Ford: Getting Better All the Time
Ford Motor (NYS: F) is one company that is always up to something intriguing. Over the past few weeks, Ford has been grabbing headlines. Here's a lowdown on what the hot automaker has been up to lately.
Tie-ups seem to be an integral part of Ford's strategy. In the last month alone, it announced three such moves, with fuel efficiency being the core theme of two.
First is Ford's initiative that will offer its electric vehicle customers a rooftop solar system, enabling the vehicles to charge through solar energy and save on electricity. For this, Ford partnered with SunPower (NAS: SPWRA) , a solar panels maker. In an environment where eco-friendly concepts have been gaining ground, Ford's move looks sensible, as it will help Ford boost its Focus Electric sales. The company has also announced plans of tripling its electric vehicle production by 2013. Electrifying aims!
It's not just the solar-powered rooftops that have caught Ford's eye. Furthering its environmentally friendly moves, it has teamed up with none other than Toyota (NYS: TM) to codevelop a gasoline-electric hybrid system for their light trucks and SUVs.
Hybrids fit in well with the U.S. government's new fuel-economy guidelines, something that most auto-makers have been pairing with newer and more advanced technologies. General Motors (NYS: GM) , for instance, has tied up with the LG Group to develop electric vehicles, and is planning an electric car based on the same hybrid technology that runs its Chevy Volt.
Another interesting step Ford has taken is joining hands with the country's leading car sharing service provider Zipcar (NAS: ZIP) and reaching out to students across 250 campuses for car sharing. I am sure Ford must have imagined the number of students who could turn out to be future Ford owners once they get acquainted with its fuel-efficient cars during campus sharing.
The emerging markets trend
Ford's growth plans are not confined to product development or tie-ups alone. Geographic expansions also play a key role. As I mentioned in an earlier article, Ford is focusing more intently on an area where it has been lagging behind peers -- the Asia Pacific region.
In line with its targets, Ford is investing $1 billion on new plants in India, a fast-growing market. Earlier in the year, it had announced $72 million of investment by 2012 in its already operating facility in an Indian metropolitan city. Ford is also aiming at exporting its cars from India to 50 countries, up from the current 32 countries.
China has also been on the Michigan-based company's list. The company currently has four new plants under development in the region, aiming to gain a greater foothold there. It is also building the next-generation SUV in China.
Ford's expansion plans appear justified if we look at the sales these emerging economies have been generating for the company. Since January this year, Ford's unit sales in China have gone up by 11% from the same period last year, and those in India have grown at a much higher rate of 40%.
Ford seems to be picking up steam, as its sales have gone up in each of the last three months. If we take the latest figures of August, Ford managed to notch up higher sales as compared to most of its peers. Compare Ford's 11% rise in August sales with Toyota's 13% decrease and Honda Motors' (NYS: HMC) 24.3% fall, and you'll know what I mean. Only General Motors saw an 18% rise in sales.
While Ford's plans and sales look good, let's take a peek at a few other awesome figures.
A bit of numbers
Ford reported a net income of $2.4 billion in its second quarter. Though it was down around 8% from last year, it beat Street estimates. This is its eighth straight quarterly profit after continuous losses during the Great Recession -- an impressive turnaround.
Ford is also continuously working to reduce its debt load. The company looks well on its way to achieving its planned debt reduction to around $10 billion by mid-decade, thus taking it to less than half of the 2009 level of $33.6 billion. In its second quarter, Ford paid off $2.6 billion of debt, and its gross automotive cash came in at $22 billion, which is $8 billion higher than the current debt levels. Impressive, isn't it?
And when we speak of Ford, we should not forget that it was the only company among the Big Three that managed to avoid a bankruptcy filing. GM and Chrysler were infamously bailed out by the U.S. government.
The Foolish bottom line
Ford's optimistic mid-decade outlook looks good. Now, the string of tie-ups and expansions are adding the right touches to that enthusiasm. With things looking good on all fronts, I wouldn't mind keeping an eye on this stock for a longer term.
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At the time this article was published Fool contributor Neha Chamaria does not own shares of any of the companies mentioned in this article. The Motley Fool owns shares of Zipcar and Ford Motor.Motley Fool newsletter serviceshave recommended buying shares of General Motors, Ford Motor, and Zipcar. Try any of our Foolish newsletter servicesfree for 30 days. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.
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