Ford May See Record Third-Quarter Earnings

Ford Motor (F) is set to report record earnings for the three months ending September when the automaker releases its third-quarter profits before U.S. stock markets open Tuesday.

Riding high on improved demand for its vehicles, analysts expect Ford to post a record third-quarter profit of $1.37 billion compared to $997 million in the year-ago period, according to analyst estimates compiled by Bloomberg News. The automaker's current third-quarter earnings record is $1.13 billion, set in 1997.

On a per-share basis, Ford is expected to report earnings of 37 cents, according to a consensus estimate of 13 analysts polled by Zacks.com. In the third quarter last year, the automaker earned 26 cents a share.

Under the leadership of Alan Mulally, Ford has piloted a so-far successful turnaround of the 107-year-old company. Last year marked Ford's first full-year profit since 2005, and the Dearborn, Mich.-based company is on target for a profitable 2010.

A Focus on the Ford Brand

Having shed the last of its luxury European makes -- Volvo -- in August, Mulally is fulfilling a pledge to focus the company's energy and resources on the Ford brand. To that end, the venerable Mercury nameplate will be phased out by year's end to reduce duplicate products.

Ford reportedly is also looking to reduce its share in Japanese automaker Mazda Motor. Ford has a held a stake in Mazda since 1979, and currently owns about 11% of the company. Selling its Mazda stake, valued at $585 million, would free up resources that Ford could invest in growing overseas markets such as China and India.

In addition to a strong product lineup that has kept foot traffic steady at the company's dealerships, Ford has also benefited from the numerous safety recalls that have hamstrung Toyota Motor (TM), and the goodwill engendered by Ford for being the only U.S. carmaker not to succumb to government-sponsored bankruptcy last year, unlike rivals General Motors and Chrysler Group.

A Range of Vehicles for Cautious Customers

Ford has managed to boost sales amid one of the slowest sales years since 1982. In addition to the recently introduced Fiesta subcompact, which has proven popular among younger buyers, Ford sales have accelerated on strong demand for Fusion and Taurus family sedans and F-Series pickup trucks.

Ford and other automakers have also been helped by a rise in fleet sales to commercial customers, such as car-rental agencies and large corporations, says Rebecca Lindland, director of automotive research for the Americas at IHS Global Insight.

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On the retail side, the lackluster economy has caused many consumers to think twice before taking on substantial additional debt, Lindland says. Still, moderate oil prices and advances in fuel economy have helped Ford and other makers sell a wider variety of vehicles to otherwise cautious customers.

Car buyers are looking at a broad category of larger vehicles, including SUVs, crossovers and more traditional trucks that can pull double duty as both a daily commuter and a weekend getaway vehicle. "Consumers are saying, 'If this one car can get me to and from work in any kind of weather, and can hold four or five people and some stuff [and] get pretty decent gas mileage ... it's a pretty good deal,'" Lindland says.

Upscale Add-Ons Boost Base Prices

Beyond moving more metal, Ford is also selling cars and trucks with more upscale features that customers want. Popular options such as leather seats have helped Ford to fetch $3,000 to $4,000 more than the $14,000 base price for the Fiesta, Ford's sales analyst George Pipas told Bloomberg. That's allowed Ford to command higher transaction prices than similar models from Toyota and Honda Motor (HMC).

Ford's strength in successfully introducing new vehicles to the marketplace is also driving sales and burnishing its images as a maker of quality cars and trucks. And there's likely more to come. Next up are an all-new Ford Explorer midsized SUV coming early next year, followed by a new 2012 Focus compact.

Beyond its bottom line, Ford shares have also benefited in recent days. Having reached a 52-week high of $14.57 a share in April, the stock sunk to below $10 a share in June. On Friday, however, shares traded just shy of $14 a share and were headed higher in midday trading Monday.