Ford’s decision to opt-out of government TARP financing has multiple benefits

Do June Ford Sales Signal a Rebound? 

 July 2nd, 2009 @ 8:34 am

There has been abundant confirmation that Ford’s decision to opt-out of government TARP financing—a move made possible by CEO Alan Mulally’s prescient borrowing of $23 billion against its assets in 2006—has multiple benefits. People seem to be retaining their confidence in Ford cars and trucks, and it’s starting to show up in sales figures—which are still down, but not as dire as they might be. For one thing, Ford’s “financial viability” (meaning, not in bankruptcy court) ensured that it would receive $5.9 billion in federal advanced technology funding through 2011 to make its existing models, from the Taurus to the Focus, 25 percent more fuel efficient. General Motors and Chrysler may get funded, too, but only Ford received this boon in the first round (along with Nissan and Tesla). In June, Ford sales were down 10.7 percent compared to June 2008, but GM dropped 33 percent in the same period, and Chrysler 42 percent. Ford also outsold Toyota for the third month in a row. Strong Fusion and Flex sales were cited as one reason for an uptick. Ford could get into positive territory as its new products come on line. Crucial for the automaker is the 2010 Taurus, which has been dramatically made over and is moving somewhat upmarket. Business Week calls the Taurus (starting at $26,000, the same as the model it replaces) “styled and packaged just right.” The new car bristles with features, including adaptive cruise, collision warning, blind spot information system, rain-sensing wipers, capless refueling, and a new generation of its SYNC audio system. Here’s a first video drive of the new Taurus: The new Euro-rooted Fiesta and Focus are moving forward, and the Fiesta is being pre-marketed with a smart youth-oriented campaign that includes 100 Twitter-friendly bloggers using the cars for six months. The Focus, in a partnership with Magna International, will be the basis of a new electric battery car in 2011, and Ford is also working on a plug-in hybrid for 2012. The new, leaner Ford has also jettisoned Jaguar and Land Rover (to India’s Tata, generating $2.3 billion), gotten out of the supercar business by selling Aston Martin, reduced its share in Mazda, and is no doubt working overtime to sever its relationship with Volvo. The Fusion Hybrid is a very credible entry in the field. And the company is also trying to reinvigorate the stagnant Lincoln and Mercury brands with a new Fusion-based luxury sedan and SUVs grouped around “MK” branding. Executive Chairman Bill Ford said that “Alan was the right choice [to be CEO], and it gets more right every day.” Of course, Ford is hardly out of the woods. Sales are, after all, still down. But it hasn’t made any significantly wrong moves in its attempt to recover from the auto industry’s worst slump since the Depression.

One response to “Ford’s decision to opt-out of government TARP financing has multiple benefits

  1. Car and Driver’s recent review of the new Taurus was tepid at best, but they approach every vehicle as though it ought to behave like a 3-series BMW. They did say they thought the car had a world-class fit and finish.

    It is ironic, however, that the starting platform for this new car is mostly Volvo, the company Ford is trying mightily to unload right now.

Leave a Reply

Please log in using one of these methods to post your comment: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s