Good Idea Ford: Its Time To Bring Its European Operations To The U.S.

Implications: Faced with a $8.7 billion loss, a $2.1 billion write-down on its lease portfolio with Ford Motor Credit, Ford plans to bring some of its hot selling European products to the U.S. But that's not the only answer.

Analysis: Personally I think it's a good sign that Ford is going to start bringing over cars from its European operations to North America to help capture the public's increased interest in compact, fuel efficient cars: whether it will be enough or too little too late remains to be seen. At the very least it does show that Ford is beginning to wake up and smell the coffee, so at the very least it's a step in the right direction.

To give you an idea of how things are going with Ford right now, I have dealer clients offering Ford '08 pick-up trucks for less than their '08 Ford Focuses, and '07 and '08 Explorers for about the same price as a Focus. It's a sad state of affairs when your most profitable vehicles are being sold for similar prices as your least profitable ones.

However the fact that the company is profitable outside of North America provides insights in to what the company needs to do to turn things around, namely, it needs to focus on improving the product mix, fixing its cost structure, and making profitable sales, instead of trying to make sales at any cost. If you were ever a daler, you know what I mean.

When a struggling automaker is selling vehicles with a MSRP of $30K for $16K just to keep sales volume "strong" and avoid costs incurred when plants are shut down, etc. it's not on the path to recovery. Ford, (in addition to Chrysler and GM) needs to let go of some of the old ideas about managing their workforces, maintaining their sales volume, etc, and note how companies like Honda are able to out-earn them despite selling significantly fewer cars.

In the end it's not just about changing the product mix to suit consumers shifting tastes, it's about a wholesale change to Detroit's overall operating model.