In 2019, most investors, who specialize in the automobile sector, have been almost completely occupied with the fate of electric car manufacturer Tesla (TSLA-Stock Info). The sliding sales and deepening losses had worried investors and sent the stock crashing at the beginning of the year.
It goes without saying that the attention Tesla got was disproportionate. This brings us to the point of Ford, one of the established giants of the global automobile industry. Amidst all the chaos, the Ford Motor Company (F-Stock Info)’s stock has proven to be an unlikely winner. In fact, it has managed to gain as much as 27% this year so far.
Sales And Profits Continue To Grow
Over the past decade, Ford had dropped from its highs following the financial crisis. In this regard, it needs to be noted that while its sales and profits continue to grow, Ford failed to rein in its expenses. In turn, it affected the company’s ability to fully take advantage of segments in which they were strong. Truck and SUV sales are two particularly glaring examples in this regard.
Investors were fully aware of these problems. Eventually, the stock slumped, despite the fact that Ford had recorded record profits back in 2015. However, the company has recently overhauled its strategy completely. New CEO Jim Hackett’s leadership seems to have taken Ford into a new trajectory altogether.
Hackett has been extremely proactive with his plans on ‘redesigning’ the business of Ford. He has come up with a specific plan to turn the company around completely. More importantly, it seems that his efforts are taking an effect and it has been reflected in the company’s previous two earnings reports.
The new CEO has steered the company towards focusing more on SUVs and trucks since those vehicles generate higher margins and sales. On the other hand, investments on hatchbacks and sedans have been reduced significantly. This move has helped the company in helping the bottom-line without losing out much with regards to market share.
In addition to that, Ford has moved aggressively towards a global restructuring of its business as well. Significant restructuring is underway in the company’s businesses in South America and Europe.
Over the years, Ford had spent a lot of money on operations that did not bring a lot of money. In one of the world’s biggest automobile markets in China, the company’s operations have been abysmal but that is changing as well.
Ford has now installed a highly experienced management team in charge of its China business and the losses from the country have already been reduced somewhat. There is some way to go before the company to have completed its turnaround but the signs are good and the market has recognized that as well.