Ford Now Making The Right U-Turn? Questions Remain
No, your eyes aren't deceiving you--Ford DID post a profit of $750 million.That's right, the automaker that was sucking fumes earlier this year is now back in the black. Which brings up the question: Is this real? The answer is yes, but don't take this to mean Ford is out of the woods.
It's real because the profit was driven by substantial cost cuts ($600 million) and improved pricing and a mix of autos. That pricing shows Ford's plan of stripping out low profit fleet sales while also limiting incentives to raise retail prices is a strategy that works. Throw in the benefit of currency from Ford's European operations and you see why Ford's 2Q revenue came in higher than expected.
But Ford is not out of the woods yet. CEO Alan Mulally needs to string together several profitable quarters and that may not happen until Ford's line-up and marketing improve. The Edge, Fusion, and redesigned Taurusare big improvements. Ford also benefits from having more car-based crossover utility vehicles in its line-up. Still, the auto market is fickle and Ford has to show that its improved retail pricing can hold up to the competition. Meanwhile, Ford still has to downsize and eliminate thousands of assembly line jobs--no easy feat.
But there's no denying Ford's turnaround is gaining traction.
Questions? Comments? BehindTheWheel@cnbc.com