Ford Anticipates Profits Reduction By The Year’s 3rd And 4th Quarter

By Author: Marty Bay
Total Articles: 423
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Ford is undoubtedly one of the US car makers that were considered as the highest earners for this year’s first quarter. As a matter of fact, record shows that the first three months of the year has been the company’s most profitable quarter since last year with an estimated total profit of about $2.6 billion. This was probably the effect of Ford’s continuous offering of auto loans with competitive rates, intensifying the production of reliable vehicles, and by providing more vehicle options to almost every new car finder interested on the models that they offer.

However, Ford anticipates that it is quite impossible for the company to maintain this profit margin through the upcoming quarters especially on the third and the fourth. Also according to them, they expect that this profit margin would probably start dipping as the second quarter of this year continues. With this observation, they are expecting that the reduction would continue until the year ends.

One of the reasons that Ford analysts ...
... have identified for the expected decline of their profits is the rising prices of raw materials and components used in producing the vehicles included in their new car prices list. This observation might probably be true since almost all car makers are also complaining about the continuous increase in their production costs.

Despite this, Ford is still willing to raise the needed capital for the improvements of its sales. The company is actually committed to raise the needed funds to push its plan of increasing their annual investments from $3.9 billion in 2010 to $6 billion by 2015.

The second reason that most analysts would use to explain Ford’s possible profit decline in the remaining quarters of the year is the emphasis that the company is placing towards increasing their car sales instead of focusing on trucks that are considered to be highly profitable. Due to this, Ford is actually losing about $5,000 of profit by selling a unit of car instead of a truck.

Given the causes of the profit decline, Ford needs to develop the best ways on how to deal with these in order to ensure that they are getting the most out of what they are selling.