Ford Q3 earnings strong, but there are challenges ahead, says GlobalData

Following the news that Ford posted net income of $2.4bn for the third quarter, exceeding expectations;

David Leggett, Automotive Analyst at GlobalData, a leading data and analytics company, offers his view: 

“Like several other carmakers, Ford is getting a boost from higher demand – especially in the US – after the pandemic-induced low points earlier this year. High margin trucks are selling very well and there are signs of a turnaround, too, in China which has been a disaster area for Ford in recent years.

“In the third quarter, Ford posted volume up 25% in China, its largest year-on-year sales increase there since 2016.

“There is more work to do in China though and Ford faces big challenges elsewhere, too. The outlook for loss-making Europe is clouded by both the ongoing pandemic and difficult-to-quantify Brexit risks. The eighth generation Ford Fiesta – a key model – is also struggling in Europe’s marketplace. With its facelift delayed, it is losing out to the new Opel/Vauxhall Corsa.

“Nevertheless, investors will be cheered. After a protracted slump, the upward track of the Ford share price this year suggests investors are upbeat about prospects under new CEO Jim Farley. These financial results are a very good start for him, particularly in the current circumstances for the global auto industry.

“That said, maintaining momentum won’t be easy and dealing with the uncertainties and risks ahead in 2021 is a pretty big job for any auto industry CEO.

“The stakes are high for upcoming electrified Fords, including the delayed Escape plug-in hybrid and Mustang Mach-E. The new F-150 pickup faces a very competitive field. Investors will be looking for signs of solid execution in all areas of Ford’s business, as well as clear strategic direction from Jim Farley in 2021.”

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