F - Ford Motor Company
5.82 -0.04 (-0.77%)
After hours: 7:51PM EDT
| Previous Close | 5.71 |
| Open | 5.73 |
| Bid | 5.81 x 38500 |
| Ask | 5.84 x 27000 |
| Day's Range | 5.67 - 5.88 |
| 52 Week Range | 3.96 - 10.56 |
| Volume | 60,643,106 |
| Avg. Volume | 101,317,438 |
| Market Cap | 23.345B |
| Beta (5Y Monthly) | 1.25 |
| PE Ratio (TTM) | N/A |
| EPS (TTM) | -0.78 |
| Earnings Date | Jul. 28, 2020 |
| Forward Dividend & Yield | N/A (N/A) |
| Ex-Dividend Date | Jan. 29, 2020 |
| 1y Target Est | 5.91 |
- Reuters
Buffett-backed BYD to supply EV batteries to Ford
Chinese electric vehicle (EV) maker BYD Co Ltd <002594.SZ>, <1211.HK> will supply EV batteries to U.S. automaker Ford Motor Co <F.N>, a document on the website of the Ministry of Industry and Information Technology showed on Monday. Ford's China venture with Changan Automobile <000625.SZ> is seeking government approval to build a plug-in hybrid model equipped with BYD's batteries, according to the document. Shenzhen-based BYD, which is backed by U.S. investor Warren Buffett, said it would supply EV components including batteries and power management devices.
- Zacks
AVs Gather Momentum Amid Coronavirus But Roadblocks Remain
With coronavirus keeping most people housebound, driverless cars have indeed proved to be an asset. However, it will still take considerable time to bring AVs into the mainstream.
- Yahoo Finance Video
Amazon may become a threat to automakers, with this potential acquisition
Amazon is reportedly close to buying the self -driving car company, Zoox. Yahoo Finance's Tech Editor Dan Howley joins Yahoo Finance's The First Trade to discuss.
Yahoo Finance VideoJeep Gladiator pickup: the high cost of bliss
Pop the roof off the Jeep Gladiator pickup and cruise around on a sunny day and you won’t care at all about the clunky handling, deafening wind noise or plasticky interior. You won’t have to manage the awkward climb-down until you park and get out.
- Reuters
Volkswagen board formally okays Ford alliance projects
Volkswagen <VOWG_p.DE> said on Thursday its supervisory board had approved several projects in a multibillion-dollar alliance with Ford Motor <F.N> that was first announced last July. Among the shared projects specified by VW are a midsize pickup to be developed by Ford; a city delivery van to be developed by VW; a larger commercial van to be developed by Ford, and a new electric vehicle for Ford of Europe, to be built on VW's electric vehicle architecture. Regarding official approval of the agreements, a Ford spokesman on Thursday said, "We look forward to jointly providing an update soon."
- Bloomberg
$1 Trillion of Corporate Bonds Today, Downgrades Tomorrow
(Bloomberg Opinion) -- The amount of new debt issued this year in the U.S. investment-grade corporate bond market will reach $1 trillion today, by far the fastest pace in history. The implications of that milestone depend on how you look at it.For businesses that had been ravaged by the coronavirus pandemic and the ensuing nationwide lockdowns, access to capital markets was a lifeline to get through the worst of the economic collapse. Sure, Carnival Corp. had to offer interest rates like a junk-rated borrower and Boeing Co. needed to include a so-called coupon step-up provision to offset jitters that it could lose its investment grades. But, in the words of Federal Reserve Chair Jerome Powell, these deals avoided turning “liquidity problems into solvency problems” for brand-name American companies.It’s worth remembering that until the Fed stepped in with extraordinary support for credit markets, averting widespread failures was far from guaranteed. Investors pulled a staggering $35.6 billion and $38 billion from investment-grade funds in the weeks ended March 18 and March 25, respectively. Before 2020, the previous record was $5.1 billion of outflows. I wrote on March 19 that bond markets were veering into a vicious cycle that could get ugly in a hurry — four days later, the Fed announced what would end up becoming a $750 billion backstop for corporate America.Now, the Fed hasn’t actually had to buy any individual bonds yet, a fact that Powell seems proud to share. “We may have to be lending money to those companies, but even better, they can borrow themselves now, and a lot of that has been happening and that’s a really good thing,” he said during May 19 testimony before the Senate Banking Committee.Most people would probably agree with that assessment, at least for the immediate future as the country grapples with restarting the world’s largest economy. But what about the longer-term view?Here, the rampant borrowing paints a more sobering picture. As of late April, 1,287 issuers worldwide rated between AAA and B- by S&P Global Ratings were considered at risk of a potential downgrade, up from 860 in March and 649 in February. That surpasses the previous all-time high set in 2009. “Generally, we expect heavy credit erosion in coming months as issuers, especially those in the lower-rated spectrum come under heavy fire from poor earnings, continued difficulties in managing cost structures, and market volatility creating limited funding opportunities,” said Sudeep Kesh, head of S&P’s credit markets research.That’s bad enough, but doesn’t even strike at the heart of the issue. Last year was supposed to be the beginning of a broad “debt diet” among companies that borrowed huge sums to finance mergers and acquisitions during the longest expansion in U.S. history. That didn’t end up taking place on a wide scale. Even a success story like AT&T Inc., which made headway in trimming its debt stack, still found itself back in the bond market recently, borrowing $12.5 billion on May 21 in what was the biggest deal since Boeing’s $25 billion blockbuster offering.When it comes to companies directly impacted by the coronavirus pandemic or structural changes to their industries, the “big three” of S&P, Moody’s Investors Service and Fitch Ratings haven’t shied away from taking action. Ford Motor Co., Kraft Heinz Co., Macy’s Inc. and Occidental Petroleum Corp. are just a few of the “fallen angels” that lost their investment grades earlier this year.The rating companies haven’t been quite as keen to react to high leverage metrics. I frequently refer back to this feature from Bloomberg News’s Molly Smith and Christopher Cannon, which found that of the 50 biggest corporate acquisitions in the five years through October 2018, more than half of the acquiring companies increased their leverage to a level that would seemingly merit a junk rating but remained investment grade on the assumption that they’d take that leverage down in the coming years. Those expectations seemed ambitious in 2018, when the economy was seemingly invincible. Now, no one can truly expect companies to focus on right-sizing their debt. Corporate leaders are rightfully eager to raise cash to get to the other side of the pandemic, especially with all-in yields not far off from record lows. The vast majority of the $1 trillion in borrowing so far this year was by no means imprudent.In the years ahead, however, the overhang from this issuance spree will inevitably weigh down credit ratings. A company with more debt presents a greater risk of missed interest payments than if it had fewer fixed obligations. Fortunately, for much of the previous expansion, firms had no issue finding investors willing to buy their long-term securities. That practice of rolling over debt and extending maturities might very well be the norm in the months and years ahead, too. Still, if the first five months of 2020 are any indication, investment-grade bondholders will have to get comfortable with even more bloated balance sheets and the prospect of further credit downgrades. For better or worse, with the confidence that the Fed has their back, that seems like a risk investors are willing to take.This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Brian Chappatta is a Bloomberg Opinion columnist covering debt markets. He previously covered bonds for Bloomberg News. He is also a CFA charterholder.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
- Zacks
Ford (F) Suspends Production in Kansas on Coronavirus Scare
Ford (F) halts production at Kansas City assembly plant on the Transit Van side after a worker tests positive for COVID-19.
- Reuters
GM, Ford turn to fast-payment programs to aid suppliers hit by shutdowns
General Motors Co <GM.N> and Ford Motor Co <F.N> are using fast-payment programs set up with financial lenders to help cash-strapped small suppliers survive production shutdowns caused by the coronavirus pandemic. GM started its "Early Payment Program" last August with Wells Fargo & Co <WFC.N>, and now is using it as a way to support suppliers during the pandemic, especially as they roll out new technologies, GM spokesman David Barnas said. GM operated a similar program with General Electric Co <GE.N> prior to 2008.
- Reuters
All three Detroit automakers had workers test positive for COVID-19 since plants reopened
In the week since U.S. auto factories reopened after coronavirus lockdowns, workers at all three Detroit automakers have tested positive for COVID-19 but only Ford Motor Co <F.N> has temporarily closed plants. To ensure safety during the outbreak, companies imposed new safety measures, including screening employees, use of face masks and social distancing. Ford paused production at its Claycomo, Missouri, plant for an hour on Tuesday after a worker tested positive.
- Bloomberg
Amazon Will Take Robot Cars to a Whole New Level
(Bloomberg Opinion) -- Amazon.com Inc.’s interest in acquiring a self-driving car pioneer is the prime example (pun intended) of how expectations for driverless vehicles have been recalibrated.The e-commerce giant is in advanced talks to buy Zoox Inc. for less than the $3.2 billion at which it was valued in 2018, the Wall Street Journal reported on Tuesday. Given the California-based startup’s approach to autonomous cars, its fate is particularly instructive.In a very crowded field, Zoox was practically alone in aiming to build a whole new kind of electric-powered vehicle, and to operate the fleet itself. Peers such as Alphabet Inc.’s Waymo, General Motors Co.’s Cruise unit, Ford Motor Co. and Volkswagen AG’s joint venture Argo AI, and Aurora Innovations Inc. have focused solely on developing the self-driving technology that could subsequently be fitted into vehicles.Zoox wanted to be Tesla Inc., Waymo and Uber Technologies Inc. all rolled into one.Back in 2015, that seemed like an attractive proposition. If the triple threat to the automotive industry was autonomous technology, electric drivetrains and ride-hailing, why not embrace all three? After all, there were expectations that by 2020 robotaxis would ferry you around the world’s metropolises. Capital flowed into self-driving car startups, typified by the $1 billion GM spent acquiring Cruise in 2016.Those dreams, needless to say, have failed to materialize. Companies that had aimed to jump straight to the fourth of five levels of autonomy have quietly downshifted. (The first level of self-driving encompasses driver-assistance functions such as cruise control, and the fifth is full automation.) Bloomberg New Energy Finance doesn’t expect vehicles with Level Four automation to start gaining traction until 2034. Even then, they will likely represent just 831,000 of the 95 million-unit global car market that year.What’s more, the expense of developing, building and operating a fleet of self-driving cars would be considerable. Even deep-pocketed Alphabet and GM have sought outside investment for their efforts. Established carmakers are meanwhile focusing their capital on electric cars, a more imminent threat. And owning and operating a fleet is expensive too. Zoox had a tough sell to investors: In 15 years’ time, it might have been an attractive business.Which brings us to Amazon. Even if robotaxis aren’t coming any time soon, there are alternative applications for autonomous technology that fall squarely in the Seattle-based firm’s wheelhouse, namely, logistics. Given Amazon’s shipping costs are set to hit $90 billion a year, tech from Zoox could help save $20 billion in shipping costs, according to Morgan Stanley analysts. Its solutions could be used across warehousing and distribution. Buying Zoox could take Amazon's other moves in this field — an existing investment in Aurora and experiments with self-driving truck specialist Embark and electric vanmaker Rivian — to a whole new level.Amazon has become the fantasy acquirer for any number of companies seeking a soft landing: theater chains, brick-and-mortar retailers, food deliverers, mobile carriers, real estate brokers, dental suppliers, film studios and plenty more besides.Sometimes, just sometimes, those deals make sense. Zoox is one of them.This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Alex Webb is a Bloomberg Opinion columnist covering Europe's technology, media and communications industries. He previously covered Apple and other technology companies for Bloomberg News in San Francisco.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
- Bloomberg
Costly Electric Vehicles Confront a Harsh Coronavirus Reality
(Bloomberg) -- At a factory near Germany’s border with the Czech Republic, Volkswagen AG’s ambitious strategy to become the global leader in electric vehicles is coming up against the reality of manufacturing during a pandemic.The Zwickau assembly lines, which produce the soon-to-be released ID.3 electric hatchback, are the centerpiece of a plan by the world’s biggest automaker to spend 33 billion euros ($36 billion) by 2024 developing and building EVs. At the site, where an East German automaker built the diminutive Trabant during the Cold War, VW eventually wants to churn out as many as 330,000 cars annually. That would make Zwickau one of Europe’s largest electric-car factories—and help the company overtake Tesla Inc. in selling next-generation vehicles.But Covid-19 is putting VW’s and other automakers’ electric ambitions at risk. The economic crisis triggered by the pandemic has pushed the auto industry, among others, to near-collapse, emptying showrooms and shutting factories. As job losses mount, big-ticket purchases are firmly out of reach—in the U.S., where Tesla is cutting prices, more than 36 million people have filed for unemployment since mid-March. Also, the plunge in oil prices is making gasoline-powered vehicles more attractive, and some cash-strapped governments are less able to offer subsidies to promote new technologies.Even before the crisis, automakers had to contend with an extended downturn in China, the world’s biggest auto market, where about half of all passenger EVs are sold. Total auto sales in China declined the past two years amid a slowing economy, escalating trade tensions, and stricter emission regulations. EV sales are forecast to fall to 932,000 this year, down 14% from 2019, according to BloombergNEF. The drop-off is expected to stretch into a third year as China's leaders have abandoned their traditional practice of setting an annual target for economic growth, citing uncertainties. Economists surveyed by Bloomberg expect just 1.8% GDP growth this year.The global market contraction raises the prospect of casualties. French finance minister Bruno Le Maire has warned that Renault SA, an early adopter of electric cars with models like the Zoe, could “disappear” without state aid. Even Toyota Motor Corp., a hybrid pioneer when it first introduced the Prius hatchback in 1997, is under pressure. The Japanese manufacturer expects profits to tumble to the lowest level in almost a decade.Automakers who for years have invested heavily in a shift to a high-tech future—including autonomous vehicles and other alternative energy-based forms of transportation such as hydrogen—now face a grim test. Do their pre-pandemic plans to build and sell electric cars at a profit have any chance of succeeding in a vastly changed economic climate? Even as Covid-19 has obliterated demand, for the car makers most committed to electric, there’s no turning back.“We all have a historic task to accomplish,” Thomas Ulbrich, who runs Volkswagen’s EV business, said when assembly lines restarted on April 23, “to protect the health of our employees—and at the same time get business back on track responsibly.”Volkswagen Pushes AheadGlobal EV sales will shrink this year, falling 18% to about 1.7 million units, according to BloombergNEF, although they’re likely to return to growth over the next four years, topping 6.9 million by 2024. “The general trend toward electric vehicles is set to continue, but the economic conditions of the next two to three years will be tough,” said Marcus Berret, managing director at consultancy Roland Berger.Volkswagen’s Zwickau facility became the first auto plant in Germany to resume production after a nationwide lockdown started in March. Before restarting, the company crafted a detailed list of about 100 safety measures for employees, requiring them to, among other things, wear masks and protective gear if they can’t adhere to social-distancing rules.The cautious approach has reduced capacity—50 cars per day initially rolled off the Zwickau assembly line, roughly a third of what the plant manufactured before the coronavirus crisis. (VW said Wednesday that daily output had risen to 150 vehicles, with a plan to reach 225 next month.) Persistent software problems also have plagued development of the ID.3, one of 70 new electric models VW group is looking to bring to market in the coming years. Still, Ulbrich and VW CEO Herbert Diess over the past three months have reaffirmed Volkswagen’s commitment to electrification. “My new working week starts together with Thomas Ulbrich at the wheel of a Volkswagen ID.3 - our most important project to meet the European CO2-targets in 2020 and 2021,” Diess wrote in a post on LinkedIn in April. “We are fighting hard to keep our timeline for the launches to come.”Diess has described the ID.3 as “an electric car for the people that will move electric mobility from niche to mainstream.” Pre-Covid, the company had anticipated that 2020 would be the year it would prove its massive investments and years of planning for electric and hybrid models would start to pay off.A more pressing worry that could hamper VW’s ability to scale up production is its existing inventory of unsold vehicles. The cars need to move to make room for new releases, but sales are down as consumers are tightening their spending. One response has been to offer improved financing in Germany, including optional rate protection should buyers lose their jobs. VW also has adopted new sales strategies first used by its Chinese operations, such as delivering disinfected cars to customer homes for test drives, and expanding online commerce.Other German automakers are similarly pushing ahead with EV plans. Daimler AG is sticking to a plan to flank an electric SUV with a battery-powered van and a compact later this year. BMW AG plans to introduce the SUV-size iNEXT in 2021 as well as the i4, a sedan seeking to challenge Tesla’s best-selling Model 3.A potential obstacle for all these companies—apart from still patchy charging infrastructure in many markets—is the availability of batteries. Supply bottlenecks appear inevitable given that the number of electric car projects across the industry outstrip global battery production capacity. And boosting cell manufacturing is a complicated task.China's (Weakened) EV Dominance For VW and others, the first big test of EVs’ appeal in a Covid-19 world will come in China. Diess has referred to China as “the engine of success for Volkswagen AG.” VW group deliveries returned to growth year-on-year last month in China, while all other major markets declined.Not long ago, China appeared to be leading the world toward an electric future. As part of President Xi Jinping’s goal to make the country an industrial superpower by 2025, the government implemented policies that would boost sales of EVs and help domestic automakers become globally competitive, not just in electric passenger cars but buses, too.With the outbreak seemingly under control in much of the country, China is seeing some buyers return to the showrooms, but demand for passenger cars is likely to fall for the third year in a row, putting startups like NIO Inc. at risk and hurting more-established players like Warren Buffett-backed BYD Co., which suffered from a 40% year-on-year vehicle sales decline in the first four months of 2020.The Chinese auto market may shrink as much as 25% this year, according to the China Association of Automobile Manufacturers, which before the pandemic had been expecting a 2% decline. EV sales fell by more than one-third in the second half of 2019.NIO, the Shanghai-based startup that raised about $1 billion from a New York Stock Exchange initial public offering in 2018 but lost more than 11 billion yuan ($1.5 billion) last year, was thrown a much-needed lifeline when a group of investors, including a local government in China’s Anhui Province, offered 7 billion yuan last month.Other Chinese manufacturers are counting on support from the government, too, including tax breaks and an extension to 2022 of subsidies, originally scheduled to end this year, to make EVs more affordable.For now, the government will also look to help makers of internal combustion engine vehicles, at least during the worst of the crisis, said Jing Yang, director of corporate research in Shanghai with Fitch Ratings. But, she said, “over the medium-to-long term, the focus will still be on the EV side.”America is Tesla CountryCompanies can’t count on that same level of support from President Donald Trump in the U.S., where consumers who love their SUVs and pickup trucks have largely steered clear of electric vehicles other than Tesla’s.The U.S. lags China and Europe in promoting the production and sale of EVs, and that gap may widen now that Americans can buy gas for less than $2 a gallon.“When you’re digging out of this crisis, you’re not going to try to do that with unprofitable and low-volume products, which are EVs,” said Kevin Tynan, a senior analyst with Bloomberg Intelligence.Weeks after announcing plans to launch EVs for each of its brands, General Motors Co. delayed the unveiling of the Cadillac Lyriq EV originally planned for April. Then on April 29, the company said it would put off the scheduled May introduction of a new Hummer EV. The models are part of CEO Mary Barra’s strategy to spend $20 billion on electrification and autonomous driving by 2025, to try to close the gap with Tesla.In another move aimed at winning over Tesla buyers, Ford Motor Co. unveiled its electric Mustang Mach-E last November at a splashy event ahead of the Los Angeles Auto Show. The highly anticipated model had been scheduled to debut this year. Ford has not officially postponed the release, but the company has said all launches will be delayed by about two months, potentially pushing the Mach-E into 2021.Elon Musk, whose cars dominate the U.S. electric market, cut prices by thousands of dollars overnight. The Model 3 is now $2,000 cheaper, starting at $37,990. The Model S and Model X each dropped $5,000.Musk engaged in a high-profile fight with California officials this month over Tesla’s factory in Fremont, California, which had been closed by shutdown orders Musk slammed as “fascist.” In a May 11 tweet, he said the company was reopening the plant in defiance of county policy. On May 16, Tesla told employees it had received official approval.During most of the shutdown in California, the company managed to keep producing some cars thanks to better relations with local officials regulating its other factory, in Shanghai. That plant closed as the virus spread from Wuhan in late January, but the local government helped it reopen a few weeks later in early February.First Zwickau, Then the WorldThe ID.3’s new electric underpinning, dubbed MEB, is key to VW’s strategy to sell battery-powered cars on a global scale at prices that will be competitive with similar combustion-engine vehicles. Automakers typically rely on such platforms to achieve economies of scale and, ultimately, profits. MEB will be applied to purely electric vehicles across all of the company’s mass-market brands, including Skoda and Seat.VW said it spent $7 billion developing MEB after Ford last year agreed to use the technology for one of its European models. Separately, the group’s Audi and Porsche brands are built on a dedicated EV platform for luxury cars that the company says will be vital in narrowing the gap with Tesla.VW plans to escalate its electric-car push by adding two factories, near Shanghai and Shenzhen, that it says could eventually roll out 600,000 cars annually, more cars than Tesla delivered globally last year.While China is the initial goal, making a dent in Europe and the U.S. is the long-term one. Like China, Europe had been tightening emissions regulations significantly before the pandemic. New rules to reduce fleet emissions will gradually start to take effect this year, effectively forcing most manufacturers to sell plug-in hybrids and purely electric cars to avoid steep fines.Because of the mandates, Europe’s commitment to electrification isn’t going away, said Aakash Arora, a managing director with Boston Consulting Group. “In the long term, we don’t see any relaxation in regulation,” he said.For VW, this crisis wouldn’t be the first time it started a new chapter in difficult times. Diess saw an opportunity coming off the manufacturer’s years-long diesel emissions scandal that cost the company more than $33 billion to win approval for the industry’s most aggressive push into EVs. When VW unveiled the ID.3, officials compared its historic role to the iconic Beetle and the Golf, not knowing that this might hold in unintended ways: The Beetle arose from the ashes of World War II, and the Golf was greeted by the oil-price shock in the 1970s.“We have a clear commitment to become CO2 neutral by 2050,” VW strategy chief Michael Jost said, “and there is no alternative to our electric-car strategy to achieve this.”(Updates with Tesla price cut starting in the third paragraph. An earlier version corrected the spelling of Berret in the ninth paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
- Motley Fool
Why Ford, General Motors, and Honda Stocks Are Up Today
What happened Shares of several global automakers were rising on Tuesday, as auto factories around the world continued to ramp up after shutting down in March amid the COVID-19 pandemic. Here's where things stood for these three companies' stocks as of 2:30 p.
- Bloomberg
What Hertz Had Under the Hood Wasn't Pretty
(Bloomberg Opinion) -- From the customer’s perspective, car rental is a straightforward business. The only uncertainty is whether the hire company will charge you for the scratch they discover when you hand back the vehicle. Hertz Global Holdings Inc.’s bankruptcy protection filing on Friday was a reminder that today even the simplest business models are underpinned by a lot more financial complexity than meets the eye. Rather than make the rental giant more robust, financial engineering seems to have made Hertz more brittle. The proximate cause of Hertz’s demise was of course the sudden collapse in bookings caused by coronavirus travel restrictions. The company’s monthly revenue fell 73% year-on-year in April, a shortfall that even the most resilient companies would struggle to withstand for long.But Hertz’s complicated financial plumbing contributed to it becoming one of the most high-profile companies to seek protection from creditors during the corona crisis. This byzantine organizational chart from the bankruptcy filing gives you just a taste of what lies underneath the company’s hood:In the decade preceding its collapse, Hertz took on too much debt, participated in overpriced M&A and was accused of playing accounting games to pad its earnings. (For more, read this colorful account from Bloomberg’s David Welch.)So when disaster struck and a request for a government bailout was rejected (rightly in my view considering top shareholder Carl Icahn is worth some $18 billion), Hertz was already standing far too close to the precipice. Regrettably Covid-19 will probably expose more of this type of corporate frailty, both in America and around the world.Hertz’s debt binge began when it was acquired by private equity firms from Ford Motor Co. in 2005; the new owners quickly took out a $1 billion dividend. Piling on debt juiced the potential returns for the owners and helped pay the inflated $2.3 billion price tag for the Dollar and Thrifty brands in 2012, which Hertz struggled to integrate.Hertz was only able to amass an eye-watering total of $19 billion in borrowings thanks to a massive program of asset-backed lending, which became its primary source of capital.(2)Special-purpose financial entities purchase cars on Hertz’s behalf, and investors in the asset-backed securities make a return via the lease payments that Hertz is obliged to stump up. Put another way, Hertz leases cars long term from the financing subsidiary — typically for about 18 months in the U.S. — and then rents them out to customers for shorter periods.In theory, this is a stable and low-cost way for a risky borrower such as Hertz to fund the large capital outlays needed to keep its fleet looking fresh. Hertz’s corporate credit has been rated junk for the past decade but many of the asset-backed securities it issued were triple-A rated, at least until recently. However, economic shutdowns stemming from efforts to curb the new coronavirus suddenly threw a lot of sand in Hertz’s gears: The resale value of its vehicles fleet fell sharply, requiring the company to inject more cash into the financing structure.With only about $1 billion of cash on its books, Hertz was ill-placed to fund that collateral call, and the pandemic meant it wasn’t able to sell vehicles to generate cash because potential buyers were confined to their homes and auctions and dealerships were closed. (Hertz’s chief financial officer describes these acute pressures in this filing.) Asset-backed securities holders appear to have decided that allowing Hertz to fall into bankruptcy will prove no impediment to them getting most of their money back, at least for those holding the better-rated tranches of debt. The same can’t be said, however, for Hertz’s unsecured lenders, or its shareholders. Building a 39% stake since 2014 probably cost Icahn about $1.6 billion, based on a Bloomberg average share-cost estimate, but he now risks being wiped out. Hertz’s predicament was made more severe because in the U.S. it couldn’t hand back most of its surplus vehicles to the manufacturer, as is common practice in Europe. Instead it faced the task of selling them itself and bore the risk of any unexpected depreciation. The company is one of the 10 largest sellers of used vehicles in the U.S.The preponderance of these so-called “risk vehicles” in its half-a-million strong U.S. car fleet has increased since 2014 because it was more profitable than paying a premium to the manufacturer to guarantee a fixed repurchase price. There’s no reward without risk, though, as Hertz’s bankruptcy filing made abundantly clear. Having lost money in three of the past four years, Hertz did seem to have turned a corner lately: It raised capital to pay down debt last year and was ranked No. 1 for customer satisfaction in J.D. Power’s North American car rental rankings. Not that customers have much choice. Consolidation has given just three groups — Hertz, Enterprise Holdings Inc. (owner of the National and Alamo brands) and Avis Budget Group Inc. — control of almost the entire U.S. market for airport car rentals in the U.S.New competition from ride-hailing companies and a litany of management missteps meant Hertz never achieved the pricing power that Icahn and other recent investors probably assumed would come from all that merger activity. Because the industry’s fortunes are so closely tied to air and business travel, car rental demand is likely to remain weak for a while. Still, Hertz remains open for business and thanks to the more lenient Chapter 11 process it should get another chance to make a success of that oligopoly, albeit as a smaller company with different shareholders and a new capital structure. Next time you return a rental car, expect the attendant to check even more thoroughly for dents and scratches. (1) $14.7 billion of Hertz's debt relates to vehicle financingThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Chris Bryant is a Bloomberg Opinion columnist covering industrial companies. He previously worked for the Financial Times.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
- Motley Fool
Where Will Ford Motor Be in 5 Years?
The work-from-home movement and growth of ridesharing have implications for the Blue Oval's future.
- Yahoo Finance Video
How commuting will change after COVID-19
Yahoo Finance’s Alexis Christoforous and Brian Sozzi speak with Shift.com Co-Founder and Co-CEO George Arison about what commuting will look like after coronavirus ends, and how this will impact the auto industry.
- Motley Fool
Ford Is Using Its Cash Hoard to Pay Some Suppliers Early
Ford Motor Company (NYSE: F) is helping out some cash-strapped suppliers by paying its bills early. Ford has created a new early payment program intended to ensure that cash-strapped parts makers have access to cash flow and working capital as they restart production. Ford restarted most of its U.S. factories on Monday after a two-month shutdown amid the coronavirus pandemic.
Reuters VideosTrump visits Ford plant, leaves mask off for cameras
REPORTER: "Are you going to wear a mask today at the Ford plant? TRUMP: "Well, I don't know. We're going to look at it. A lot of people have asked me that question." The nagging question ahead of President Donald Trump's trip to the crucial election battleground state of Michigan on Thursday was whether or not he'd wear a protective face mask. First, to a meeting with African-American leaders to discuss vulnerable populations hit by the coronavirus pandemic. "Very exciting being here." Then, to a Ford Motor plant that's been recast to produce ventilators and PPE. And as he did at similar facilities in Arizona and Pennsylvania, the president unsurprisingly opted not to wear a mask in front of cameras. UNKNOWN REPORTER: "Mr. President there was a lot of interest about whether you would end up wearing a mask today. Could you just take us through your thought process of why you decided not to wear a mask? TRUMP: "Well, I did wear. I had one on before. I wore one in this back area, but I didn't want to give the press the pleasure of seeing it. But, no, I had it in the back area. I did put a, uh, mask on." REUTERS REPORTER JEFF MASON: "Why would you not be wearing it here, sir?" TRUMP: "Not necessary here. Everybody's been tested and I've been tested. In fact, I was tested this morning. So it's not necessary." REUTERS REPORTER JEFF MASON: "But the executives are wearing them." TRUMP: "Well, that's their choice." UNKNOWN REPORTER: "What about the example that it would set for other Americans..." TRUMP: "Well, I think it sets an example. I think it sets an example both ways and, as they say, I did have it on." The president even pulled out a mask to prove he had one, but didn't put it on. TRUMP: "Here is my mask. Right here. I liked it very much. I actually... honestly, I think I look better in the mask. I really did. I look better in the mask. But I'm making a, uh... but I'm making a speech, so I won't have it now. But I did have it on right here, and I think some of you may have gotten a shot. Thank you very much." REUTERS REPORTER JEFF MASON: Mr. Ford, can you confirm that the president was told it's okay not to wear one in this area? BILL FORD: "It's up to him." Before his visit, Michigan's attorney general said if Trump didn't wear a mask during the tour of the Ford plant, he'd be asked not to return to similar facilities. Michigan's Democratic governor, Gretchen Whitmer, who has been a target of Trump - even encouraging anti-lockdown protests against her - moved to further reopen Michigan's economy on Thursday through a series of executive orders. On Wednesday, Trump threatened to withhold federal funding from her state - which has been hit by devastating floods - because of a plan to expand mail-in voting, but later appeared to back off the threat. "I don't think it's going to be necessary." At the Ford plant, Trump also said he would not close the country if the U.S. is hit by a second wave of coronavirus infections. "We're going to put out the fires. We're not going to close the country. We're going to put out the fires." And the president said he wants to stage campaign rallies at outdoor sites until the pandemic settles down. With little more than five months left until the election, Trump is behind Democratic rival Joe Biden in national polls and in some battleground states, including Michigan, which he won in 2016. "We got to get back to the rallies." A senior campaign official said Trump was "chomping at the bit to resume the rallies,” adding that the campaign was aiming to hold a rally as early as mid-June.
- Bloomberg
Ford Throws Lifeline to Auto-Parts Suppliers Facing Cash Crunch
(Bloomberg) -- Ford Motor Co. is helping some of its suppliers survive a cash crunch by paying its bills early to ensure that critically needed parts keep flowing to its auto factories.The car industry in North America is just restarting after shutting down for two months to slow the spread of the coronavirus. That has caused a cash-flow crisis at many auto-parts suppliers that don’t have deep capital reserves.Ford burned through $8 billion in the first three months of the year, but it has built up a substantial cash pile by suspending its dividend, drawing down its credit lines and selling junk bonds. Now it is helping keep key component suppliers afloat by paying invoices early.“In light of current market conditions, Ford is creating an early-payment program for our supply base,” Jennifer Flake, a company spokeswoman, said in an emailed statement. “This new voluntary program creates access to cash flow and working capital to Ford suppliers.”The automaker, which is projecting a $5 billion operating loss for the second quarter, said it is making these early payments to a small group of key suppliers it declined to identify. The company plans eventually to expand the program to other manufacturers across its supply base, Flake said.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
- Yahoo Finance Video
Ford temporarily halts work at two plants due to coronavirus
Yahoo Finance's Rick Newman joins Jen Rogers and Myles Udland to discuss Ford temporarily halting work at 2 plants due to workers testing positive for coronavirus.
- Yahoo Finance
Coronavirus update: Worldwide count tops 5M as US inches toward reopening; AstraZeneca gets $1B
The global case count hit a new grim milestone Thursday, surpassing 5 million, as the World Health Organization said the virus is showing no signs of slowing down.
- Bloomberg
Ford Is the Poster Child for America's Grand Reopening
(Bloomberg Opinion) -- After a prolonged shutdown, Ford Motor Co. officially resumed production at its North American factories this week. It hasn’t been as smooth a process as the company might have hoped: Ford had to temporarily close two critical facilities this week to allow for a deep cleaning after workers tested positive for the coronavirus. An Explorer SUV plant in Chicago was closed a second time after an employee at a nearby supplier facility tested positive for the virus, causing a parts shortage.This is the reality of manufacturing for the time being as companies fret about worker safety and the legal and reputational risks of not doing enough to protect employees. Unlike Ford, whose products fall into a category of consumer spending that’s become even more discretionary amid the pandemic, wide swaths of the industrial sector were deemed essential and allowed to remain operational. Those companies, too, have had their share of growing pains as they adjust to a new way of working.Boeing Co. temporarily closed its factories in the Puget Sound area in March after a worker died of the coronavirus and later briefly shuttered work at its 787 plant in South Carolina. CBS Minnesota reported earlier this month that a Honeywell International Inc. facility in Minneapolis had closed after a worker tested positive. Whirlpool Corp. closed its Amana, Iowa, refrigerator plant at least twice after employees tested positive for the virus, according to the Gazette local paper. Deere & Co. and Altria Group Inc.’s Philip Morris USA are among the many others that have had to close plants on a limited basis to avoid outbreaks among workers. Lockheed Martin Corp., meanwhile, said this week it will temporarily slow production of the F-35 fighter jet because of delays at suppliers. It’s a lot harder, though, to bring factories back to life than it is to just figure it out as you go along. Ford may be a manufacturer, but because it’s one of the few to have experienced an extended lockdown, it’s arguably a better benchmark for the non-industrial economy. You better believe that office-based companies that have sent most of their workers home are keeping a close eye on how the likes of Ford fare in flipping the switch back on. Seeing the automaker’s setbacks this week, companies that can operate without their employees clustered in the same place may be less keen to rush back. They’re getting a more continuous stream of work out of their employees now than they would if they had to hit the pause button and clear out the office every few weeks. And the mixed messages from the White House aren't helpful: President Donald Trump is due to visit a Ford factory in Michigan that’s been converted to ventilator production and has been wishy-washy on whether he will adhere to the company’s face-mask requirements. Already, American Express Co. CEO Steve Squeri and Visa Inc. CEO Al Kelly said this week that most of their employees would work from home for the rest of the year. Some 28% of employers recently surveyed by Challenger, Gray & Christmas said they would make work-from-home arrangements permanent for at least some employees. Cryptocurrency exchange Coinbase and social media site Twitter Inc. are among those who have publicly said remote working will be their indefinite default option. Facebook Inc. said Thursday it would follow suit and move to a more permanent remote workforce.At the end of the day, manufacturing or non-manufacturing, it's all interconnected. How permanent this shift to work from home will be is debatable, but if companies end up needing less office space, by default that means fewer HVAC systems, commercial lighting, fire and security products or even 3M Co.’s Post-it notes. And if workers aren’t going to be commuting, do they still need to buy cars from Ford? There's a lot riding on getting reopening right. This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Brooke Sutherland is a Bloomberg Opinion columnist covering deals and industrial companies. She previously wrote an M&A column for Bloomberg News.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
- Yahoo Finance Video
What AstraZeneca's $1B funding for Oxford's coronavirus vaccine means for the U.S.
Pharmaceutical company AstraZeneca secures $1.2 billon to produce the University of Oxford’s COVID-19 vaccine. Yahoo Finance’s Anjalee Khemlani breaks down the latest developments.
- Motley Fool
Factories Are Reopening, But For How Long? Why Coronavirus Disruptions Will Continue for Stocks
Tesla pushed local officials to reopen; now a Ford plant restart highlights the struggles manufacturers will have to address as production resumes.
- Reuters
Trump visits Ford plant in politically crucial Michigan, leaves mask off for cameras
President Donald Trump traveled on Thursday to the crucial U.S. election battleground state of Michigan to visit a Ford Motor Co plant amid tensions with its Democratic governor during the coronavirus pandemic, opting not to wear a protective face mask for the cameras. Trump toured the Ford plant, which has been recast to produce ventilators and personal protective equipment, and held a roundtable discussion with African-American leaders concerning vulnerable populations hit by the virus. Trump, who has said he is taking a drug not proven effective for the coronavirus after two White House staffers tested positive, did not wear a mask during any of his public events at the plant in the city of Ypsilanti even though Ford on Tuesday reiterated its policy that all visitors must wear them.
- Reuters
While U.S. economy slides, heartland auto dealers cry out for more trucks
Jerry Bill is worried the novel coronavirus could hurt business at the Des Moines auto dealership he runs, but not because of a shortage of buyers for the big Ram pickups on his lot. "Our biggest issue will be if we don't get more inventory," said Bill, general sales manager of Stew Hansen Chrysler Dodge Jeep Ram, which sells around 2,700 new vehicles a year in Urbandale, a suburb of Iowa's capital Des Moines. After a drop in sales in April when consumers stayed home, Bill expects pickup truck sales to end May similar to where they were a year earlier.
