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Inside autos: Vehicle demand lifts Ford shares

 

FREE PRESS STAFF AND NEWS SERVICES • AUGUST 2, 2009

Vehicle demand lifts Ford shares

 Shares of Ford Motor Co. soared Friday as investors expressed enthusiasm for increased vehicle demand under the cash-for-clunkers program, which Congress is rushing to expand. 

 

Dearborn-based Ford’s shares jumped 61 cents, or 8.3%, to close at $8. That’s a 52-week high for the stock. It has traded as low as $1.01 over the past year.

Ford shares have risen 10% this week, following the company’s surprise second-quarter profit and a sale of three-year unsecured notes by its financing arm, Ford Motor Credit.

“Despite being in the middle of a challenging environment, our underlying business is getting progressively stronger, as we launch new cars and trucks that customers want and value while continuing to aggressively restructure our operations,” said Ford spokesman Bill Collins.

Higher demand for new cars sparked by the government-backed trade-in program is boosting July auto sales, and investors believe Ford will gain a fair share of those sales as the company has recently refreshed many vehicles in its product line.

U.S. auto sales may jump in July

U.S. auto sales may reach a 2009 high in July after the government’s $1-billion cash-for-clunkers incentives program lured shoppers back to showrooms.

Industrywide deliveries will run at a seasonally adjusted annual rate of 10.1 million cars and light trucks, based on seven analysts surveyed by Bloomberg. Sales will fall 24% at General Motors Co., 33% at Chrysler Group LLC and 6.1% at Ford Motor Co., according to six estimates.

A sales rate matching the analysts’ projections may signal a possible bottom to the worst slump in demand since at least 1976. Buyers drained most of the initial clunkers funding in less than a week, spurring the U.S. House to approve an emergency measure Friday to add $2 billion more.

“The incentives coupled with already high car company discounts have put a new automobile within reach of consumers that would have shopped for a used vehicle,” said Joe Barker, an analyst at consultant CSM Worldwide Inc. in Northville.

Automakers report July sales on Monday. The results will likely show the industry had its 21st consecutive month of declines. A 10.1 million annual rate would be 19% less than a year earlier.

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