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Ford First Quarter Profits May Be Over $2 Billion

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On: Tue, Apr 26, 2011 at 10:36AM | By: Tim Healey

Ford First Quarter Profits May Be Over $2 Billion

Ford is projecting a large first-quarter profit, perhaps as much as $2.1 billion. That would be the largest first-quarter profit since 1998 for the automaker.

Rising gas prices have actually helped Ford in the short term, as the company's focus on fuel-efficient vehicles appears to be paying off. However, those same high gas prices could hurt sales overall if they remain high.

Supply disruptions caused by the disasters in Japan could also affect the automaker going forward.

The Fiesta subcompact offers a maximum 40 miles per gallon, and the redesigned Explorer SUV has a fuel-economy boost over the previous model, and that's helping drive profits for the brand.

Unlike in 2008, which is the last time that gasoline prices surged to these levels, Ford is better positioned to deal with the rising price at the pump. In 2008, the automaker was focused on gas-guzzling trucks and SUVs. By focusing more on smaller cars and improving the fuel-economy of the existing trucks and SUVs, Ford will be able to entice more customers.

Rival Toyota may suffer cuts in production due to the crisis in Japan, and that could also help Ford. Ford now has 13.6 percent of the retail market share, excluding fleets.

There are other reasons for Ford's success. For one, Ford avoided borrowing federal bailout money, and that improved the company's standing with buyers who disapproved of Ford's rivals General Motors and Chrysler taking federal bailout money.

Ford has also reduced its reliance on incentives, which helps boost profits.

Ford is on a roll, and if the company's products continue to impress the press and public, that roll should continue.

Of course, a lot depends on the state of the economy. If the economy continues to improve, Ford's profits should grow, too. But a stalled economy could eat into Ford's gains.

So, too, could high gas prices, as noted above. But experts think that Ford's improved product portfolio and improved fleet fuel economy will help the automaker get through an era of high prices.

Most of Ford's competitors are introducing more and more fuel-efficient vehicles. So their potential success could eat into Ford's future profits.

For now, though, the Blue Oval brand is in good shape.


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