PROUD HENRY KEEP ON ROLLIN'

FORD CONTINUES ITS ROLL Ford Motor Company continues its triumphant run today with the announcement that it has achieved a profit for the sixth continuous quarter. In an amazing turn of events, Ford's North American operations are now providing financial stability for the company's struggling European operations when just a few years ago, it was Ford of Europe that was keeping the U.S. side of the business afloat. Ford's profit success is all the more impressive given the state of the overall industry, which continues on its steady but very slow recovery. From our perspective, this latest Ford story highlights a simple truth in the automotive business: Appealing product can sell in any market on its own merit, without major incentives. In the case of many of Ford's latest products, they can sell at even higher transaction prices thanks to popular and profitable additional features, such as EcoBoost turbo-charged engines and SYNC. These higher transaction prices are allowing Ford to take deep swings at the heavy debt load it incurred during the lead-up to GM and Chrysler's bankruptcy proceedings in 2009. In addition, renegotiated union contracts have allowed Ford to right-size its production, better matching supply to demand. We have seen Ford take a firm hold on Kelley Blue Book's kbb.com as well, as the vehicles that sport the famous Blue Oval have shown a 28 percent year-over-year rise in shopper activity, while major competitor Toyota experienced a 14 percent drop during the same time frame in our most recent Market Watch report. Much of the company's success can be attributed to the fact that Ford's new products are consistently delivering solid and attractive value to an audience wary of overspending or appearing to be wasteful. However, Ford's domestic competition also has taken note, as GM already has begun its product renaissance and Chrysler is readying 11 new or improved vehicles to be released between now and the summer of 2011. In addition, the slow march toward the challenging industry 35-mpg CAFE standard in 2016 is on, and all car companies will need to sell a higher number of small and more efficient vehicles traditionally not known for strong profits. Ford recently has shown that it can improve and change with the times, and the company will need to continue that attitude moving forward in order to ensure continued success in the future. James Bell, Executive Market Analyst Kelley Blue Book’s kbb.com