6 Reasons Ford Just Had its Best First Quarter Ever
Things are good in Dearborn right now. This week, Ford posted a $3.8 billion pretax profit for first-quarter 2016, making it the most profitable quarter in the company’s 113-year history, and raking in nearly one-third of last year’s $10.8 billion profits. Its European divisions have earned more money in Q1 than they did in all of 2015.
Speaking to reporters at the company’s headquarters, CFO Bob Shanks told reporters: “Essentially everything has improved,” adding “We’re reconfirming all of our guidance to be as good as if not better than the record year that we had in 2015.”
Last year was a strange one for the brand; the company doubled its profits, yet saw its stock plummet after individual shareholders felt that earnings weren’t as good as they could have been. In the months since, the company has pivoted to become more tech-focused while still selling as many vehicles as it can crank out. At this early stage, it all appears to be working.
So how did it come to be that the number two player in Big Three is now Detroit’s brightest star? Here are some reasons, big and small.
1. The F-150
If you’re looking for they key to the Blue Oval’s success and brevity is your thing, here it is in five characters: F-150. Ford sold over 186,000 F-Series trucks between January and March, and is on track to smash 2015’s 780,000 sales mark. Last year, the then-new F-150 was unproven with its aluminum-intensive construction. Now that it’s proven itself in the truck-hungry real world, there’s nowhere to go but up — provided gas stays cheap.
2. SUV sales
Speaking of cheap gas, Americans have been buying big SUVs like it’s 1999, and Ford has been more than happy to assist. While many of GM and FCA’s offerings are quickly becoming dated, Ford’s Edge and Explorer were both redesigned in 2015, as was Lincoln’s MKX. Since there’s no sign of this trend slowing down anytime soon, Ford has announced four new crossover and SUV models before 2020.
3. Competitive models
At a time when companies are purging everything from their lineups that couldn’t be sold as a crossover and SUV, virtually all of Ford’s car lineup is overall stylish, well-built, and highly competitive. The Ford GT is a great high-profile halo car, the current Mustang is the best driver’s car in the nameplate’s history, the Fiesta ST is a world-class performance car for the masses, and the tire-shredding Focus RS is a boy racer’s poster car for the 21st century. If you could care less about performance, the evergreen Fusion sedan is a smart and attractive midsize sedan, and the base Fiesta and Focus are comfortable and competitive hatchbacks. With a number of refreshed models coming for 2017, including a refocused Lincoln brand (a new MKZ, Continental, and Navigator are on the way), we don’t see Ford losing much ground here in the near future.
4. A focus on technology
As analysts predict a future full of bland, autonomous pods replacing cars in the near future, investors are beginning to feel uneasy investing in automakers — an attitude reflected in Ford’s surprising stock drop last year. To combat this, Ford has begun to remake itself in the mold of a Silicon Valley company, investing billions in a decade-long transformation to turn its Dearborn headquarters into a tech campus, continuing to test autonomous vehicles (including the first successful test during a snowfall), and even launching Ford Smart Mobility, a subsidiary that aims to integrate mobile technology and cars.
5. Paying down pension obligations
If you don’t invest in Ford or work for it, you might not think twice about this, but with a 113-year history, Ford has some pretty steep pension obligations. A successful negotiation with the U.A.W. last year and a big sales year means the company has its financial house well in order.
6. Low gas prices
There may be signs that the global market is finally starting to cool, but as long as gas prices remain low, consumers are going to want crossovers, trucks, and SUVs. As as long as they want those, there’s a good chance they’ll end up in a Ford — after all, the F-150 is America’s best-selling vehicle for 35 years. We don’t expect that to change anytime soon.