Chicken Tax to be repealed?

By Mike Ramsey

Ford Motor F-0.54% Co.’s stock is getting run over today, as investors worry that the auto maker’s profit growth will plateau this year in part because of what CFO Bob Shanks referred to as “adverse product mix.”

That phrase is a car business euphemism for a condition in which an auto maker sells more low-profit cars and small sport utility wagons, and fewer of its larger, more expensive models. When a Detroit company like Ford complains about “adverse mix,” what it means is the company expects big pickup trucks to account for a smaller share of total sales.

It’s true that Ford has built its turnaround — and the impressive 10% margins its North American auto business achieved in 2012 — by boosting the profitability and desirability of its smaller vehicles. The new Fusion midsize sedan, the Ford Focus compact and the Ford Escape compact SUV are all big improvements over their predecessors.

But selling more of these vehicles — and hybrids like the Ford C-Max — can hurt overall profit margins, Mr. Shanks warned during a conference call this morning.

“We are going to have a lot more Fusions, Escapes and C-Maxes,” he said. “Obviously the margin we see on these vehicles isn’t as high as it is on the F-series.”

Auto analysts have pegged the variable margin on each Ford F-series truck at between $8,000 and $10,000. Compare that to $2,500 in pretax profit in North America per vehicle sold and it is easy to see that the trucks contribute an outsized share of Ford’s overall profitability.

Mr. Shanks has said that following Ford’s efforts to use common platforms around the world for its cars and small SUVs and major cost-cutting actions, small vehicles make money today. They used to be mostly money-losers in North America. That swing is important. But Ford’s global profit potential depends on the F-series trucks to a considerable degree — one thing about the company that hasn’t changed after a decade of restructuring and product strategy reinvention.

For the coming year or so, the Ford Truck franchise is going to be under pressure, as the current F-150 runs out its last 12-18 months of life while General Motors Co. launches a redesigned Chevrolet Silverado, Chrysler Group promotes its redesigned Ram pickups and Toyota Motor Corp. tries to get back in the game later in the year with a revamped Tundra truck.

Mr. Shanks likened Ford to a department store. Some items for sale make only a tiny profit. Other items have wide margins. Wall Street might wish that all Ford did was sell F-series trucks. But customers want to see an entire collection when they come to the Ford store.


FOMOCO is the F series...

The F series is FOMOCO...

 

LOL.

You realize that article is over a year old. Brand new Tundra and GM, eh. That happened almost two years ago. Ford is doing fine today . At least Ford evolves. Ever wonder what will happen to Toyota if the Japanese government is forced to end the heavy subsidies and favoritism to it's large oligopolies?

 

This defines the US market, for every automaker btw:

If we are quoting articles from a few years ago:

Guess you better go buy shares in Honda based on your few years old economic information

 

You also better hope none of the big three go bankrupt or Toyota will face a price change as well that could hurt them:

Toyota profits by having the US automakers profit.

 

Then there is this from the same time frame you quoted most of your articles:

http://www.thedetroitbureau.com/2013/05/is-toyota-facing-financial-trouble/

I find all of these articles more speculative then truly informative.

At the end of the day Ford and Toyota will exist for a long time. I can see Crysler dying off, and GM entering a decline if they don't have another shake up, but Ford is here to stay.

 

I sure hope FOMOCO stays in business, they put a LOT of butter on our bread around here!!!


Sure the articles over a year old (I pulled it)... (2008 - 2009 are critical years in the auto industry.)

Isn't this thread about a 50 year old protective tariff (Chicken Tax)???

Your the one that fell over the edge laughing about the (off the cuff) F- Series profitability comment, side tracking this entire thread... (Google the subject and Ford's overall EBIT w/ F-Series.)

Bottom line, The Chicken Tax is NOT going away...

NO foreign truck manufacturer is ever gonna ruin this party dude... (Build your plant in the NAFTA trade zone and join the party.)

 

what is the chicken tax?

 

That Ranger T6 is one sexy beast. I'd love to see that thing over here.

 

Look at post #2 of this thread.

 

So basically if the Chicken Tax dies, the only extra truck of substance we might see in North America is the VW Amarok...

 

Maybe it will make the Ranger more cost effective for Ford and some people think that Toyota will bring the Hilux to North America. Toyota won't bring a third model to North America, the Ranger is a possibility.

 

Maybe Toyota could bring their real truck over if this goes away...the 70 series 'cruisers.



LC79 is all I want.