Ranger hauls Ford out of a dip in North America

POPULARITY of the Australian-developed Ford Ranger in North America has singlehandedly offset a sales volume decline caused by the Blue Oval’s decision to discontinue sedans in that market.

 

This nugget of Aussie pride comes courtesy of Ford Motor Company’s quarterly financial results, in which it is reported that the Ranger achieved a substantial 14.2 per cent segment share in North America and helped Ford achieve its best combined second-quarter pick-up sales since 2004.

 

Ford’s earnings before interest and taxes (EBIT) and EBIT margin remained more or less flat for the quarter year-on-year, but net income nosedived from $US1.07 billion ($A1.55b) to $US148 million ($A214m).

 

The company attributed the almost 86 per cent decline in net income to “$1.2 billion of charges for special items” related to its “ongoing global redesign and restructuring activities, primarily in Europe and South America”.

 

Ford also wrote down its investment in cloud-based software company Pivotal by $181 million, without which it says its EBIT would have been $US1.8b rather than the flat $1.7b it reported.

 

Despite this burn, Ford said it has increased investments in mobility services, connectivity and autonomy 46 per cent, including taking a stake in autonomous vehicle platform company Argo AI as part of its joint venture with Volkswagen.

 

Losses from Ford’s mobility division increased 45.6 per cent year-on-year, to $US264m.

 

Much of Ford’s EBIT result was driven by $US1.4b from its automotive division, a 19 per cent year-on-year increase on the back of improved sales of higher-spec, higher-priced pick-up trucks and SUV in North America.

 

Finance division Ford Credit contributed another $US831m, up 29 per cent year-on-year, helped by better-than-expected auction prices for off-lease vehicles and “healthy consumer credit conditions”.

 

Overall EBIT for Ford’s North American division was $US1.67b, where Ranger volume effectively replaced that of now-discontinued sedans including the Focus, Fusion and Taurus.

 

Sales of the Expedition, EcoSport and Edge SUVs were up 14 per cent year-on-year, while a new model change for the Explorer and its Police Interceptor variant contributed to an overall 7.0 per cent decrease in wholesales, along with the current-generation Escape that will be replaced later this year.

 

Ford has stated that big vehicles with big profit margins – such as the Lincoln Aviator luxury SUV – are pivotal to its financial turnaround plans. To this end, it says F-Series pick-ups enjoy the “lowest incentive spending and highest transaction pricing among primary competitors”.

 

The long-struggling Ford of Europe division – where four manufacturing plants will close and 12,000 jobs will be cut – recorded a $US53m EBIT, up $US126m and the region’s first quarterly profit uptick for two years.

 

Commercial vehicles are Ford’s strong suit in Europe and a 2.7 per cent increase in Transit sales set a new Q2 record.

 

Losses continued in China with the $US155 EBIT loss a significant improvement over the $US328m recorded a year ago.

 

Ford puts this down to higher sales volumes, a richer model mix and higher pricing, along with lower structural costs. Revenues were up 48 per cent, in part due to higher sales of Lincoln luxury models.

 

Overall Ford sales in China were up 13 per cent year-on-year and dealer inventories were at the lowest levels in 18 months. The Territory is Ford’s best-selling SUV in China so far this year.

 

Ford lost $US205m in South America and another $US45m in the Middle East and Africa region, while Asia-Pacific posted a $US30m profit.