Ford stock closed in the low $8 range today, probably near an all-time low. It’s $8, I’m not actually going to check. What I did check was that it’s yield is 7.28%… Insane if they keep the dividend. Things have gotten so bad, I wouldn’t be surprised if the CEO’s job was on the line. They recently replaced the COO, so hopefully they can turn things around quickly. They don’t have a lot of time.
Ford has made some very questionable decisions and some poorly executed launches. A few years ago they decided to drop all cars except the Mustang, which meant all sedans such as the Focus and Fusion were going away. This would allow them to refocus R&D to what people currently want, SUVs and crossovers. Given the market, this seems like a smart idea since the Focus and Fusion just can’t compete with the Camry, Accord, or Sonata and Ford would have to dump a lot of money to make that happen. People just don’t want sedans anymore so why bother… is probably what they were thinking. However, at the time and still today, they don’t exactly have a compelling lineup to replace the lost sales. Most notably, their two newest, the Escape and the Explorer are brand new. They’re just kind of mediocre. They are their top selling crossovers though.
What really went wrong were their launches. In 2019, Ford seemingly rushed the Escape, Explorer, and the Lincoln Aviator to market and they failed. Quality issues, production issues, design issues… all of them. The Escape cannot compete with a CRV or RAV4 in quality or reliability so why didn’t Ford try to compete in style? The Escape is one of the most invisible crossovers I’ve ever seen. The Explorer feels like a price level below the Hyundai Palisade and Kia Telluride. Maybe it’s the Koreans who are aiming too high. Sit in the Ford then the Hyundai/Kia and you’ll know what I mean. Price to quality ratio is severely skewed in the Koreans favor. The Explorer and Aviator were also rushed to production and held up by massive production and quality issues which killed any hype it had when it was new. pretty much everything else in Ford’s lineup feels a generation behind.
But it’s not all bad, the new COO could help turn things around and Ford has some new products in the pipeline that could really boost profits if not sales.
The Mach-E, whether you love it or hate it should do really well… if Ford can get it right. To compete with Tesla, they need to hit their promised range estimates of at least 300 miles per charge. They need a quality interior with technology that is somewhat on par with Tesla. The pictures and videos seem to be promising on that front. They also need to have a reliable launch with no production issues. Ford says end of 2020. They better deliver.
Ford’s money printing machine is also due for a new generation. Currently the oldest of the Detroit 3, the F-150 is actually a solid 2nd place in my opinion. They are way behind the Ram in terms of technology and interior quality. Go test drive a Longhorn or Limited Ram with the air suspension to see what I mean. If Ford has been paying attention, they should be able to address a lot of these issues. They have no reason not to. Just look at 2019 sales, Ram is surging. They need to nail it, the competition is tight between these two. The Silverado is garbage, don’t bother.
Finally, if 2019 was the year of the Supra and Corvette, 2020 is for the reincarnation of the Bronco. It is the most talked about vehicle and should prove to be very popular. Ford seems to be making the right decision to have a smaller “baby Bronco” as well. People want to sit tall and look like they’re ready to go off-roading. If they nail this, they should sell as many as they can make.
If they can get these 3 things right, Ford stock should rally. Unless the stock market crashes, coronavirus affects production, we get into a recession, or car sales continue to stagnate… I guess we’ll see.