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Episode 262 – Ford Posts Solid Profit, Audi in the Black, Automakers Top R&D Spending

November 2nd, 2009 at 12:00pm

Runtime 6:49

Ford reported solid earnings today, posting a net profit just shy of $1 billion in the third quarter. Audi posted an operating profit of almost 350 million euro in the third quarter. A new report says that the auto industry remained one of the highest spenders in R&D last year. All that and more, plus a look at some of Acura’s latest product updates.

Transcript and Story Links after the jump . . .

Here are today’s top headlines. Ford blows through Wall Street’s expectations. Audi moves solidly in the black. And guess which industry spends more on R&D than any other?

Up next, we’ll be back with the news behind the headlines.

This is Autoline Daily for Tuesday, November 2, 2009. And now, the news.

Ford reported solid earnings today, blowing through Wall Street’s expectations. Analysts forecasted a loss of 14 cents a share. Instead, Ford earned 26 cents, posting a net profit just shy of $1 billion. Ford’s North American operations posted a pre-tax operating of $357 million. In fact, Ford posted an operating profit in every geographical region where it operates. And it generated $1.3 billion of positive cash flow.

So, does this mean Ford has turned the corner? No, not completely, not yet. It will still probably post losses in upcoming quarters and said it will not be fully profitable for a full year until 2011. Also, the UAW rejected concessions to make the company competitive with GM and Chrysler. And now Ward’s reports that aerospace blogs and message boards are beating the drums to try and get Ford’s CEO Alan Mulally to return to Boeing (subscription required).

In another sign that the global economic crisis may be abating, Audi posted an operating profit of almost 350 million euro in the third quarter, about $515 million. It may be in the black, but profits are still down nearly 55 percent from the same time last year. With the company making money, a spokesman says it’s focusing on developing advanced new electric vehicles and drivetrains, which ties into our next story.

A report from consulting firm Booz & Co., says that the auto industry remained one of the highest spenders in R&D last year among all industries, despite the economic downturn. According to the Detroit News, five of the top 20 R&D spenders were automakers, Toyota was tops on the list for the third year in a row, spending $9 billion on R&D and GM was the next automaker on the list, spending $8 billion. Even though most major automakers cut spending on research, the industry as whole increased R&D expenditures to $86 billion.

Bridgestone announced it will put out of Formula One after the 2010 season. According to Bloomberg, the tire company is spending up to $100 million a year on the series, and will use those savings to develop new technologies and strategic products. Bridgestone is the sole supplier of tires to Formula One.

A Nebraska man has been accused of stealing parts from the Toyota dealership he worked at and selling them on eBay. The Omaha World Herald reports that authorities have searched his online PayPal account and discovered that he received nearly $550,000 for stolen Toyota parts. The scheme has gone on since at least 2001. Among other things, he sold 798 pickup truck bed extenders, 375 skid plates and 363 roof racks. Ironically, he was a hit on eBay, receiving lots of positive feedback and glowing reviews.

Coming up next, a look at some of Acura’s latest updates, we’ll be back right after this.

Despite the economic slump, Acura is updating three of its most important products. The entry-level TSX gets enhancements that make it more appealing to a wider group of buyers. The biggest news about the smallest Acura sedan is the addition of an optional V6 engine. At 3.5-liters, it puts out 280 horsepower, 79 more than the base four-cylinder.

Also at the smaller end of the spectrum is the brand’s RDX crossover. Like the TSX, it gets an array of upgrades and tweaks including restyled bodywork and interior refinements. But the biggest news is the availability of a two-wheel-drive model that offers some surprising benefits.

Of course Acura didn’t leave its larger vehicles out of this sweeping refresh. Even though it was just redesigned a couple years ago, the popular MDX gets some big upgrades, too. The most obvious changes to this seven-seat crossover are on the outside, but underneath it features the brand’s first-ever six-speed automatic transmission. It also gets some new technology, including a multi-view backup camera.

The refreshed TSX and RDX are available on dealer lots right now, but the new MDX isn’t out yet. It’s expected to arrive in December.

And that’s it for today’s top news in the global automotive industry. Thanks for watching, we’ll see you tomorrow.

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22 Comments to “Episode 262 – Ford Posts Solid Profit, Audi in the Black, Automakers Top R&D Spending”

  1. Pedro Fernandez Says:

    Congrats to Ford for great economic news without collecting welfare from the government, now I hope the UAW doesn’t drive Mullaly away with their demands, they’re gonna shoot themselves in the foot, there’s no roome for the UAW down in Mexico way.

  2. Jim Sachetti Says:

    “the UAW doesn’t drive Mullaly away with their demands, they’re gonna shoot themselves in the foot”

    They have been known to do it in the past, and at Ford they seem very eager to do it again. Gettelfginger’s probable successor, as if this was possible, is even worse than G himself.

    The profit report will only increase the UAW’s greed, I am afraid.

  3. T. Bejma Says:

    Nice job Ford. Expect a profit announcement from GM too. Another detrimental affect of C4C. Chrysler? Who knows…

  4. Tony Gray Says:

    Some awfully inept management at that Toyota store to not catch all that inventory going bye bye.

    That Acura grille that looks so hideous (IMHO) on the sedans somehow doesn’t look so out of place on the crossovers. Go figure.

    And John, don’t forget, we loyal viewers of AAH are waiting for you to announce that you convinced that lady from the Mercury commercials to come on as your next guest!!!

  5. Chuck Grenci Says:

    Good news that some of the red ink has turned to black; now we just need some stability and for other companies to join in on profitability.

    Acura makes some good stuff but still could use some help with design; it’s not bad but it is boring (at least to me).

  6. Dave Says:

    I am with U Tony, I hate the grills on the ACURAs I would never buy one.

    As for FORD with a ton of debt and C4C is now over, and UAW problems this “profit” the party may just be short lived

  7. Nick Stevens Says:

    The last 5-6 years, Acura has lost its way totally. Its new designs are horrendous. Only their mothers and Star Trek fans could possibly like them. Acura as a division should either wake up or DIE. Too bad, since it was the first, and quite succesful for its first decade or two, Japanese attempt in the near-luxury and luxury class. And I say all this as a Honda fan and past and present owner of Civic and Accord 5-speeds.

  8. David Says:

    Come on John, today is NOT Tuesday, November 2nd.

  9. Alex Kajdi Says:

    I am in agreement with Dave and Tony, the grilles on Acura Models looks like a shield got bolted to the front end of the vehicles. Bring back the 2005-2006 MDX styling. Acura / Honda needs to share the SH-AWD technology with it’s Honda Line-up, especially with the Odyssey, Pilot, Accord and Civic Si. The Civic Si needs a 6 speed automatic transmission.

    If Mullaly leaves Ford they are sunk! Bill Ford needs to be come more visible in Ford’s Advertising campaigns. Bill needs to be the Company spokesman. It is his family’s name on each and every vehicle they sell. If I had that silver spoon stuck in my month at birth you could not stop me from being involved in every aspects of the company. I would be walking the production floors of each and every plant, visiting dealerships and hosting consumer groups in all the major markets around the nation and maybe the world. If Obama can run all over the country gathering votes for Democratic Candidates. Why can’t Bill do the same for promoting Ford vehicles? Jill Wagoner, the Mercury Spokeswoman could be his female counterpart in attracting attention to the Ford Brands.

    Ford was once known as: First on Race Day!.

    In less recent times: Fix or Repair Daily!.

    Not to distance future: Federal Orphan Recapitalization Doctrine.

    This is what FORD will be if Mullaly leaves. The Federal Government will need to bailout Ford from it’s soon to mature debt load with taxpayer dollars to save all those Ford UAW jobs. Peter Delorenzo see’s the writing on the wall for Ford and the UAW.

  10. Jim Sachetti Says:

    Fix or Repair Daily is what I know FORD to be,

    and “Fix it Again Tony!” for FIAT.

    (FIAT-Chrysler.. a match made in heaven.. or, if you buy one of these POS, Hell…)

    One thing Mullaly has not done yet, and he should, a long time ago, is fire that clueless head of design Mays, and, even more important, also fire that slimeball spin doctor Mark Fields. If he leaves, and these two still have their Jobs, WOE to Ford!

  11. Alex Kovnat Says:

    So Boeing is trying to lure Alan Mulally away? This proves that, when you get up to stratospheric levels in the American corporate hierarchy, it gets very difficult indeed to find people of the caliper to do justice to such positions. I mention this because I’ve read criticism of high-level executive pay in comparison to how much rank-and-file workers are paid.

    Given what a great job A.M. has done in turning Ford around, people who do a great job at that level deserve every kilodollar they’re paid.

    I hope the UAW will realize that if they want higher pay than they’re getting, the answer is simple: Let Ford (and for that matter GM and Chrysler too) offshore production of small cars that cost a lot to build because of all the technology involved, but cannot command as high a price as a luxury car or pickup truck.

    Let domestic assembly plants, especially those up north in UAW country, specialize in larger vehicles which are easier to sell at a higher price compared to how much it costs to build them. If we fail to permit this, don’t be surprized if Ford, GM and Chrysler continue to experience problems staying afloat.

  12. Jim Sachetti Says:

    “Alex Kovnat Says:
    November 2nd, 2009 at 2:49 pm

    So Boeing is trying to lure Alan Mulally away? This proves that, when you get up to stratospheric levels in the American corporate hierarchy, it gets very difficult indeed to find people of the caliper(caliBer!) to do justice to such positions.”

    Mullaly was actually passed over for promotion at Boeing, and this is a major reason he accepted the Ford job.

    Now that he did well at Ford, Boeing is doing well to re-consider giving him a top Mgmt position.

    PS Alex, people in top positions are not paid in … “kilodollars”, which are only plebeian $1,000s that any McDonald’s employee gets, but in Megabucks, aka MILLIONS. Most of them, not deservedly so.

    It is a glaring conflict of interest. CEOs appoint their own compensation boards and fill them with their buddies and butt-wipers, and then of course, rain or shine, they get their multi-million salaries and bonuses, EVEN IF they drag their company thru virtual bankruptcy, as the clowns in the Banks, Wagoner at GM, and that sordid LaSorda at Chrysler did.

    Good Riddance to bad rubbish… but unfortunately, Henderson is just an inbred Wagoner clone, and many in the banks still have their jobs, like Vikram Pandit at Citibank, and this really makes me sick to my stomach.

  13. Jim Sachetti Says:

    PS Alex, even tho gas prices are not up to their $4 and $5 levels again, American Consumers have sobered up, and many do not even have the $ that they used to have (largely thru home equity loans) to buy large expensive cars.

    The new 35 mpg CAFE will further discourage large car buyers.

    So your recipe does not bode well for Detroit.

    Remember even Toyota tried to make money by building full size pickups in the US, and it bombed big time, and lost billions on the new Tundra.

    Americans are spending less and saving more, worried that the next one losing their jobs could be them!

    They arre defensive and many, under the CFC program, did NOT buy another SUV or pickup, but most bought econoboxes, FOcuses and Civics and Corollas.

  14. Hermann the German Says:

    Some commenters here don’t like the Acura designs. But they do recall the head dress of martial leaders from the shogun era. I doubt many people have ever seen that stuff, so the cars look just odd. Also, if you look at the side character line on some late model TLs, its possible to see the lines of a long Samurai type sword.

    Again, if you don’t see the heritage, the cars are odd looking. And not many people walk through the martial arts section at the Met.

  15. Andrew Charles Says:

    35 mpg CAFE will do nothing to discourage large car buyers. That has been the problem from the start—asking manufacturers to sell vehicles but giving consumers no incentive to buy them. In fact as fuel economy improves consumers use the fuel savings to buy larger vehicles, or at least delay buying smaller vehicles with smaller engines and high fuel economy. The current CAFE proposal assumes that fuel prices will rise and drive consumers to buy more efficient cars, otherwise the industry will not be able to meet the target.

  16. dcars Says:

    I own a Honda Accord, I don’t like the looks, but it runs good, is roomy, well engineered and gets great gas mileage. I’m happy.

  17. dcars Says:

    Some good points were made about CEO’s compensation. If they increase shareholder wealth, they are worth every penny they make. If they get control of the board and continually lose money they can destroy great companies. Rick Wagoner had complete control of the GM’s board. When he took office GM’s stock was worth $60.00 a share, when he left it was worth about a buck.

  18. JOE Says:

    JOHN,

    I guess you were trying to see which one of your viewers was watching and paying close attention and that might have been why you said “Tuesday, November 2nd, 2009″ and NOT Monday. See, we do pay attention! And we love the show! Great job as always!!!

  19. Nick Stevens Says:

    I ownED a Honda Accord for 14 years, biought it used at 3.5 years old and 68k miles for only $6,500 in 94, I did like the looks (it was a germanic-looking squarish but elegant 5-speed silver coupe), but it ran good, was roomy, (but much smaller and probably 500 lbs lighter, at 2822 lbs, than today’s Accords) very well engineered and got good gas mileage (32-37 highway, 20-28 city). I was happy. It rusted behing the rear wheels, and the gearbox started acting up, but it was still drivable when I donated it to charity in 2008. I sure got my money’s worth. It had 137,500 hard miles on it (short trips, cold starts most of its life when I drove it)

    I then bought a very complexly engineered, RWD German V8 in 05 and had it till now. I am actually very surprised, it already has as many miles as the Accord had at the end of its life, and it still drives and looks like new, zero rust for a snowbelt 12 yr old car, etc. I already got my $s worth off this one. I am surprised that, being 10 times as complex as my old accord, it does not at all fail 10 times as much!

  20. Nick Stevens Says:

    “Rick Wagoner had complete control of the GM’s board. When he took office GM’s stock was worth $60.00 a share, when he left it was worth about a buck”

    ANd Henderson was a Wagoner clone, only marginally better. And, if that’s possible, Sales VP LaNeve quit recently, found a job in insurance (they are not very picky, are they?) and was replaced by clueless Susan DOherty, whose GM career (another inbred loser) was a series of disasters.

    That’s what one gets when one lets the Govt run a company. I start to think that the New GM is actually worse, if that is possible, than the old one. Pity, because they have some good looking cars now!

  21. Nick Stevens Says:

    “Again, if you don’t see the heritage, the cars are odd looking. And not many people walk through the martial arts section at the Met.”

    Acura should know that most people do not see the heritage. They should have US-market tested the designs. What counts for pretty in Japan does not always cut it in the US. Subaru must have had a similar problem, their exterior styling is just awful, when it is not merely boring. In contrast, Hyundai and Kia are far smarter, they went to Italy and outsourced their exterior (and interior?) styling to the best in the world, the famous italian Design Studios, and it sure was an excellent investment for them!

  22. Nick Stevens Says:

    “I owned a Honda Accord for 14 years, bought it used at 3.5 years old and 68k miles for only $6,500 in 94, ”

    Forgot to say that the 90-93 LX’s such as mine had a mere 125 HP from their 2.2 engine, a better 137 lbft of torque. I remember it struggled in some parts of the road, was not as fast as I would like. Now with the luxo german v8, the same spots are effortless, there always seems to be adequate power (rated at 282 HP, and the torque at 317 maybe, but a friend told me I can buy a chip for $150 or so that can release extra HP to take it above 300. I did not bother. And the v8 weighs at 4,300+ lbs, about 50% more than the Accord. But has more than twice the HP and torque.