DEARBORN - “It’s a great day for Ford Motor Company,” said Joe Hinrichs, president, The Americas, during the second quarter Americas Business Review for management leaders in the auditorium at World Headquarters.
North America reported a pretax profit of $2.3 billion – the fifth time in the last six quarters that North America reached a pretax profit or $2 billion or more. For the first half of the year, North America set an earnings record with a pretax profit of $4.7 billion, an increase of $628 million compared to a year ago.
South America returned to profitability this quarter with a pretax profit of $151 million, $146 million more than a year ago.
“That’s one quarter,” said Hinrichs. “We have 35 more to go to match our record in South America.”
Operating margin for North America in the second quarter was 10.4 percent, 0.2 percentage points greater than last year.
“For us to continue maximizing our operating margins we must hit production,” said K.R. Kent, executive director and controller, The Americas.
In North America, second quarter sales were up 15 percent from a year ago and showed a balance across the vehicle lineup – cars up 14 percent, utilities up 13 percent, trucks and vans up 18 percent, retail up 18 percent and fleet up 9 percent.
For the first half of the year market share was 16.2 percent, an increase of eight-tenths of a percentage point.
“The performance of our company in the first half of the year has been solid,” said Ken Czubay, vice president, U.S. Marketing, Sales and Service. “We saw a gain of eight-tenths of a percentage point in an industry where we fight for one-tenth of a percent at a time.”
The super segment and coastal strategy, two areas key to our long-term success, also added to the success of the first half.
Ford Fiesta, Ford Focus, Ford C-MAX and Ford Escape – Ford’s entries in the super segment – were up 21 percent and contributed 1.4 percentage points to the company’s growth this year.
“We are placing an emphasis on the super segment because these are the entry vehicles for people in growing populations and into the automobile market,” said Czubay.
North America also saw growth in each of the coastal markets driven by our new products and electrified vehicles.
“This is what will differentiate us from our competitors,” said Hinrichs. “It’s important to us to break into the coasts. The West Coast is very important because it leads trends and leans toward the future of the industry.”
Quality continued to be a theme for the meeting. Hinrichs discussed the results from J.D. Power’s Initial Quality Study and APEAL Study.
In the IQS, the Ford brand ranked 27th and the Lincoln brand ranked 17th. The industry results were down overall with the new study methods; however, Ford has remained flat for the last three years after peaking at fifth place in 2010.
“We all know what we need to improve and this should motivate us,” said Hinrichs. “If we want to become the lead in infotainment we have to do better than the competition in all areas so our average score is equal to or better.”
In the APEAL study, the company had three segment leaders – Ford Mustang, Ford Super Duty and the Lincoln MKZ.
Overall Lincoln ranked ninth, up two spots from last year and Ford dropped to 20th, down four spots from a year ago.
“Our business plan counts on us being back to leadership levels in quality for pricing, consideration and market share,” said Hinrichs. “We’ve done it before and we’ll do it again.”
Hinrichs ended the meeting by thanking everyone for their contributions so far this year.
“Thank you for everything you have done,” said Hinrichs. “We are going to have a great year in South America and North America. You have already made a big difference so far this year.”