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Why Did Ford Motor Reduce Its Pre-Tax Profit Projection?

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Price movement

Ford Motor (F) has a market cap of $50.3 billion. It rose by 0.24% to close at $12.73 per share on September 8, 2016. The stock’s weekly, monthly, and year-to-date (or YTD) price movements were 1.0%, 3.4%, and -4.5%, respectively, on the same day. F is trading 2.4% above its 20-day moving average, 0.19% above its 50-day moving average, and 0.16% below its 200-day moving average.

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Related ETFs and peers

The Guggenheim Multi-Asset Income ETF (CVY) invests 0.88% of its holdings in Ford Motor. The ETF tracks the Zacks Multi-Asset Income Index. The index aims to outperform the Dow Jones US Select Dividend Index using US stocks, ADRs (American depositary receipts), REITs, MLPs, CEFs (closed-end funds), preferred stocks, and royalty trusts. The YTD price movement of CVY was 10.8% on September 8.

The First Trust Large Cap Value AlphaDex ETF (FTA) invests 0.83% of its holdings in Ford Motor. The ETF tracks an index that selects and weights value stocks from the S&P 500 Value Index using fundamental factors including sales, book value, and cash flows.

The market caps of Ford Motor’s competitors are as follows:

  • Toyota Motor (TM) — $201.1 billion
  • General Motors (GM) — $49.0 billion

Latest news on Ford

In a press release on September 8, 2016, Reuters reported that Ford had “lowered its 2016 adjusted pre-tax profit forecast to $10.2 billion from the at least $10.8 billion it forecast in July because of a $640 million charge for an expanded vehicle recall, the company said on Thursday.”

Ford Motor has recalled additional 1.5 million vehicles, including the 2013–15 Ford C-MAX and Ford Escape, 2012–15 Ford Focus, 2015 Ford Mustang and Lincoln MKC, and 2014–16 Ford Transit Connect, to replace side-door latches that could unlatch while driving.

In another release, Ford Motor reported that it had “sold its 1 millionth vehicle in Asia Pacific in 2016, reaching the milestone a month ahead of last year’s pace.”

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Ford’s sales in August 2016

Ford Motor (F) reported total vehicle sales of more than 214,000 units, a fall of 8.4% from August 2015.

  • The Ford brand reported sales of just over 205,000 units, a fall of 9.0% from August 2015. This includes the Focus, Explorer, Escape, and F-Series trucks, whose sales fell by 27.9%, 15.5%, 2.8%, and 6.1%, respectively. Sales of transit trucks rose by 16.9%.
  • The Lincoln brand reported sales of 9,243 units, which includes MKZ cars. This is a rise of 7.0% from August 2015. MKX and SUV (sport utility vehicle) sales rose by 7.1% and 49.9%, respectively.

The following is a breakdown of Ford’s sales by type:

  • cars reported sales of ~52,000 units, a fall of 25.4% from August 2015
  • SUVs reported sales of nearly 74,000 units, a fall of 0.84% from August 2015
  • trucks reported sales of over 88,000 units, a fall of 1.6% from August 2015

Ford reported sales of 126,834 units in Asia-Pacific, a rise of 22% from August 2015.

Sales in China were as follows:

  • Ford and its joint ventures reported sales of 96,450 units, a rise of 22.0% from August 2015
  • Changan Ford Automobile (CAF) reported sales of 75,228 units, a rise of 26% from August 2015, and sales of 578,947 units YTD, a rise of 13.0% from the same period of the previous year
  • Jiangling Motor (JMC) reported sales of 19,951 units, a rise of 16% from August 2015, and sales of 159,213 units YTD, a fall of 3% from the same period of the previous year

Next, we’ll look at Honda Motor (HMC).

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