Ford has announced it will stop production in Australia in 2016. Not only in Australia but Ford is suffering loss across the globe. According to the reports which came few months back 3.4% decrease was observed in the profit for the first three months of 2013. Evan Stents, the head of HWL Ebsworth’s Automotive Industry Group, says Australia “will never be able to compete or have a sustainable business model just to build cars for the Australia market because of competition”.
There is also decline in the demand for Ford these days. Following are some of the reasons for Ford’s decline:
- Australia’s car industry has been suffering loss since the early ‘80s. Nissan closed the production in 1992, Mitsubishi in 2088 and now Ford will stop production in 2016.
- Australians are more into buying the small cars from overseas rather than their home country. Due to this exporting of cars has been affected to a great extent. Car parts suppliers have started worrying about viability of the industry.
- I guess this is due to Australia being a part of global car market and People have started buying from Japan or Korea due to the latest technology that they offer.
- The large six cylinder family cars were considered the specialty of Australia in the car market but that too is not in the demand now-a-days.
- Even the car manufacturers have to export the parts for the cars to survive in the market.
- Even people have started to question Government investments in the car industry as they think it’s just a waste of time and money in investing car industry in Australia.
Ford has earnings per share growth forecast of about 15% and P/E ratio is less than the industry average. Moreover, its operating margin is less than the industry average, but return on equity is 34%, dividend yield is about 2.3%. The shares are not in a good position since 2001 and have traded mostly between $16.00 and $17.50. Ford is not performing well even against its competitors. Many competing brands like Toyota, Honda, etc. have been performing well in the market as compare to Ford. Ford has nothing new to offer to its customers, they didn’t even have a latest technology features within the cars they have made. They should have given a thought for automatic transmission remanufacturing or transmission exchange for its cars.
Ford has launched Lincon and trying to attract new segment of customers i.e. youngsters. Ford was at the verge of bankruptcy and stops its luxury brands including Aston Martin, Volvo and Mercury and put millions of dollars into Lincon. Now, the company just has to wait and watch that Lincon will bring success to them or not.