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Ford To Post Highest Profit Since Its Inception For Third Quarter 2010

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On: Wed, Oct 27, 2010 at 1:29PM | By: Sherry Christiansen

Ford To Post Highest Profit Since Its Inception For Third Quarter 2010

Ford Motor Company is hoping to post its biggest profit in history when numbers come in for the 3rd quarter. Ford’s CEO Alan Mulally’s lineup overhaul will reveal a huge boost in sales after the launch of many new redesigned Ford cars and trucks.

Financial analysts that were interviewed by Bloomberg News predict that Ford may post $1.37 billion in net income for the 3rd quarter, up from $997 million. This years’ third quarter profits will be a new record setter, beating Ford's all-time high of $1.13 billion in sales that was reported back in 1997. According to Automotive News.com;”estimates for adjusted quarterly profit have risen to 38 cents a share, the average of 12 analysts, from about 34 cents a month ago.”

Ford captured the market for 15.1% light vehicle sales compared to only 13% 2 years ago and according to Autodata Corp., buyers pay more for Ford vehicles since Ford launched the new line-up of vehicles such as the Fiesta subcompact, and high tech features like the Ford Sync and voice activated stereo controls.

“It’s a virtuous circle of the right products, targeted at the right customers with the right options,” said Brian Johnson, a Barclays analyst.

September of 2010 was the 6th straight profitable month for Ford this year as a result of gaining ground with younger consumers as well as tapping into markets on the West Coast; areas that typically favor smaller subcompact cars (including Asian and European brands). “We’re not buying share at the bottom of the food chain,” George Pipas, Ford’s sales analyst, said. “People buying Fords today are generally more educated and affluent and they want and are willing to pay for nicer Fords.”

Ford managed to capture 10.8% of the West Coast market for consumers (not including fleet sales), and its stock rose accordingly. In the Detroit area Ford holds a market share of 19.2%, up 2.3% this year and in the central U.S. region including Texas Ford controls 18.1% of the market. But the biggest gains for Ford Motor Company are with the younger and older consumer according to Pipas, capturing 12% of the young car buyer market and 17.7% of elderly consumers (over age 75).

Not only are sales up in 2010, but Ford also boosted profits by lowering expenses by $10 billion since 2005. The Detroit automaker boosted revenues by lowering costs to produce high numbers of vehicles thus cutting discounts by 23% since 2008. In September 2010 consumers paid an average of $30,636, up 10% from 5 years ago according to Edmunds.com.

“Ford was among the first to recognize that making money is more important than moving the metal,” Johnson said. “There’s now a general level of pricing discipline across Detroit, which is leading to higher average transaction prices.”

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