Autoblog

Ford admits consumer shift toward small cars will eat into profits

Jeremy Korzeniewski — Fri, 16 Nov 2012 14:32:00 EST

Filed under: Europe, Ford, Earnings/Financials, South America

Big, expensive cars and trucks equal big profits. Small, inexpensive cars equal small profits.

The mathematics in today's marketplace simply can't be argued, and the result, as buyers increasingly switch from trucks, truck-based 'utes and big family cars into smaller sedans and hatchbacks, is less earning potential for full-line automakers. Like Ford, for instance. Citing the rising trend of smaller cars and crossovers, Ford Chief Operating Officer Mark Fields warned that fourth-quarter earnings will be down compared to last year.

Smaller profits in the US market are one thing; an even bigger problem is the almost complete lack of profit margin in South America and huge multi-billion-dollar losses in Europe, where economies are in crisis and automakers are laying off workers and closing plants. In other words, we're thinking Ford's eight to ten-percent margins in the States aren't looking so bad...

Ford admits consumer shift toward small cars will eat into profits originally appeared on Autoblog on Fri, 16 Nov 2012 14:32:00 EST. Please see our terms for use of feeds.

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BMW reports record profit margin, but Audi's is better

Jeff Sabatini — Thu, 08 Mar 2012 15:30:00 EST

Filed under: Audi, BMW, Earnings/Financials

It reported a record profit margin, but BMW still wasn't as profitable as its rival Audi. According to a report in Automotive News, BMW booked an 11.8-percent profit margin, up from eight percent last year. Audi, however, managed 12.1 percent.

Both figures were calculated using the earnings before interest and tax method (EBIT).

Audi and BMW have had a blossoming rivalry since Audi began directly targeting BMW, both in the development of its products and in its advertising. The two ultra-competitive German luxury brands most famously clashed in a series of billboard ads in Southern California.

Analysts had forecast an 11.9-percent profit margin for BMW, according to AN. Despite this "mild disappointment," as one analyst called it, BMW still led Audi and Mercedes-Benz as the top-selling luxury brand in 2011.

The company expects to set another annual sales record this year, besting the 1.67 million units it moved in 2011, thanks largely to it's new-for-2012 F30 3-Series.

BMW reports record profit margin, but Audi's is better originally appeared on Autoblog on Thu, 08 Mar 2012 15:30:00 EST. Please see our terms for use of feeds.

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REPORT: Marchionne thinks Chrysler could go public in 30 months

Chris Shunk — Thu, 23 Jul 2009 10:58:00 EST

Filed under: Chrysler, Fiat

Analysts have been wondering when Chrysler would go public, and new CEO Sergio Marchionne has an answer: not soon. Some have speculated that Chrysler shares would be available on the stock exchange by the end of 2010, but Automotive News is reporting that Marchionne is giving a timetable of "not sooner than 2½ years." Marchionne obviously wants to hold off on going public until he and Chrysler's board of directors feel the company will command the appropriate value.

Reporters also asked Marchionne in a conference call when he felt Chrysler would be profitable. The Fiat/Chrysler CEO pointed out that he didn't feel such speculation was a good idea considering the fact that Chrysler has yet to have a post-bankruptcy board meeting. Good point. Chrysler's board of directors will be meeting on July 29.

Marchionne did, however, say that Chrysler would "generate healthy profit margins" once US auto sales hit 13-14 million units per year; something he doesn't expect to happen before 2011.

[Source: Automotive News - Sub. Req. | Photo Source: Tiziana Fabi/Getty/AFP]

REPORT: Marchionne thinks Chrysler could go public in 30 months originally appeared on Autoblog on Thu, 23 Jul 2009 10:58:00 EST. Please see our terms for use of feeds.

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GM's Plan: Small cars making a big profit

Jonathon Ramsey — Mon, 21 Jul 2008 10:28:00 EST

Filed under: Budget, GM, Earnings/Financials

GM currently owns about 13% of the small car market. With demand for small vehicles increasing with the price of black gold, GM is out to increase that market share. Nevertheless, even if it doesn't increase its share, it plans to make more money off of each small car sold. How? By raising the price, naturally.

The plan is simple: make better small cars, charge more for them. The upcoming Cruze could run you a few thousand more than the outgoing Cobalt, for instance. The test is to see whether cars like the Cruze will be worth the premium. GM Global Design Chief Ed Welburn said, "In North America, we never did a good small car." The General plans to bury that piece of its history... but it's going to charge you, the consumer, for the funeral.

The idea that GM can lasso the small car market while charging a premium, at the same time as slashes its marketing budget by $1.5 billion, takes some effort to swallow. One analyst said that demand for small cars will outstrip supply, so GM could get away with it. However, until we see proof of small GM cars that take bats to the established competition, we'll have to give this plan a "Hmmm."

[Source: Automotive News, subs. req'd]

GM's Plan: Small cars making a big profit originally appeared on Autoblog on Mon, 21 Jul 2008 10:28:00 EST. Please see our terms for use of feeds.

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