Ford's Investment Rating Downgraded

[Lawguy85]

ITT: an industry professional using actual cites v. baseless conjecture with both being treated as valid opinions. 2018 in a nutshell

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[Hack]

Then prove otherwise. Luxury cars have been calculated and criticized over 17%. So even if 10-15% is off, the numbers aren’t off by a massive factor.
https://www.autoblog.com/2017/03/21/porsche-17250-profit-per-car/

What are we on, the Infowars of car forums? Clearly all the automotive companies in the world are manipulating numbers to hide their profits, cause 15% isn’t already massive enough.

You are the one putting the numbers out there that don't make any sense. Look up any random steel place that sells to the public and you can easily see how much it costs for a few thousand pounds of steel. And don't try to tell me that Ford would pay anywhere near what some random company would sell to the public for.

I'm more used to a 2x or 3x expected profit margin over the actual cost to produce a product. It's hard for me to imagine companies being financially successful with such a small amount of profit. The only way I could imagine it is they are calculating COGS by including a bunch of overhead that really has nothing to do with the cost to produce a car.

The numbers you posted seem more like a "fake news" political statement that sounds good to car buyers rather than an honest reckoning of the cost to build a car. A manufacturing company has to make a lot of profit on their products in order to pay overhead - engineering, product development, marketing, management, sales, buildings, etc. etc.

 

[sdiver68]

How far ahead do you think suppliers guarantee pricing? The whole auto industry is against this. Do you honestly think hurting one large industry to boost a smaller industry is smart?

I think it's smart to not consider this a 2-factor discussion. I think it's smart to question biased sources. I personally hope it works out for you, both industries, national defense, and the goals of free and fair trade.

 

[bootlegger]

You are the one putting the numbers out there that don't make any sense. Look up any random steel place that sells to the public and you can easily see how much it costs for a few thousand pounds of steel. And don't try to tell me that Ford would pay anywhere near what some random company would sell to the public for.

I'm more used to a 2x or 3x expected profit margin over the actual cost to produce a product. It's hard for me to imagine companies being financially successful with such a small amount of profit. The only way I could imagine it is they are calculating COGS by including a bunch of overhead that really has nothing to do with the cost to produce a car.

The numbers you posted seem more like a "fake news" political statement that sounds good to car buyers rather than an honest reckoning of the cost to build a car. A manufacturing company has to make a lot of profit on their products in order to pay overhead - engineering, product development, marketing, management, sales, buildings, etc. etc.

When you make claims like a couple hundred dollars of steel and aluminum go into manufacturing, then you are making up numbers. Your 2x-3x profit margin doesn't exist anywhere in the auto industry, and you can't back this up with evidence. If a manufacturer makes 17% profit, it is amazing. This is backed by multiple sources.
I can tell you that we, as a supplier to the big 3, make only a few percent profit per part. The money is made in volume sales. If you look at Toyota, they sell 2.5million cars in the US every year. If they make only $2k profit per car, that's $5billion in profit per year. There is no overhead in profit percentage. The overhead is part of operational costs.

As a side note, Toyota reported an amazing $22billion profit and 10.4 million car sales globally for 2017. That is just over $2100 profit per car. So, if your conspiracy theory about 2x profit margin was correct, you are basically saying Toyota is hiding billions of dollars of profit. And for what reason? Profitability encourages investment. If anything, exaggerating profits is more beneficial.

 

[Silver Bullitt]

I always find this funny in a somewhat depressing sort of way. The fakest news that's circulating out there are the tweets coming directly from the man himself. Sad!™

4.2% GDP = real news. Hmm, I bet you won't hear much about that on MSLSD or the Communist News Network. That's what's sad!

 

[bootlegger]

I think it's smart to not consider this a 2-factor discussion. I think it's smart to question biased sources. I personally hope it works out for you, both industries, national defense, and the goals of free and fair trade.

I always question sources, but I trust the word of the whole auto industry. I also trust in my own company, and what we hear internally about increased costs. Tariffs do nothing to help us, yet they do harm us. The steel industry wasn't tanking, so I don't see the reason to hit auto in favor of steel. I am a free market guy. I want zero tariffs in all key countries. Global business thrives through trade partnerships, while it is harmed by taxation. I may be a centrist, but my corporate stance is more libertarian.

 

[Hack]

When you make claims like a couple hundred dollars of steel and aluminum go into manufacturing, then you are making up numbers. Your 2x-3x profit margin doesn't exist anywhere in the auto industry, and you can't back this up with evidence. If a manufacturer makes 17% profit, it is amazing. This is backed by multiple sources.
I can tell you that we, as a supplier to the big 3, make only a few percent profit per part. The money is made in volume sales. If you look at Toyota, they sell 2.5million cars in the US every year. If they make only $2k profit per car, that's $5billion in profit per year. There is no overhead in profit percentage. The overhead is part of operational costs.

As a side note, Toyota reported an amazing $22billion profit and 10.4 million car sales globally for 2017. That is just over $2100 profit per car. So, if your conspiracy theory about 2x profit margin was correct, you are basically saying Toyota is hiding billions of dollars of profit. And for what reason? Profitability encourages investment. If anything, exaggerating profits is more beneficial.

So - here's my objection to your statements about raw material cost, assembly cost and profit margins, etc. Consider the EB versus the GT350. Which has more raw material in it? Does one have 50% more raw material? The same situation applies to many different options of every type of vehicle on the road.

I would assume you understand the difference between profit on a car versus profit as a company. You are just skipping it for purposes of making your point, right? A company has lots and lots of activities that are separate from actually making a car. The cost to build a car versus the money that comes back from the sale of that single car is a completely different thing than overall profitability of a company. Hiding profits.. pah.

 

[bootlegger]

So - here's my objection to your statements about raw material cost, assembly cost and profit margins, etc. Consider the EB versus the GT350. Which has more raw material in it? Does one have 50% more raw material? The same situation applies to many different options of every type of vehicle on the road.

I would assume you understand the difference between profit on a car versus profit as a company. You are just skipping it for purposes of making your point, right? A company has lots and lots of activities that are separate from actually making a car. The cost to build a car versus the money that comes back from the sale of that single car is a completely different thing than overall profitability of a company. Hiding profits.. pah.

Sure, Toyota profits don’t come all from car sales. But if you consider other pieces of the business in the profit picture, that only reduces the average profit per car. So my number of $2100 per car profit is too generous. Most of Toyota profits are from car and truck sales, so this is just nitpicking.

The percentage manufacturing cost is an average of 47% for material. I didn’t say every single car has the same percentage. The GT350 has low sales numbers and high costs for assembly. Other cars have high sales, thus low costs for assembly. These cars likely have more than 47% of manufacturing cost into materials.

Once again, there is absolutely no proof of the claims you have made here. Car manufacturers aren’t making 2x profit. Please do some research, before making things up about my industry.

 

[bootlegger]

Just for reference, this is a good estimate. Though it changes depending on company.

 

[thehunterooo]

4.2% GDP = real news. Hmm, I bet you won't hear much about that on MSLSD or the Communist News Network. That's what's sad!

TRUMP 2020

 

[Hack]

Sure, Toyota profits don’t come all from car sales. But if you consider other pieces of the business in the profit picture, that only reduces the average profit per car. So my number of $2100 per car profit is too generous. Most of Toyota profits are from car and truck sales, so this is just nitpicking.

The percentage manufacturing cost is an average of 47% for material. I didn’t say every single car has the same percentage. The GT350 has low sales numbers and high costs for assembly. Other cars have high sales, thus low costs for assembly. These cars likely have more than 47% of manufacturing cost into materials.

Once again, there is absolutely no proof of the claims you have made here. Car manufacturers aren’t making 2x profit. Please do some research, before making things up about my industry.

I feel you're just deliberately being obtuse now. I've explained it too many times and you still pretend you don't understand.

We were talking about the cost of steel and you've switched over to "material". Finished items like tires and gear boxes that Ford counts as "material" should not enter at all into the discussion of the cost of steel in a car. How far will you stretch to try to sound like an expert versus admitting the truth?

 

[bootlegger]

I feel you're just deliberately being obtuse now. I've explained it too many times and you still pretend you don't understand.

We were talking about the cost of steel and you've switched over to "material". Finished items like tires and gear boxes that Ford counts as "material" should not enter at all into the discussion of the cost of steel in a car. How far will you stretch to try to sound like an expert versus admitting the truth?

I was never talking about steel alone. I specifically mentioned steel and aluminum, and steel makes up just under half of the total material portion of the average car manufacturing cost. If you actually read my previous posts, you would see where I am talking about more than just raw steel in manufacturing. You deliberately skipped past my point that tariffs don’t just hurt due to steel prices. Export tariffs, component import tariffs, etc all add up. As shown in articles posted here earlier, and in this article, cost increase estimates are averaging up to $300-400 per car. That is significant and hurts the industry. https://www.google.com/amp/s/www.ws...iffs-could-raise-car-prices-by-300-1520867757

I notice you skip right past the fact that you made up a big lie about automotive manufacturers selling the car for 2X manufacturing cost. Just admit that you aren’t using facts and move along.

 

[Jetnoise]

I believe this is correct but Trump just threatened China by Monday. That's why the market slipped just before the bell.

Guess again......

 

[Lawguy85]

4.2% GDP = real news. Hmm, I bet you won't hear much about that on MSLSD or the Communist News Network. That's what's sad!

Obummer/Obunga/[insert pejorative de'jour] topped that 4 times, he also holds the record for highest quarter-over-quarter GDP growth, your point, or are we just throwing out random numbers for craps and giggles?

...on topic, Ford may have a plan for the future, but their lack of transparency is clearly hurting them on the street. Chevrolet is selling EVs today, FCA has strong, growing global sales, Ford has the F150 with strong US demand, downward trending Mustang sales and not much else. Simple cost cutting is a temporary fix, not not a growth indicator.

TRUMP 2020

MANGA

 

[Silver Bullitt]

Obummer/Obunga/[insert pejorative de'jour] topped that 4 times, he also holds the record for highest quarter-over-quarter GDP growth, your point, or are we just throwing out random numbers for craps and giggles?

You might want to check your source for your "facts" there Sparky. More fake news!

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