TACH - AUTOMOTIVE STOCK INDEX
January 03, 1997
By Gerald Levinson CMA
Ford Motor Company
Though Ford is bullish on its Taurus, pickup trucks are driving the company's sales. Parked in Dearborn, Michigan, Ford Motor Company is the world's largest truck maker and, with about 13% of the market, it is the #2 manufacturer of cars and trucks combined. Ford also offers loans to its car buyers and operates Hertz, the #1 car-rental company in the US. The company's Taurus family sedan, the US's top-selling car from 1992-95, was upgraded for 1996 with a design change that also raised its price, leading to slower sales and angry dealers.
The Taurus slump has been offset by continued strong sales of F-series pickup trucks, which have outsold all other US autos since the early 1980s. And with Ford spending less to market the Taurus, the Escort economy car and other models are receiving an increased sales push.
Ford's effort in the early 1990s to make the Taurus #1 involved high-dollar ad campaigns and large rebates, which sold lots of cars, but were not great for profits. The company is counting on a push for greater efficiency, further globalization, and new products, such as the Ford Expedition sport utility truck, to fuel growth in the late 1990s.
Officers, directors, and the Ford family control about 40% of the company's voting power.
HISTORY
Henry Ford began the Ford Motor Company in 1903 in Dearborn, Michigan, hoping to design a car he could mass-produce. In 1908 Ford introduced the Model T, dropping other models in 1909. His business manager, James Couzens, recommended that he lower the selling price to $600, so Ford perfected the moving assembly line. Couzens and William Knudsen (later GM president) created the first branch assembly plant system and a national dealer network. By 1916 the cars cost $360; by 1920, 60% of all vehicles on the road were Fords.
In 1919 Ford bought back all of its outstanding shares for $100 million. It was 1956 before the Ford family again allowed outside ownership.
Ford bought Lincoln in 1922 and discontinued the Model T in 1927. Its replacement, the Model A (1932), was the first low-priced car with a V-8 engine. With Henry Ford's health failing, his son Edsel became president in 1932. Despite the introduction of the Mercury (1938), market share slipped behind GM and Chrysler. After Edsel's sudden death in 1943, the navy released his son, Henry II, to run the company. Henry II decentralized Ford, then losing $10 million a month, following the GM model. In 1950 the carmaker recaptured 2nd place.
In the 1950s the company created the Aerospace Division (1956) and introduced the infamous Edsel (1958). In 1964 Ford launched the popular Mustang, created by president Lee Iacocca. In 1979 Henry II retired.
Ford cut its work force by 33% and closed 15 plants during the 1980s. With the purchase of New Holland (1986) and Versatile (1987), the company became the world's #3 agricultural equipment maker. It bought First Nationwide Bank in 1986 (it was sold in 1994) and the next year acquired U.S. Leasing (later renamed USL Capital). The 1988 introduction of the Taurus and Sable (inspired by then-CEO Donald Petersen) spurred Ford to its largest US car market share (21.7%) in 10 years. In 1989 it bought the Associates (financial services) and luxury-car maker Jaguar.
Harold "Red" Poling succeeded Petersen as CEO in 1990, and the company sold Ford Aerospace to Loral. Ford merged New Holland with a Fiat subsidiary in 1991.
In 1992 the company took a $7.4 billion charge relating to the future cost of retiree health care benefits. The next year Poling retired, with Alex Trotman becoming chairman and CEO. Ford acquired the 46% of Hertz it did not already own in 1994.
In 1996 the firm announced plans to buy the No. 3 rental agency, Budget Rent a Car. Also that year it sold a 19% stake in Associates First Capital Corp., a unit that provides finance, leasing, and related services, in an IPO; increased its stake in Mazda to over 1/3 through a $481 million cash infusion; and agreed to sell most of the units of USL Capital, including rail- and fleet-services operations and several financing businesses.