Big Trucks to Bring in Profits for Ford (NYSE:F)

The third quarter profits and net income of Ford Motor Company (NYSE:F) have fallen quite remarkably. On Thursday, the company announced their net income has come down to $957 million from $2.2 billion in the same period last year, which means it has fallen by an amazing 56 percent. In the July-September period last year, earnings were 55 cents for each share. But this year, it is just 24 cents.

The automaker even had to close down four of its plants temporarily in North America.

There are two reasons for these poor results – declining sales for the pickups and SUVs in North America that have been a cash cow for the business in recent times, and the launch of their new trucks for which Ford have had to invest a lot of money. Ford Motor even issued a warning saying that retail demand was cooling off.

Sales in North America have dropped by 11 percent, while revenue in this quarter has come down by 8 percent. The recent recall of many of their vehicles also played a role. The business has surely felt the effects of all this, as is evident in the results.

Ford Is Still Banking On Its Truck Sales

In spite of the poor results, partly because of the truck launch, the business is still banking on the sales of their trucks. The business seems confident that the 2017 story will be different, as the demand for their trucks will pick up.

Mark Fields, the CEO, while speaking to the press said, “When you look at the overall market, the car industry…is still relatively strong, but we are seeing some weakness in the retail end of the market”. However, Mark feels that with the production adjustments they are making, and demand picking up, the same F-150 vehicles will allow the business to turn things around.

Ford’s Market Share Is Up, In Spite Of Stiff Competition

Mark points out that Ford’s (NYSE:F) market share in the segment has actually gone up over last year even though their competitors have been very aggressive in marketing. On top of that, Ford Motor is also paying the least incentives in monetary terms.

The sales of F-Series have gone up by 5.5 percent over last year. The company disclosed that they were able to sell 595,656 trucks this year, so far. The figures for October are going to be released next week.