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Ford Motor Company (F), General Motors Company (GM): This Car Maker Is Cruising

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Ford Motor Company (NYSE:F) has a habit of performing well above any bar that’s set ahead of it. The company’s growth has been strong across the board, by and large, where each geographic region has demonstrated visible improvements in performance metrics. The second largest US automaker declared its quarterly results a few days back, and needless to say, it beat both revenue and earnings estimates by appreciable figures.
Ford Motor Company (NYSE:F)Revenue & earnings

As a result of volume climbing up 16% to 1.67 million vehicles, compared to the year-ago quarter, and increases in market share in all regions where the company commands a presence, the total revenue for the quarter stood at $38.1 billion, which beat consensus estimates by $2.7 billion. Newer models in all markets also contributed to increased volumes and market share.

Also, the South American and European markets performed better this quarter and this added to the increase in revenue and market share. Some of the gains were offset partially by higher costs and unfavorable exchange rates, primarily in South America.

The inherent strength of the ‘One Ford’ strategy, lean cost structure and agile execution capabilities are the key strengths that enable Ford Motor Company (NYSE:F) to maximize its gains in each of the markets where it has presence. Ford Motor Company (NYSE:F) managed to achieve a break-even point in all of its international markets combined together, compared to a $600 million loss in the first quarter.

With improvement in automotive margin to 6.4% from 4.9% a year ago, the company posted an impressive 50% gain in earnings per share to $0.45 as compared to $0.30 a year ago, beating consensus estimates of $0.37. This was the 16th consecutive profit making quarter of the company, as operating profit stood at $2.6 billion.

Prospects

Traditionally, Ford Motor Company (NYSE:F) has always derived most of its sales and profits from North America. The US economic growth rate is expected to be in the 2.5% range with automotive industry sales being supported by the improvement in the housing sector and also the demand generated due to aging vehicles in the US market.

As the company witnesses encouraging results from its investment in Asia and other emerging markets, it is making rapid strides away from home also. Ford Motor Company (NYSE:F) has announced two new engine plants, one in China and the other in Russia. It plans to have a full portfolio of vehicles in China, aiming to introduce 15 new vehicles in China by 2015, as it has set ambitious plans for China. In China, the company improved its market share by 1.5 percentage points to a quarterly record of 4.3%, fueled by strong sales of the new Focus, Kuga and EcoSport SUV, and this is expected to grow further as the company is quickly adapting to what would suit the Chinese market.

The company showed profitability in South American markets and reduced losses in Europe. Although business conditions in Europe remain uncertain, but the company is aiming to return to profits by 2015 and is going through a restructuring exercise. It has also increased its market share to 8.1% from 7.6%, which is significant. This is the first year-over-year gain in the last year.

Companies only go on a hiring spree when the future looks bright. Ford Motor Company (NYSE:F) recently revised its workforce requirement from 2,200 earlier to 3,000 now. It will be hiring 800 more engineers, computer specialists and other salaried workers in the U.S.

All in all, the future looks bright.

Competitors

‘The Big 3’ (Ford being one of the three) — together hold 46.1% of the domestic market, which is up by a full percentage point as compared to last year. So the other two, obviously, would be competitors that deserve a look and they are General Motors Company (NYSE:GM) and Chrysler, a subsidiary of Fiat

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