There are many reasons to doubt the turnaround plans of Ford Motor Co. (NYSE: F) CEO Jim Hackett. Ford U.S. sales have stagnated. Sales in China, the world’s largest car markets, have cratered. Hackett’s vision to make Ford into an electric and autonomous car global leader are unimpressive and undistinguished from programs of any of the world’s other global car manufacturers. Moody’s downgraded Ford’s debt to “junk” status for these reasons and some other convincing ones.
The Moody’s action was to downgrade Ford’s debt from Ba1 from Baa3. It called Hackett’s restructuring plan lengthy and costly. Moody’s also said the plan will need to be executed at a point when the results of the worldwide industry are softening.
Behind the rating is the fact that Hackett has stumbled. His restructuring plan involves $11 billion in investments in the next generation of electric and self-driving cars. This means Ford will need to launch 40 electrified vehicles by 2022. Hackett will cut $14 billion in costs over approximately the same period. He made this announcement in January 2018. There has been barely any movement since then that would hint the plans are well underway. Hackett has announced the layoffs of several thousand workers.
Hackett does not expect to go it alone. He has announced a series of loose joint ventures with Volkswagen, the world’s largest car company. The alliance is meant to be a cooperation on commercial vehicles and, more ambitiously, electric and autonomous cars. Ford, for example, will use the VW electric car platform in Europe. The deal was long on public relations and light on detail. It also failed to mention that the two companies are brutal competitors, which means the cooperation will only go so far. Ford also must compete for this technology with every other carmaker in the world and a number of smaller tech startups, some of which are well funded, like Google’s Waymo.
Among Ford’s other problems is that its current lineup of cars and light trucks is aged. If electric vehicle and autonomous vehicle adoption is not as rapid as Ford believes, it will be stuck without a new series of vehicles to compete in the traditional car business. Under those circumstances, Ford will be in a vice it cannot escape. Ironically, the car industry is based very heavily on consumer perceptions. Ford does well compared to other major brands in the industry.
One sure sign of skepticism about Ford’s prospects is its stock price is down 18% in the past two years. Over the same period, GM’s shares are up 3% and the S&P 500 is 19% higher.
There are no major outside indications Ford is on the right track. Moody’s new report only makes that more obvious.
24/7 Wall St.100 Million Americans Are Missing This Crucial Retirement Tool
The thought of burdening your family with a financial disaster is most Americans’ nightmare. However, recent studies show that over 100 million Americans still don’t have proper life insurance in the event they pass away.
Life insurance can bring peace of mind – ensuring your loved ones are safeguarded against unforeseen expenses and debts. With premiums often lower than expected and a variety of plans tailored to different life stages and health conditions, securing a policy is more accessible than ever.
A quick, no-obligation quote can provide valuable insight into what’s available and what might best suit your family’s needs. Life insurance is a simple step you can take today to help secure peace of mind for your loved ones tomorrow.
Click here to learn how to get a quote in just a few minutes.
Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.
Latest from 24/7
Our expert who first called NVIDIA in 2009 is predicting 2025 will see a historic AI breakthrough.
You can follow him investing $500,000 of his own money on our top AI stocks for free.