Ford’s latest results suggest a long road to fitness, says GlobalData

Following the announcement that Ford’s third quarter (Q3) results showed a drop in profitability amid China slowdown;

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

“Ford is not alone in experiencing slow growth in the automotive industry, and its bottom line is being dragged down further than expected this year. It has even warned that headwinds will be stronger in the fourth quarter (Q4) as it hits higher warranty costs, higher than planned incentives in North America, and still lower volumes in China.

“China is a major worry for Ford. Sales there were down by 30% in Q3 and it will take time to get operations there profitable again. Ford is also incurring restructuring costs around the world as it looks to resize and get ‘fitter’.

“Ford CEO Jim Hackett is putting in place a strategy to get the company into a position to address the considerable long-term challenges facing the industry. For example, its partnership with Volkswagen is designed to yield cost savings and benefits for the company in advanced electrification and autonomous drive technologies, while the joint venture (JV) with Mahindra in India reinforces the firm’s commitment to profitable growth in the high-potential India market and is expected to unlock the low-cost product development capabilities key to emerging-market growth. In addition, Ford has formed a new business unit to better focus activities in emerging markets.

“Jim Hackett appears to be making the right strategic moves, but they will take time to bear fruit.”

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