Ford Suffers Badly as Management Misjudges Sales

Cars and Drivers

Published: October 18, 2016 8:55 am

Last Updated: January 13, 2020 2:16 am

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Ford Motor Co. (NYSE: F) trades very near its 52-week low, although management believes it has started to work its magic by extending to a service business and electric cars. The problem is that Wall Street does not believe Ford’s executives run the company well. Another proof of that is it misjudgment in how many cars and trucks it makes compared to demand.

According to Bloomberg:

Ford Motor Co. is temporarily halting one of two plants that builds the top-selling F-150 pickup as it idles four factories this month amid slowing U.S. auto sales.

This week, Ford is shutting its Louisville, Kentucky, factory building the Escape and Lincoln MKC sport utility vehicles, as well as two plants in Mexico that make the Fusion sedan and Fiesta subcompact, according to an e-mailed statement. Next week, the second-largest U.S. automaker said, it will close the F-150 factory near Kansas City for seven days. And starting Oct. 31, the Louisville plant will be idled for another week, Ford said.

Put another way, Ford’s optimism about its business was misplaced.

CEO Mark Fields took over as the head of Ford on July 1, 2014. Since then, Ford’s shares are down 30%. GM’s are down 16% over the same period, and the S&P 500 is up 8%.

Ford has problems in each of the two huge markets outside the United States. Its sales in the European Union are a small fraction of the manufacturing leaders. In China, it trails market share leaders GM and Volkswagen.

Ford may believe it has a bright future, but no one can tell if its new initiatives will work. For the time being, the company is mired in mediocrity.

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