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Ford rakes in record $2.5b profit during Q1 of 2016

Fears that the auto industry is due for a downturn may be fading. Ford posted record profits in the first quarter of 2016, the company announced Thursday. Chief financial officer Bob Shanks said Ford enjoyed its best quarterly performance in history, generating operating profits of $3.8 billion and a record profit margin of 9.8 percent. Overall, the company's $2.5 billion profit in the quarter more than doubled from the 2015 quarterly results. "The first quarter was an absolutely terrific start to the year, an all-time record for the company, with very strong performance across the business," said chief executive officer Mark Fields. "We're excited about our future and confident in our ability to deliver long-term growth and profitability as we expand our business model to be both an auto and a mobility company." During the quarter, Ford announced the creation of Ford Smart Mobility, a new subsidiary that would vet future mobility projects in the realm of car-sharing, fractional ownership and autonomous deployment. The company also kicked off a billion-dollar makeover of its Dearborn, Michigan campus and headquarters. The company's after-tax earnings of $0.68 per share trumped Wall Street's expectations, and were significantly up from $0.39 per share a year ago. The results were buoyed by the company's fourth consecutive quarter of growth in Europe, which comes after a long period of stagnant sales. Ford's earnings results come amid reports that April car sales are on pace to jump 4 percent year over year, which would make it the best-selling April in history. Kelley Blue Book projects that car sales will reach 1.51 million this month, placing the industry on track for 17.5 million vehicles sold in 2016. Even as SUV and crossover sales drive the market, analysts say Nissan and Honda are positioned to benefit from renewed interest in mid-size cars. "Following a disappointing March, we expect sales to get back on track in April with SAAR in the mid-17 million range," said Tim Fleming, analyst for Kelley Blue Book. "Increased fleet sales and rising incentive spending among automakers remain the factors to watch, but the retail demand appears to be holding steady, signaling the industry's strong run isn't over quite yet." Related Video: Image Credit: Getty Earnings/Financials Ford Lincoln 5g Connectivity mobility auto industry financial

Ford taken to task by gov't for Chicken Tax end-around

Ford is in a bit of a pickle for importing and selling Turkey-built Transit Connect cargo vans as passenger vehicles in the US, then converting them to commercial-vehicle specification stateside in an effort to bypass a 25-percent tax imposed on vehicles imported for commercial use. Automakers are required to pay a 2.5-percent tax on imported passenger vehicles.
The Blue Oval got into trouble for this in a January ruling in which U.S. Customs and Border Protection officials asked Ford to stop the practice of importing the Transit Connect vehicles with passenger seats, then removing and shredding them. Now Automotive News reports that Ford is appealing the ruling. The 25-percent "Chicken Tax," as the tariff is often called, is 50 years old and was enacted as a response to a German tariff on chickens. Like Ford, Chrysler bypasses the higher tariff, but it does so in a different manner. It partially disassembles Sprinter cargo vans before shipping them to the US, then rebuilds them at a plant in South Carolina.
But the ruling against Ford's strategy states that it "serves no manufacturing or commercial purpose" and is there to "manipulate the tariff schedule," Automotive News reports. As Ford's appeal goes through, it is importing the Transit Connect and paying the higher tax, hoping for a favorable outcome and planning to build the next-generation Transit Connect, which it plans to launch before the end of the year, in Spain.

NHTSA will investigate some Ford Fusion, Lincoln MKZ models for power steering issue

The National Highway Traffic Safety Administration is opening an investigation into the 2010-2012 Ford Fusion, Fusion Hybrid and Lincoln MKZ, the 2012 MKZ Hybrid and 2011 Mercury Milan because the agency has hundreds of complaints of electric power steering failure in these models.
According to NHTSA's data, it has received 508 complaints of the power steering allegedly suddenly malfunctioning and resulting in increased effort to turn the wheel. In four incidents, these failures resulted in loss of control and crashes. According to the reports, in some cases a power steering warning message came on as the fault occurred, and other times the system restored itself by turning off and then restarting the vehicle. NHTSA said it has also received further field report data from Ford, but that information hasn't been publicly released yet.
For the moment, there isn't a recall for this failure on these models. NHTSA is just investigating them to "assess the scope, frequency and safety consequences of the alleged defect," and the agency says an estimated 938,000 vehicles could potentially be affected.