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Ford Q1 profits dragged down by warranty costs

General Motors isn't the only Detroit automaker posting falling profits in the first quarter. Ford just released its Q1 2014 financial data, and it reported a net income of $989 million, down $622 million from Q1 2013. The drop is partially blamed on higher warranty and recall expenses than the company had anticipated.
Financially, Ford suffered a rough quarter almost across the board. Its pre-tax profit of $1.4 billion was also down $765 million from a year ago. Things were even worse in the North American market where operating profit fell significantly to $1.5 billion, down from $2.392 billion in Q1 2013. However, its global revenue ticked up slightly to $35.9 billion, from $35.6 billion in this period in 2013.
Ford admitted that it spent about $900 million on expenses that it hadn't planned for during this quarter. According to Reuters, the company paid about $400 million in additional warranty and recall costs in North America. The automaker didn't explain why the costs were so much higher than expected. However, in the last three months, Ford has had several recalls, including on the 2001-2004 Escape for rust, Explorer for its steering, Edge for its fuel line and others.

Ford idling Michigan Assembly Plant to trim Focus, C-Max supply

Ford will be putting the brakes on production at its Michigan Assembly Plant in Wayne, MI, idling production during the weeks of October 28 and December 16. Ford is citing the first drop in US sales in 27 months, a 4.2-percent dip in September, as the impetus for trimming their supplies, according to Automotive News.
Ford's deft management of its supplies has been part of its success over the years, and seeing supplies of Focus and C-Max, the two vehicles built at MAP, rise from 58 and 108 days, respectively, to 71 and 122 days over the span of a month was apparently all that was need to justify the trimming. As AN points out, the rule of thumb for many automakers is to maintain a 60-day supply of vehicles.
"Ford has been focused on keeping their pricing in check. Their operating margin is in double digits. Nobody else is there and they're obviously very proud of that," Alan Baum, an auto analyst with Baum & Associates told AN. Keeping the supply chain operating smoothly and not increasing supplies too much is crucial to that healthy profit margin. After all, a large supply lowers prices ,which, in turn, cuts profit. So while this news might not be great for employees at MAP, who now have an extra two weeks of vacation time, it's far from a sign of problems in Dearborn. Quite the opposite, actually.

Why the 2015 Detroit Auto Show will be the best since The Crisis

The Detroit Auto Show clearly has its swagger back, and the 2015 edition will be a veritable feast for the enthusiast senses. We're talking serious performance, and it will be exhibited in a variety of forms. Sports cars. Supercars. Muscle-bound luxury cars. They're all set for splashy debuts in January in the Motor City. It's another signpost that companies have recovered from the global economic crisis that gripped the industry from 2008-09. For a while, automakers played it safe at Detroit and other shows. Environmentally friendly cars were important, especially for General Motors and Chrysler that were living on loans from Uncle Sam. Ford, Toyota and other companies generally focused on their best-selling or core models. With a few notable exceptions, recent auto shows have been a bit more buttoned-down than in the past. Boring probably isn't the right word, but austerity has been reality. That's changing. Car companies are making money. Sales are up. Aside from the many nagging recalls – and they are notable – the industry now has the time and energy to make performance cars a priority. That will be offered in hard evidence in Detroit. A year from now when we look back at this auto show, we'll sum it up with one word: Horsepower. But make no mistake, this isn't frivolous. Sports and luxury cars are expensive. They're profitable. They boost images and highlight strengths. With that in mind, here are five significant performance-oriented reveals to watch for when the show kicks off in less than two weeks. 2016 Acura NSX Acura's reborn NSX is a strong bet to earn plenty of votes for our Editors' Choice awards. It's one of the most anticipated – and strung-out – reveals of the year. Think back: we actually saw an NSX concept at the 2012 Detroit show, and Acura has spent the last three years teasing the car in a variety of ways. The slow burn, however, means we know a lot about the NSX. It's will use a mid-mounted twin-turbo hybrid powertrain and run with all-wheel drive. It will also wear an innovative zirconium e-coat paint, a new paint process that Honda says is more environmentally friendly. Honda has also said it will build the new NSX in Ohio, where a large part of the car's development work has been done. The original NSX was produced from 1990-2005 and helped establish Acura's performance credentials in the United States. It was a landmark car and a shot across the bow of Ferrari, Lamborghini and others.