posted by mark
on Tue, 07/10/2018 - 16:01
The 25% tariff that China is putting on American cars shipped to China is putting real pressure on Ford. Ford roughly shipped 80,000 vehicles there last year. Add the steel and aluminum tariffs that the US has put in place and it looks like Ford is in a heap of trouble.
Here is what I think.
- First, Ford is cutting out many of its sedans. Mary Barra at GM has already said they would take Ford’s "leftovers". There will be no going back when Ford needs to diversity in their product line.
- Second, 80k is a lot of their vehicles being produced. Now, where are they going to unload them? Too high a supply for a given amount of demand and prices go down.
- Third, the cost of steel and aluminum is going up as a result of tariffs. This will hurt many manufactures in the US. Don't forget that Ford's F150 has a high component of aluminum.
- Finally, premium priced trucks are selling well in the current environment. What happens when the economy turns south? Are people still going to shell out $42,000 for a new vehicle? Soon, buyers are going to have to take out 30 year mortgages on their vehicles! While I am just joking, the terms of an auto loan are getting longer and longer to move the product.
With the supply being extra high and costs increasing quickly, the future doesn't look good.
There will likely be rough roads ahead! Fasten your seatbelts. Even with your seatbelt on, you can get roughed up. Make sure you have it on!
