Analysts Thoughts On Ford’s Future? It’s Junk (Bond Status)

Ford is working on a number of high-profile vehicles including a new Bronco, a Mustang-inspired electric crossover and a redesigned version of the most popular pickup truck in America.

While that would normally be good news, investors see a much bleaker future. In particular, the Moody’s Investors Service now has a negative outlook for the company and has downgraded Ford’s credit rating to speculative or “junk” status.

As Business Insider reported, Moody’s expects the automaker to post “weak earnings and poor cash generation” for the foreseeable future. This comes at a bad time for Ford as they’re embarking on a major restructuring which is expected to cost around $11 (£8.9 / €9.9) billion.

Also Read: Ford Cutting 10% Of Global White-Collar Workforce – Around 7,000 People Impacted

In a note, Moody’s said “Ford is undertaking this restructuring from a weak position as measures of cash flow and profit margins are below our expectations, and below the performance of investment-grade rated auto peers.” The service went on to say they don’t believe things will changes in the next couple of years as they expect a “lengthy period of negative cash flow from the restructuring programs.”

If the restructuring issues weren’t bad enough, Moody’s noted that demand for new vehicles is softening and the automotive industry is experiencing an “unprecedented pace of change relating to vehicle electrification, autonomous driving, ride sharing and increasingly burdensome emission regulations.” This will significantly increase costs for automakers as they will need to develop electrified vehicles, autonomous driving technology and more fuel-efficient engines.

Those are significant challenges, but Ford has been tackling them head on. Besides developing electric vehicles in-house, the automaker has partnered with both Rivian and Volkswagen. On the autonomous front, Ford is Argo AI’s biggest cheerleader and recently got Volkswagen to invest $2.6 (£2.1 / €2.3) billion into the firm.

 

  • Thetruthísntalwayspopular

    Ford just isn’t a desirable brand. They just kind of exist. They have the F150 and that’s really all most people want from Ford. They do have ONE asset though and that is the Mustang. Branching Mustang off into a sub brand is a good direction to make. Just like GM is doing with Corvette.

    • jimie orleg

      Ford escape, 12th best selling vehicle in country (and hasn’t been really re-designed in 6 years), selling at same rate as honda accord.

      • Thetruthísntalwayspopular

        Incorrect. Last month the Escape was 17th and sold 22k. The Accord was 10nth best selling 30.5k in a segment that is decreasing.
        The Escape was comfortably out sold by the Equinox 32k, The Rogue 42k, The Rav 4 49k and the CRV at 44k.

        But really, your comments were irrelevant to my original point. Ford is not an aspirational brand and is in trouble. It excels in full size Trucks and The Mustang. In every other segment it is outsold. If they didn’t have the F150 – they would be f k e d .

        Also last month Lincoln sold a pathetic 8500 units.

        • ThatGuy

          True Thetruthísntalwayspopular, plus the Escape/Kuga, certain Fiesta models, Ranger and Figo catching fire, the SportSh!T tans issues did not help their brand. When those issues popped up they did not do recalls or sort customers out, all those issues compounded their problems world wide. thus the other manu’s snapped up disgruntled customers.

          Im not the greatest Ford fan for a very long time, but i like their car design and certain interiors, not the best but nice. But their reliability, and lack of customer service put me off them from 2007.

          I guess im hard on them cause i do like them, but not enough to be saddled with regret afterwards. I know of so many colleagues who had issues with various models, not that other car brands dont have issues as well, just trusting my wife and kids in an Escape that is a ticking fire bomb was never tea time.

    • charlotteharry57

      Mustang is irrelevant compared to the F-150. Should the economy and pickup truck sales tank, so will Ford. And it’ll have no sedans to fall back on. THAT and overestimating demand for electrics are why WS analysts are pitching fits.

      • Thetruthísntalwayspopular

        Of course it’s irrelevant compared to the F150, but you’re missing the point. It has large potential to be a desirable sub brand. They are already making a Mustang SUV which is the right course of action. Ford have NO premium brands and there are none for sale. This is where the market is going.

    • TED Schmitt

      So all most people is the F-150, but they have ONE asset in the Mustang? Huh?

      • Thetruthísntalwayspopular

        One other potential asset yes. It’s not that hard to understand.

  • LJ

    Anyone else miss Mulally?

    • bd0007

      Mulally was a big part of the problem – Ford and Lincoln’s reliability tanked and so many bad launches.

      In addition, Mulally was slow to move on autonomous drive systems, electrication, etc. – the stuff that investors get excited about (GM has done a better job of that and that’s saying something).

      • TED Schmitt

        You’re actually referring to Mark Fields.

    • charlotteharry57

      No, but I can’t stand Hackett either. The big problem is that Bill Jr. likes to “run” things, with blinders on.

  • Big Black Duck

    I knew this would happen…their only go to vehicles are the F150 and Mustang in NA…The GT is a Halo vehicle which most people cannot afford. Excluding those 3, copying the Korean designs and styling just makes them a “ME TOO” brand…Chevrolet has a much better line up than Ford…but they should make headway once their Electric Truck comes through,,,,but they really need a design and styling plan

  • Six_Tymes

    On the positive side of things, I think the Volkswagen collaboration will turn into good for both companies (long term). I don’t see a down side to that.

  • dumblikeyou2

    They better get that $350million Michigan Central Station renovation done pronto.

  • charlotteharry57

    Won’t have much impact.

  • Thetruthísntalwayspopular

    You obviously cared because you replied with a link that doesn’t work. Sort of like most Fords.

  • Pissed Canuck

    Short term pain for long term gain.

  • MarketAndChurch

    That looks incredible, great work!

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