Ford Motor Company

Company Profile
Publication Date: 15 May 2009

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Ford Motor Company

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TABLE OF CONTENTS

TABLE OF CONTENTS
Company Overview..............................................................................................4 Key Facts...............................................................................................................4 SWOT Analysis.....................................................................................................5

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Ford Motor Company

Company Overview

COMPANY OVERVIEW
Ford Motor (Ford) is one of the largest automotive manufacturers in the world. It manufactures and distributes automobiles across six continents. The company's automotive vehicle brands include Ford, Lincoln, Mercury and Volvo. The company primarily operates in the US and Europe. It is headquartered in Dearborn, Michigan, and employed 213,000 people. The company recorded revenues of $146,277 million during the financial year ended December 2008 (FY2008), a decrease of 15.2% compared to 2007. The operating loss of the company was $4,130 million during FY2008 when compared to operating profit of $5,631 million in 2007. The net loss was $14,672 million in FY2008 when compared to net loss of $2,723 million in 2007.

KEY FACTS
Head Office Ford Motor Company One American Road Dearborn Michigan 48126 USA 1 313 322 3000

Phone Fax Web Address

http://www.ford.com

Revenue / turnover 146,277.0 (USD Mn) Financial Year End Employees New York Ticker December 213,000 F

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SWOT Analysis

SWOT ANALYSIS
Ford Motor (Ford) is one of the largest automotive manufacturers in the world. The company has strong engineering capability. The company's strong engineering capabilities allow it to broaden its product portfolio and remain in the forefront of the automotive industry. However, further recession in North America and Europe would harm Fords business by adversely affecting its revenues, results of operations, cash flows and financial condition. Strengths Strong engineering capability Extensive dealer network High employee productivity Achievements Opportunities Growth potential in China and India Increasing demand for hybrid electric vehicles Growing global truck market Weaknesses Poor financial performance Sluggish performance of Ford in geographic regions Poor cash flows Threats Forecasted recession in North America and Europe Weakening of global automotive industry Intense competition

Strengths

Strong engineering capability The company engages in engineering, research and development primarily to improve the performance (including fuel efficiency), safety, customer satisfaction, and to develop new products. The company operates over 50 engineering, research and development centers worldwide. Ford maintains extensive engineering, research and design centers in Dearborn, Michigan; Dunton, Gaydon and Whitley, England; Gothenburg, Sweden; and Aachen and Merkenich, Germany. The company's strategy of product innovation is amply supported by its strong emphasis on research and development. In FY2008, Ford launched the Blind Spot Mirror. The Blind Spot Mirror is a traditional side view mirror designed with a secondary convex spotter in the top outer corner, which provides a view of the driver's blind spot. When traffic enters the driver's blind spot on either side of the vehicle, it is visible in the secondary convex mirror, alerting the driver of potential danger. In the same year, Ford introduced accident-assistance feature, 911 Assist in its SYNC. The company partnered with National Emergency Number Association (NENA) to improve the delivery of critically important emergency services. In the event of an accident involving the activation of an air bag or the emergency fuel cutoff, 911 Assist helps vehicle occupants in placing a call directly to a local 911

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SWOT Analysis

emergency operator. Also in 2008, for the 2009 Escape and Mariner, Ford redesigned the front bumper spoiler and added rear tire spoilers for better airflow management. Aerodynamic refinements are the most cost-effective ways to reduce fuel consumption. The company's strong engineering capabilities allow it to broaden its product portfolio and remain in the forefront of the automotive industry. Extensive dealer network Ford has an extensive dealer network. It manufactures and distributes automobiles across six continents. Dealers are a source of strength in North America and around the world, especially in rural areas and small towns where they represent the face of Ford. The company is working with its respective brand dealers to provide targeted average-year sales for Ford dealers of more than 1,500 units and for Lincoln Mercury dealers of more than 600 units. Ford's core and affiliated automotive brands include Ford, Lincoln, Mercury and Volvo. Ford network is comprised of 11,827 dealers and has presence in 110 markets; Lincoln has 1,427 dealers in 30 markets; Mercury has 1,871 dealers in 20 markets; and Volvo has 2,341 dealers in 103 markets. An extensive network serving more than 100 countries enables Ford to meet the demand for its products in multiple regions in a cost efficient way. High employee productivity Ford has registered stronger revenue per employee, as compared to its competitors. In FY2008, the company recorded total revenues of $146,277 million and employed a total of 213,000 employees. The company's revenue per employee at $686,746.5 is higher than that of its competitors such as Fiat, Volkswagen and General Motors. The revenue per employee of Fiat stood at $440,479.2 in FY2008, significantly lower than Ford. Similarly, revenue per employee of Volkswagen stood at $452,656.5; and revenue per employee of General Motors stood at $613,082.3 during the same period. Relatively strong revenue per employee indicates the company's operational efficiency and stronger productivity. Achievements Ford received many awards from media, and independent evaluators in response to the products it introduced in 2008. The companys new 2009 Ford F-150 introduced in the fourth quarter of 2008 was named Motor Trend magazines Truck of the Year and was also awarded the title of North American Truck of the Year at the North American International Auto Show in January 2009. The F-150 was named as Top Safety Pick by the US Insurance Institute for Highway Safety (IIHS). In addition, Ford Galaxy and Ford S-MAX were named number one for reliability among multi-activity vehicles by DEKRA, the German vehicle testing agency. Also, FG Falcon XT was named best large car in the Australias Best Car Awards in 2008 and during the same period, Falcon G6E Turbo was named 2008 Carguide Car of The Year: Peoples Choice Award. These achievements indicate the cumulative affect of Fords new innovations and strength of its product portfolio.

Weaknesses

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SWOT Analysis

Poor financial performance Ford has witnessed declining revenues in FY2008 when compared to 2007. The company recorded revenues of $146,277 million in FY2008, a decrease of 15.2% compared to 2007. The decrease in revenues was due to lower volumes and lower revenues of Jaguar Land Rover. The operating loss of the company was $4,130 million during FY2008 when compared to operating profit of $5,631 million in 2007. The operating margin of the company decreased from 3.3% in 2007 to -2.8% in 2008. The net loss was $14,672 million in FY2008 when compared to net loss of $2,723 million in 2007. The net loss margin increased from 1.6% in 2007 to 10% in 2008. Poor financial performance of the company disables the company to seek more growth avenues in the future and may also dent the investors confidence. Sluggish performance of Ford in geographic regions Ford witnessed sluggish performance in its sales in all its geographic regions, including North America, Europe and all other regions. North America, which is the largest geographic market for the company, accounted for 48.5% of the total revenues in FY2008. Revenues from North America reached $70,990 million in FY2008, a decline of 23.7% compared to 2007. Europe, Fords second largest geographic market accounted to $56,717 million in FY2008, a decline of 5.5% compared to 2007. Similarly, all other regions declined 4% to reach $18,570 million in FY2008. Therefore, poor performance of Ford in all its geographic regions may eventually affect the companys financial performance. Poor cash flows In FY2008, Ford witnessed decline in its cash flows compared to 2007.The cash and cash equivalents decreased 37.5% to reach $22,049 million in FY2008 compared to $35,283 million in 2007. Poor cash position implies ineffective cost management and poor decision making by Fords management. A continuation of this trend could reduce availability of resources for the group to pursue growth plans.

Opportunities

Growth potential in China and India The Chinese and Indian new cars markets witnessed a strong growth in recent years and the trend is likely to continue in the future. The Chinese new cars market grew by 14.2% in 2008 to reach a value of $98 billion. Market consumption volumes increased by 17.8% to reach a total of 7.4 million units in 2008. The market's volume is expected to rise to 13 million units by the end of 2013. The Chinese new cars market is forecast to reach a value of $155.2 billion, an increase of 58.4% since 2008.

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SWOT Analysis

The Indian new cars market grew by 15.5% in 2008 to reach a value of $28 billion. Market consumption volumes increased by 11.3% to reach a total of 1.7 million units in 2008. The market's volume is expected to rise to 2.5 million units by the end of 2013. Furthermore, in 2013, the Indian new cars market is forecast to reach a value of $46.9 billion, an increase of 67.8% since 2008. Ford has a strong presence in manufacturing of cars.Therefore, the company is well positioned to capitalize on the growing Chinese and Indian new cars markets. Increasing demand for hybrid electric vehicles Worldwide demand for light hybrid electric vehicles (HEVs) is expected to increase. It is expected to increase to 800,000 units in 2009 and estimated to reach 4.5 million units in 2013. Rising energy costs and increased emissions regulations are likely to increase demand for HEVs. The US is expected to experience the highest level of demand for HEVs, estimated at two million units in 2013. Global problems that include the environmental challenges of global warming and the need to conserve resources and energy are the key drivers for the companys to develop HEVs. In order to meet the demand Ford is continuously focused on developing new high technology products for hybrid electric vehicles. The company is introducing EcoBoost engines, six-speed transmissions and other fuel saving technologies across a wide range of vehicles. In 2009, Ford plans to double its hybrid models and volumes in the US. In 2009, Ford plans to introduce upgraded gas and new hybrid versions of the Ford Fusion midsize sedan; a high-performance Taurus SHO with an EcoBoost engine; an upgraded Mercury Milan and new Milan Hybrid; an upgraded Lincoln MKZ; a Ford Flex and Lincoln MKS with a fuel-efficient EcoBoost engine; and an all-new Lincoln MKT premium crossover with EcoBoost. In 2010, Ford would deliver a commercial battery powered vehicle for fleet customers and in 2011 a battery-powered passenger vehicle. In 2012, Ford would deliver its third generation of hybrid vehicles, including a plug-in version. In addition, Ford is also working with Southern California Edison, the Electric Power Research Institute and six additional electric utility companies from New York, Atlanta, Detroit and Raleigh to develop plug-in hybrid vehicles and infrastructure. Therefore, a positive outlook for light hybrid electric vehicles market would boost demand for Fords products. Growing global truck market The global trucks market experienced fluctuating rates of growth for the 2004-08 period and steady growth is forecasted in the future. The global trucks market generated total revenues of $511.8 billion in 2008, representing a CAGR (2004-08) of 1%. The light commercial vehicles segment was the markets largest in 2008, generating total volumes of 9.8 million units, equivalent to 58.1% of the market's overall value. Market consumption volumes increased with a CAGR (2004-08) of 0.3% to reach a total of 16.9 million units in 2008. The market's volume is expected to rise to 21.5 million units by the end of 2013, representing a CAGR (2008-13) of 4.9%. The performance of the market is forecast to accelerate, with an anticipated CAGR (2008-13) of 7% and is expected to drive the market to a value of $719.2 billion by the end of 2013. Ford has a strong presence in the trucks industry. Therefore, growing truck market represents an opportunity for Ford to capitalize on this market and to expand its revenues and profits.

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SWOT Analysis

Threats

Forecasted recession in North America and Europe Ford has presence primarily in North America, Europe and all other regions. North America is the largest geographical market of the company. Ford generates 48.5% of its total revenues from the North America and 38.8% of total revenues from Europe. The profitability of the automotive business is tied to the performance of the economy in which the company operates. Healthy economic growth is therefore a precondition for the positive growth rate of the business. According to the world economy outlook of the IMF, the GDP growth rate of the US is forecasted to decline from 1.1% in 2008 to -1.6% in 2009, while that of Canadas GDP is forecasted to decline from 0.6%in 2008 to -1.2% in 2009. In addition, the GDP growth rate of Mexico is forecasted to decline from 1.8% in 2008 to -0.3% in 2009. The GDP of Euro area is forecasted to decline from 1% in 2008 to -2% in 2009. An economic downturn poses immense challenges for Ford.The financial turmoil and credit tightening has led to an extreme cautiousness among the companys customers when it comes to deciding on investments, which in turn may cause a decrease in demand for Fords products. The present market conditions also limit the accessibility to credits and loan financing, which may negatively affect customers, suppliers, dealers as well as the company. Suppliers financial instability could result in delivery disturbances. Therefore, further recession in North America and Europe would harm Fords business by adversely affecting its revenues, results of operations, cash flows and financial condition. Weakening of global automotive industry The weak world economy and the international financial market crisis had a significant impact on the automotive industry in 2008. Global unit sales of cars decreased by approximately 5%, the biggest drop in nearly 30 years. A sharp drop in demand in the volume markets of North America, Western Europe and Japan was partially offset by growth in the emerging markets. Although demand rose in some of the emerging markets despite weakening towards the end of the year, worldwide unit sales of commercial vehicles decreased slightly. Demand for commercial vehicles also declined in the NAFTA region, Western Europe and Japan. The US market for automobiles and light trucks slumped during 2008. The Western European automobile markets also suffered. The markets that were particularly hard hit were the volume markets of Spain (-28.1%), Italy (-13.4%) and the UK (-11.3%). Germany (-1.8%) and France (-0.7%) witnessed downward trend in the second half of 2008. In total, 8.4% fewer automobiles were sold in Western Europe. The Japanese car market also contracted, with a drop in sales of nearly 4% in 2008. A continuation of this trend in the future would slowdown the demand for the Fords products and may eventually affect its revenues. Intense competition

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SWOT Analysis

Ford faces intense competition across its market segments. The company competes on the basis of pricing, product and service quality, development and introduction time, customer service and financing terms. Ford faces strong competitors, some of which are larger and may have greater resources in a given business area and some from emerging markets, which may have a better cost structure. Ford faces downward price pressure and is also exposed to market downturns or slower growth. Some of its competitors are Daimler, General Motors, Honda Motor, Nissan Motor, Toyota Motor and Volkswagen. Intense competition could adversely affect the revenues and margins of the company.

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