07-26-07: The signs of recovery are beginning to be seen through the grey skies at Ford. After years off stuggle and sacrifices, there are signs that things are turning around.

Back In the Black

Ford reported today a $750 million profit for the second quarter of 2007. It was a stunning and unexpected announcement compared to the $317 million loss for the same period of 2006. The overall increase in profitability came as a result of higher profits for the European, South American, and Asian units as well as price cutting across the board. Ford reports that they have already saved $1.1 billion alone this year as a result of vast cost cutting that has included shuttering plants and employee buyouts.

The sale of Aston Martin also bolstered the bottom line this quarter, but Ford points our that even without that item a significant profit was made.

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"We continue to focus on the four priorities of our plan - restructuring the business to operate profitably, accelerating the development of new products that our customers want and value, funding our plan and improving our balance sheet, and working even more effectively together as one global Ford team, leveraging our assets," said Ford CEO Alan Mulally in a statement released early today. "Our team is very encouraged by the significant progress we are making. We recognize the challenges that lie ahead and remain fully committed to delivering our plan."

Granted, the overall profit still overshadows the underperforming North American division. But the losses are getting smaller and smaller. In the second quarter, Ford North America reported a pre-tax loss of $279 million, compared with a pre-tax loss of $789 million a year ago. Much of this is credited to cost cutting moves as sales were slightly lower than the same time last year.

Ford has also confirmed that the possible sale of Land Rover, Jaguar, and Volvo continues to be examined and bids are being studied. This news only further enhances the hope that Ford will continue to move in the right direction financially.

New Product On the Way

It has been reported in the past week that Ford has indeed taken the loud advice of many and is planning to bring much of the European product line to the US. At the urging of CEO Alan Mullaly, the global “C” platform that carries the Euro Ford Focus and C-Max models is being brought stateside starting around 2010. Most of Ford’s small car development and design will shift to Europe, bringing more flair and appeal to American models for a change.

The new wave of cars will replace the aged and stodgy American Ford Focus and Escape models. A version of the C-Max may fill a void in Ford’s lineup for a small and efficient people mover as Americans are hungry for an alternative to lumbering SUV’s for family transportation.

Ford also announced in recent weeks that they are readying new turbocharged engines for market including a production version of the twin turbo 3.5 liter V6 that appeared on the Lincoln MK-R concept car last winter. The engine with about 400 horsepower will be first arriving in a new Lincoln sedan in 2008 with others to follow.

The move is said to provide V8 performance with V6 efficiency. Tough new regulations and high gas prices has Ford looking at the future of performance oriented cars with a concerned eye. Ford also says it is working on turbocharged V8 engine and as we reported more than a year ago, a new variable displacement V8. Such an engine shuts down up to half its cylinders when power is not needed allowing greater efficiency in non-load situations. Both GM and Chrysler have been offering this technology for a couple years now to good success.

Other Kudos

Other good news continues as Ford has been seeing points of light along the way in their product led recovery. They had a strong performance in the J.D. Power and Associates Initial Quality Survey this spring, with five segment winners - Ford Mustang, Mercury Milan, Lincoln MKZ and Mark LT, and Mazda MX-5 Miata - more than any other manufacturer. The all new Ford Edge was recognized as "Highest-Ranked Midsize MAV" in the J.D. Power study. The Ford Edge has gained the title of the best-selling mid-size crossover in second quarter.

The relaunched Ford Taurus, Mercury Sable and Ford Taurus X earned five-star crash-test ratings from the National Highway Traffic Safety Administration. This has helped the new Taurus enjoy a strong response in the marketplace as they have been arriving at dealers just this month.

Ford also earned the most Top Safety Picks from the Insurance Institute for Highway Safety (IIHS) in the company's history, with Ford Edge, Ford Taurus, Ford Taurus X, Lincoln MKX and Mercury Sable taking top honors.