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Is Ford Motor Company in financial trouble ?

Discussion in 'Auto Industry News' started by JCat, January 29, 2020.

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  1. JCat

    JCat Active Member

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  3. donalds

    donalds Elite Explorer

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    Interesting
     
  4. JCat

    JCat Active Member

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  5. 94Eddie

    94Eddie Elite Explorer

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    I think the constant price increases and push to shove ever more technology into cars and trucks is taking a toll on sales. This is making ownership of newer vehicles very expensive when warranties run out. Then there is the depreciation hit one takes on a new vehicle purchase and this is the main reason we haven't bought a new vehicle in decades. Ford has hurt themselves by going heavily to turbocharged engines, IMO, as this adds another very expensive repair item and complexity to a vehicle. Also, there have been some very bad design decisions from Ford. Turbo motors have been have been plagued with carbon buildup, waste gate failures and the internal water pump in the 3.5L engine will continue to hurt their reputation for years to come. I wanted to buy a 5th gen Explorer but after reading up on the Ecoboost and 3.5L engine issues I defaulted to a 2010 model. My wife drives a 2015 Edge with the 3.5L engine (did this before learning of the water pump issue) and we have a big decision to make about whether to keep it after the warranty runs out. If we sell it I can't see where we will buy another used Ford to replace it.

    Ford isn't the only auto maker with these problems. Chrysler, GM, Nissan, Mercedes, BMW etc. are not making reliable, cheap to repair vehicles these days. IMO, Toyota has stayed away from this (i.e. turbo engines, bad design etc.) to a great degree and they are seeing the benefits of this. The whole industry has gone toward a product model that is not sustainable because it is pushing people away from buying new and instead buying used. I look at the new Explorers and see price tags of $50k-$60k and wonder who is buying them. Then I read about all the problems they are having with them and it is no surprise to me that Ford might be in financial trouble. Lastly, Ford deciding to stop car production (except for the Mustang) seems like a terrible idea. This will drop their sales volume a huge amount and put them out of a market segment that is far from dead. This will only make companies like Toyota, Honda, Subaru etc. stronger competitors.

    Time will tell but I don't see how Ford, and other automakers, continuing what they have been doing for the past 10-15 years is a sustainable business model because it is raising the cost of ownership to unsustainable levels for the average person.
     
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  6. donalds

    donalds Elite Explorer

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    Seems like these auto makers are making cars for the younger crowd when the older crowd has to pay the price

    Remember when you could buy a car and know it would out last the warranty
    Now we worry will the warranty even cover factory mistake or missing part etc..
     
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  7. 94Eddie

    94Eddie Elite Explorer

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    My father always tried to drill into my head about the financial waste of buying a new car. It took me until I hit 30 years of age to see the wisdom of his words. I started a business then and had to put myself in a position to be able to sustain a low salary until the business ramped up. This was in 1993 and doing this showed me how buying new cars, going into debt etc. had nothing to do with my overall happiness. I haven't had a car payment since paying off my factory ordered 1989 Mustang LX 5.0L in 1992. Had I not started the business I would have just kept buying new cars/trucks and racking up interest payments. It would be interesting for me to calculate how much money this has saved me over the decades.

    It is easier for younger people to justify buying a new expensive vehicle. It is also easier to get them to buy into the marketing hype of why they need a $60k vehicle. That said, I look around at the young people I know and very, very few of them own a brand new vehicle. They have bought used ones and intend to drive them until the wheels come off. They are realizing the true cost of buying new and especially buying new often. This is, IMO, the main reason we are seeing auto sales fall even when the economy is booming. Many, many people are not seeing the value in buying new and this group is growing larger as each new expensive model is brought to market. The industry has pushed ownership of many cars to be a disposable item like a microwave or toaster. When they break, many times the cost of the repair is greater than the value of the vehicle. The auto industry should be giving use buyers what we need which is affordable, easy to repair vehicles. Not what we want in our dreams where money is no object.
     
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  8. JCat

    JCat Active Member

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  9. donalds

    donalds Elite Explorer

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    I was brought up the same
    My dad would add ....fix it up make it fun take care of it ...
     
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  10. Josh P

    Josh P Shaggin Wagon Elite Explorer

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    This isn't just an issue with ford not making money. Many major restaurant chains have either closed or filed bankruptcy, Almost anything retail has declined or disappeared. If the economy is truly as strong as we are told then trucking companies wouldn't be going out of business at a record pace.
     
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  11. 94Eddie

    94Eddie Elite Explorer

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    Markets change and many times companies don't change their business models to survive it. Walmart is a good example of a company that was proactive in regard to the onslaught of Amazon and many other online retailers. Nearly everyone buys a great deal of goods online these days. We are all forcing this change to occur and then many of us complain about the change we are causing. Nearly all of us have become addicted to the convenience of online shopping and this is having a massive impact on retail sales. Businesses adapt or cease to exist and this is the way it should be for long term economic health and to ensure robust competition which is good for the consumer. Economies fail when they are forced to remain stagnant and are not allowed to change in regard to technological advancement and/or consumer demand.

    The auto industry had to make sweeping changes in the 1970s and 1980s (especially the Big Three) and I think another big change is coming soon. The current business model of increasing complexity and price year after year is failing. The industry is no longer meeting the expectations of the consumer which is why sales of new cars are declining. Consumers want cars that are not disposable which is where we are these days. It doesn't take long before the cost of a major repair exceeds the value of the vehicle. Especially considering the extreme rate of depreciation of new vehicles. A $50k vehicle bought today will likely be worth $10k-$20k before the loan is paid off. IMO, the pricing structure will have to reset to reduce depreciation rates, complexity will need to be lowered and serviceability for repairs will need to greatly improve. Until this happens many, many potential buyers will continue to buy used vehicles and avoid ones that are disposable. In the end the consumer will get what they want since they control the flow of money. The question is which auto makers will give consumers what they want and survive and which ones will not and cease to exist.
     
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  12. JCat

    JCat Active Member

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    Last edited: February 6, 2020

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