Ford Motor CompanyF

Morningstar Rating

Stock Research and Analysis

by David Whiston, CPA, CFE

Ford Motor Company's products, marketing, and new union contract should position it to compete better than in the past. Still, it will take a long time for the company to regain market share in the United States, as consumers are still very loyal to Read more

Bulls Say

Ford recently had the fewest "things gone wrong" in the entire industry, according to an RDA Group study.

The revamped Focus and Taurus show Ford can make quality, fuel-efficient vehicles to compete with Toyota and Honda.

As a percentage of U.S. fleet sales, Ford is reducing its sales mix to rental car agencies, which is critical. Fewer Ford brands in rental fleets will increase the vehicles' resale values, which will in turn increase demand for Ford cars. Read more

Bears Say

The auto industry is very cyclical, and Detroit automakers have been losing U.S. market share to foreign automakers for years.

Profitability will continue to be hindered by unions, which traditionally have wanted their share of the pie. The nonunionized import automakers in the U.S. do not have this problem.

Stricter fuel economy regulations will make cars more expensive to build and distribute, and these costs would be passed on to consumers.

Ford has a major debt maturity in November 2013, and in the meantime, shareholders are likely to be diluted.

Although Ford's products are much improved, there are plenty of Americans who refuse to buy from a Detroit automaker because of prior quality problems. Read more

Strategy

In 2008, management said it will not meet its goal of returning to profitability by 2009; it now seeks profitability in 2011 and then an investment-grade credit rating. Management seeks revenue increases Read more

Management

Ford made a bold move in September 2006 by hiring Alan Mulally to be president and CEO. Although he's an outsider to the auto industry, having come from Boeing BA, we think Mulally has the leadership and manufacturing expertise to run Ford. Mulally Read more

Profile

Ford Motor Company manufactures automobiles under its Ford, Lincoln, Mercury, Volvo, and Mazda brands. The company has about 16% market share in the U.S. and about 10% share Read more

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