Ford Australia posts loss of $40.3 million

Ford Australia has just reported an after-tax loss of $40.3 million for the 2006 calendar year. This represents a significant profit down-turn on recent years. In 2004 Ford posted a $192.3 million profit which dropped to a still respectable $148.2 million for 2005.

Ford Australia have attributed the loss to its significant investment in the next-generation 2008 Falcon Orion (replacement for the current Falcon) as well as its recent program of redundancies and their associated payouts. Ford has recently had to reduce production at its Geelong and Campbellfield making redundancies inevitable.

Holden recently posted a loss due in large part to the huge cost involved in designing the VE Commodore (a reputed $1 billion) and no doubt this is part of the reason for the poor result from Ford.

While redundancies, cutbacks and new model design costs tend to be one-off in nature the really worrying trend is the decline in sales of Fords Falcon range. Higher fuel prices, a shift to smaller more efficient cars and increased competition from Holden and Toyotas newer generation vehicles has had a big impact on sales at Ford.

“This was an extremely challenging year for Ford in Australia. Numerous external factors had an impact on our overall business, including consumer demand moving away from large family sedans, which drove a reduction in our sales volume. To counter this shift, we embarked on decisive actions to realign our workforce and better position Ford Australia for the future, which resulted in a significant one-time restructuring cost,” Mr Gorman, President of Ford Australia said.

Ford sold 14,175 less cars in 2006 than it did in 2005 and watched its market share drop to 11.9 per cent, down 0.8 per cent. Ford desperately need their new 2008 Falcon ‘Orion’ to help prop up falling sales in the showroom. The rumour mill is rife with speculation that we may see Orion later this year… Currently, it is not due until sometime in the first quarter of 2008.

If the 2008 Falcon is as good as we expect then Ford will have a strong position across a broad range of vehicles in 2008. The Ford Mondeo is expected to land later this year and by all reports it is an excellent car which will be backed up by Fiesta and Focus. There are no lightweight Koreans in this line-up (think Holden) and hopefully it is enough to see Ford get back on track.