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post #1 of 2 (permalink) Old 04-14-2010, 10:18 AM Thread Starter
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Ford: Warranty Costs Down 40%

Ford ‘Encouraged’ by Demand, First-Quarter Revenue

April 13 Ford Motor Co. is “encouraged” by April U.S. sales running ahead of a year earlier and experienced a boost in revenue in the first quarter, the automaker’s Americas chief said.

“Revenues were up” as well as this month’s deliveries, Americas President Mark Fields said today in Detroit without elaborating. Ford also said quality gains helped slash warranty repair rates by more than 40 percent over the past three years.

Paring that expense “will be yet another tailwind for first-quarter earnings,” said Brian Johnson, a Barclays Capital analyst in Chicago who has an “equal weight” rating on the shares. “We’re expecting a strong first quarter from Ford. Production was up and cost cutting continued.”

Field’s comments added to evidence of a rebound in the U.S. auto market after sales slumped to a 27-year low in 2009. Industry deliveries rose 24 percent in March, according to researcher Autodata Corp., and marked a fifth consecutive monthly advance.

“We’re starting to see the economic metrics start to go in the right direction,” Fields said at an auto-industry breakfast sponsored by the Dawda, Mann, Mulcahy & Sadler law firm. “I’m cautiously optimistic on consumer confidence.”

Ford’s U.S. deliveries totaled 133,979 in April 2009, according to Woodcliff Lake, New Jersey-based Autodata. Ford may report first-quarter revenue of $28 billion, based on the average of 7 analysts’ estimates compiled by Bloomberg, compared with $24.8 billion a year earlier.

Analysts’ Estimates

Net income for the quarter probably will be $978.8 million, the average of 5 estimates. Ford posted a net loss of $1.43 billion for 2009’s first three months. The company hasn’t said when it will announce results. April sales figures are scheduled for release on May 3.

Ford rose 2 cents to $12.79 at 4 p.m. in New York Stock Exchange composite trading. The shares have gained 28 percent this year. Ford was the only major U.S. automaker to avoid bankruptcy last year.

The quality improvements gave Ford vehicles the fewest defects of any “full-line” automaker, the company said. Ford’s definition excludes specialty manufacturers such as Porsche SE.

Resale values on 5-year-old Ford, Lincoln and Mercury models rose 23 percent from 2009, outpacing the 19 percent increase for the industry, Ford said, citing auction data from the National Automobile Dealers Association trade group.

Market Share

In the new-vehicle market, Ford finished the quarter with 17.4 percent of domestic sales, according to Autodata. The increase of 2.7 percentage points was Ford’s largest quarterly gain since the last three months of 1977, Fields said.

“That’s back when ‘Saturday Night Fever’ and ‘Close Encounters of the Third Kind’ were in movie theaters,” Fields said. “It’s been a long time.”

Ford’s challenge will be to retain customers as Toyota Motor Corp. ramps up discounts to recover from recalling more than 8 million vehicles linked to unintended acceleration, said Johnson, the Barclays analyst.

“Ford clearly has been gaining retail share,” Johnson said. “The question is, with Toyota being more aggressive with incentives, how much of those share gains can they hold on to?”

Fields said Ford will remain competitive in offering incentives, while still spending less than last year.

“We don’t go to the point where incentives really start damaging the brand and really start hurting” resale values for customers, Fields said.

LINK: Ford ?Encouraged? by Demand, First-Quarter Revenue (Update1) - Bloomberg.com

Rick

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post #2 of 2 (permalink) Old 04-30-2010, 03:16 AM
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Its sad to know that the warranty has gone down to40%.Due to this many car buyers wont go for Ford cars.The company should think about it.

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