

 

First and foremost GM is not a $6.Billion a year corporation. If costs are down, they have a business model that is fully capable of $12Billion annually on the low and $16 Billion on the high. They do not yet have the 1,000,0000 sales of Cadillac that VW has with Audi, nor do they have the blatant Gov't manipulation of currency that the Asians, particularly Toyota, have. Thus I see it not possible for them to go any further. I will add that a fully robust Cadillac would insure extreme profits. Add to that a pipedream of mine for GMC to be sold as a global division in the light of Jeep or previous Hummer and U are looking at a unstoppable GM

 

Projections laid out in recent (OCt 1) Strategic plan

1) cost savings from drop in platforms beginning with intro of new Cruze and drop of Zeta for better utilization of Alpha

2) , non-one time charges, and less recalls

3) Robust growth from GM Financial

4) Uptick in sales of premium vehicles from Buick, GMC, and Cadillac

5) Continued progress of profitability in Europe by 2016

6) progressive and aggressive point to 10% margin per unit sold by '16 (5-6 Quarters away) in NA and 9-10% in China

7)self funding Chinese operation by '16

 

GM break-even point is a SAAR of 10.5 Million. The projected SAAR for 2014 is 14.-15 million

 

Public doesn't care about recalls. Thanks to various media outlets over playing it I truly believe that they inadvertently numbed people to the issues. Heck.. look at the Toyota ones. Toyota's rep is hardly tarnished to the sheepish public.

 

I don't have to even mention that GM is putting out more award winning vehicles than anyone in the market these days. The various attributes they have are winning more buyers than anything else. In the past haters would have used the "Incentives" card. Its a hand that can't be played anymore as GM incentives versus ATPS are, monthly, the best or second best on the market. All of that with the fact that some did everything possible to try and make negative the new trucks when they debuted. Ignoring the big incentives placed on the F150 and Ram.

 

Another great example of what I said above was the constant beating of the dead horse on Cadillac being down this year by a whopping (sarcasm) 4% after being up in 2013 a whopping 22%, and being the Fastest-Growing Full-Line Luxury Brand.

 

[Drew Dowdell]

It's a good direction for GM, but imagine if they'd stop being so conservative with their model line-ups.

 

Chevy has one attainable coupe.... ONE.  They have no wagons, two economy hatch backs. Their mid-size is back of the pack... the advertising slogan should be "Hey, at least it's not an Avenger!"

Buick has no coupes, No wagons, No hatchbacks, no convertibles... in spite of all of those being available in other markets on the platforms Buick uses.

GMC has no off-road vehicle like the Wrangler or heck, even the Grand Cherokee.  Jeep is about to school GMC on why the Granite should have been put into production.

The Equinox and Terrain re-dos are now officially late even though they are selling okay. Sit in one and "Suddenly it's 2011"

Cadillac is on the right track just going too slowly.

[smk4565]

GM builds sedans, (mostly 4 cylinder) crossovers, and pick up trucks.  No crazy talk about hatchbacks, coupes, wagons, or off roaders.

[Cmicasa the Great]

It's a good direction for GM, but imagine if they'd stop being so conservative with their model line-ups.

 

Chevy has one attainable coupe.... ONE.  They have no wagons, two economy hatch backs. Their mid-size is back of the pack... the advertising slogan should be "Hey, at least it's not an Avenger!"

Buick has no coupes, No wagons, No hatchbacks, no convertibles... in spite of all of those being available in other markets on the platforms Buick uses.

GMC has no off-road vehicle like the Wrangler or heck, even the Grand Cherokee.  Jeep is about to school GMC on why the Granite should have been put into production.

The Equinox and Terrain re-dos are now officially late even though they are selling okay. Sit in one and "Suddenly it's 2011"

Cadillac is on the right track just going too slowly.

 

 

I have to point out that the Chevy division is a full-line mainstream entity. Like other full-line mainstream entities, coupes have all but been eradicated . Honda has the Accord coupe.. Toyota the Tc and FRS, both which are utter dogs on the market and sell at about 1/3 combined of what the Camaro does monthly. Ford and Dodge are identical in this regard as Chevy.

 

No one really has wagons in the U.S. mainstream, but the rest I will agree with in regards to Buick's line-up.

 

The GMC example is spot on, but the Granite comment remains to be seen. I'm not completely sold on the Renegade, and it is still possible that it, like the Dart, will fail to connect with the buying public.

[ocnblu]

As far as the Renegade, anything with a seven slot grille is hot these days, and Renegade will be the only miniature crossover out with any adherence to the SUV mystique.  It's got the look, it's got the famous name.

[Drew Dowdell]

 

It's a good direction for GM, but imagine if they'd stop being so conservative with their model line-ups.

 

Chevy has one attainable coupe.... ONE.  They have no wagons, two economy hatch backs. Their mid-size is back of the pack... the advertising slogan should be "Hey, at least it's not an Avenger!"

Buick has no coupes, No wagons, No hatchbacks, no convertibles... in spite of all of those being available in other markets on the platforms Buick uses.

GMC has no off-road vehicle like the Wrangler or heck, even the Grand Cherokee.  Jeep is about to school GMC on why the Granite should have been put into production.

The Equinox and Terrain re-dos are now officially late even though they are selling okay. Sit in one and "Suddenly it's 2011"

Cadillac is on the right track just going too slowly.

 

 

I have to point out that the Chevy division is a full-line mainstream entity. Like other full-line mainstream entities, coupes have all but been eradicated . Honda has the Accord coupe.. Toyota the Tc and FRS, both which are utter dogs on the market and sell at about 1/3 combined of what the Camaro does monthly. Ford and Dodge are identical in this regard as Chevy.

 

No one really has wagons in the U.S. mainstream, but the rest I will agree with in regards to Buick's line-up.

 

The GMC example is spot on, but the Granite comment remains to be seen. I'm not completely sold on the Renegade, and it is still possible that it, like the Dart, will fail to connect with the buying public.

 

 

Subaru has wagons... lots of 'em...  and they're kicking ass.

Mazda has a great hatchback... it's basically turned them around from totally sinking.

 

The manufacturers like to use the excuse that "Americans won't buy wagons or hatchbacks" as a reason to not sell them here.  Europe does buy a lot of wagons, but you can't tell me that Opel is selling a huge amount of Astra Wagons there.

 

Both Western Europe and the US are around 13 million vehicles SAAR each year give or take a million.  Why take the time to design and build multiple body styles of a model (lets say the Astra/Cascada for example) and then sell all 4 body-styles in one market and only 1 body style in the other market... while throwing up their hands exasperated that Americans don't buy sedans/hatchbacks/convertibles???   We don't because we can't!  I'd be in an Regal Sports Tourer AWD in a Frankfurt minute if I could buy one here.

 

The Impreza WRX had a 50% take rate on the hatchback, yet Subaru canceled the WRX hatch.  The mind boggles!

 

Toyota sold 24k of the ugly as sin Venza this year... it's essentially a Camry wagon.

Honda has moved 12k YTD of the even worse looking Accord Crosstour

The Jetta Sport Wagon is now out of production, but they still have sold 15k of them YTD

Ford has even managed 18k of the overpriced Flex.

 

All of them piss poor attempts at selling wagons, but close to 70k new mainstream brand, mid-size wagons have found homes this year even before we get to Subaru or Audi or any of the hatchbacks available.

[A Horse With No Name]

Jetta wagon will be coming back as golf in the spring.