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Rising aluminum costs cut into Ford's profit

When Ford reports fourth-quarter results on Wednesday afternoon, it is expected to fret that rising metals costs have cut into profits, even as rivals say they have the problem under control. Aluminum prices have risen 20 percent in the last year and nearly 11 percent since Dec. 11. Steel prices have risen just over 9 percent in the last year. Ford uses more aluminum in its vehicles than its rivals. Aluminum is lighter but far more expensive than steel, closing at $2,229 per tonne on Tuesday. U.S. steel futures closed at $677 per ton (0.91 metric tonnes). Republican U.S. President Donald Trump's administration is weighing whether to impose tariffs on imported steel and aluminum, which could push prices even higher. Ford gave a disappointing earnings estimate for 2017 and 2018 last week, saying the higher costs for steel, aluminum and other metals, as well as currency volatility, could cost the company $1.6 billion in 2018. Ford shares took a dive after the announcement. Ford Chief Financial Officer Bob Shanks told analysts at a conference in Detroit last week that while the company benefited from low commodity prices in 2016, rising steel prices were now the main cause of higher costs, followed by aluminum. Shanks said the automaker at times relies on foreign currencies as a "natural hedge" for some commodities but those are now going in the opposite direction, so they are not working. A Ford spokesman added that the automaker also uses a mix of contracts, hedges and indexed buying. Industry analysts point to the spike in aluminum versus steel prices as a plausible reason for Ford's problems, especially since it uses far more of the expensive metal than other major automakers. "When you look at Ford in the context of the other automakers, aluminum drives a lot of their volume and I think that is the cause" of their rising costs, said Jeff Schuster, senior vice president of forecasting at auto consultancy LMC Automotive. Other major automakers say rising commodity costs are not much of a problem. At last week's Detroit auto show, Fiat Chrysler Automobiles NV's Chief Executive Officer Sergio Marchionne reiterated its earnings guidance for 2018 and held forth on a number of topics, but did not mention metals prices. General Motors Co gave a well-received profit outlook last week and did not mention the subject. "We view changes in raw material costs as something that is manageable," a GM spokesman said in an email.

Junkyard Gem: 1988 Chrysler LeBaron Turbo Sedan

Lee Iacocca's K-Cars saved Chrysler from certain oblivion in the aftermath of the 1979 federal bailout, but most of the members of the many-branched K Family Tree were really built on modified K platforms. The only genuine, 100%-K machines sold in the United States were the Dodge Aries/400/600, Plymouth Reliant, and Chrysler LeBaron; today's Colorado-found Junkyard Gem is a rare example of the very last year of the K-based LeBaron. Chrysler kept selling LeBaron coupes and convertibles here all the way through 1995, and those cars could trace their platform ancestry back to the original 1982 LeBarons that saved Chrysler… but for the real K-ness in a LeBaron sedan you must get one sold during the 1982-1988 period. This one has suffered some nasty paint damage over the decades, but its padded landau roof still looks pretty good at age 33. The base engine in the '88 LeBaron was a 93-horsepower 2.2, but this car has the optional turbocharged version with an impressive 146 horses. The cost for this engine? $700 list, or about $1,600 in 2021 dollars. The 1988 LeBaron coupes and convertibles got a five-speed manual as standard equipment, while the LeBaron sedan got a three-speed automatic at no extra cost. It appears that you couldn't get a manual transmission from the factory in this car. The "Traveler" trip computer was also standard equipment on the LeBaron sedan in 1988. As was this AM/FM radio. However, air conditioning cost $807 extra, or about $1,850 today. Other than the ravaged paint, this car still seems to be in reasonably nice condition (yes, Corinthian Leather was an option). Not many are interested in rescuing an old K-Car these days, sadly. This content is hosted by a third party. To view it, please update your privacy preferences. Manage Settings. Ricardo-approved! Featured Gallery Junked 1988 Chrysler LeBaron Sedan View 26 Photos Chrysler Automotive History Sedan Chrysler K-car Chrysler LeBaron Junkyard Gems

Trump wants a trade deal, but South Korea doesn't want US cars

SEOUL - US auto imports from the likes of General Motors and Ford must become more chic, affordable or fuel-efficient to reap the rewards of President Donald Trump's attempts to renegotiate a trade deal with key ally South Korea, officials and industry experts in Seoul say. Meeting South Korean President Moon Jae-in last week in Washington, Trump said the United States would do more to address trade imbalances with South Korea and create "a fair shake" to sell more cars there, the world's 11th largest auto market. "What we really want to say to the United States is: Make good cars, make cars that Korean consumers like." While imports from automakers including Ford, Chrysler and GM more than doubled last year largely thanks to free trade deal which took effect in 2012, sales account for just 1 percent of a market dominated by more affordable models from local giants Hyundai and affiliate Kia. Imports make up just 15 percent of the overall Korean auto market, and are mainly more luxurious models from German automakers BMW and Daimler AG's Mercedes-Benz, which also benefit from a trade deal with the European Union. "Addressing non-tariff barriers would not fundamentally raise the competitiveness of US cars," a senior Korean government official told Reuters, declining to be identified because of the sensitivity of the subject. "What we really want to say to the United States is: Make good cars, make cars that Korean consumers like." TASTE BARRIER In Korea, US imports are seen as lagging German brands in brand image, sophistication and fuel economy, industry experts say. US imports do have a competitive advantage in electric cars: Tesla Motors' electric vehicles are seen as both environmentally friendly and trendy, while GM has launched a long-range Bolt EV. US Commerce Secretary Wilbur Ross had cited a quota in the current trade deal as an obstacle to boosting imports. The quota allows US automakers to bring in each year 25,000 vehicles that meet US, not necessarily Korean, safety standards. Should GM, for example, decide to bring in more than its quota of one model - the Impala sedans - it would cost up to $75 million to modify the cars to meet Korean safety standards, the company told its local labor union. Asked about non-tariff barriers, a spokesman at GM's Korean unit said removing them could expand the range of models the company can bring in from the United States. No US company, however, has yet to make full use of the quota, industry data shows.