Ford Australia post $87.2m loss for 2007
9 May, 2008
64 Comments 
Ford Australia has today released its financial results for the 2007 fiscal year and has outlined an impressive strategy to improve the brands profitability in 2008.
In 2007, Ford Motor Company of Australia Limited posted a net after-tax loss of $87.2 million from net sales revenue of $3.3 billion representing 108,071 total vehicle sales.
Overall market share was down to 10.3 percent in 2007 from 11.9 percent the previous year, the result of a year-on-year decline in sales of 6,894 units.
“Ford Australia experienced a challenging year in 2007, with the ongoing transition of our product mix contributing to lower sales volume and market share,” said Ford Australia President, Bill Osborne.
Rather than making excuses, Ford Australia is making progress in 2008 with the addition of the new Mondeo and the all-new FG Falcon range to its line-up which is now on sale as of May.
Ford Australia also announced it would begin producing the range of Focus small cars locally from 2011 following significant investment in world-class research and development facilities in Geelong and at the company’s Proving Ground in Lara.
“We continued to make significant investments in our facilities that will help secure the long-term future of Ford in Australia. These will further establish our business as a centre of automotive design and engineering excellence in the development of class-leading vehicles for Australia and overseas markets,” said Mr Osborne.
The aging BF Falcon managed second in the large vehicle segment for 2007 while the Territory maintained its position as the most popular SUV with sales of 17,290 units, equating to a 23.2 per cent share of the segment.
“The enhancement of the Ford portfolio through the arrival of Ranger, Fiesta XR4, Focus turbo-diesel, Mondeo and Focus Coupe-Cabriolet has created the most impressive Ford line-up in recent history,” said Mr Osborne.
This is the second consecutive year Ford has posted a loss, finishing 2006 $40.3m in the red. However this followed four years of profitability between 2002 and 2005 where it posted profits as high as $192.3 million.
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May 9th, 2008 at 5:51 pm
One would have to hope that they’ve accounted for the bulk of FG product development in this period, otherwise the outlook is dire.
May 9th, 2008 at 6:09 pm
one would assume that captain.
when you consider the FG development cost 700K, its a wonder the figure in the red wasnt bigger than that
May 9th, 2008 at 6:16 pm
I don’t think you can’t write off new model development cost against current revenue under AU tax laws.
It has to be amortised over the sales life of the model in question.
That would mean none of the FG development cost is factored in, the FG will have to make sufficient profit from its own sales to pay for the development. But the depreciation cost of the development can be offset against profits from other model sales.
Even so, I’d say the outlook is dire while Ford continues with the doomed large car.
Ford will be looking enviously at Mitsubishi at the moment - they got rid of the millstone of local large carmanufacturing, and are selling imports in record numbers. That’s repeating the Nissan story. All other import only car companies are booming.
Changing over to manufacturing small cars locally won’t solve their problem. The Ford range outside Falcon is not as boring as Toyota, but not as exciting as the rest (because most models are old), so piggy in middle (with bad supply planning thrown in) will also miss out.
May 9th, 2008 at 6:18 pm
suprise surprise………
May 9th, 2008 at 6:21 pm
Andrew M. One of the things that I was told many years ago was ‘never assume anything’. And the blue oval has lots of clever accountants. Who knows how many years they’re going to spread the $700K over?
May 9th, 2008 at 6:44 pm
Oh boy I can just see the Toyotaphiles kicking of now.
Ford really need to pull their little socks up quickly or Ford Au won’t be designing & manufacturing cars for long if it carries on. Production of the Focus is a start. How about diesel engine production locally since its the big demand item at the moment.
May 9th, 2008 at 6:44 pm
reckless,
car manufacturers do show profits reflecting their development costs
captian,
thats true too. the cost has been clearly spread over at least this year and last year.
just look back pre development costs time. take this years loss and add it to last years loss. then take the profits of the 3 previous years and take the loss out of those.
the balance of the last 5 years shows ford OZ with a well and truely out of the red figure.
5 yrs is the typical vehicle development cycle so dont forget to average the profits over that.
i mean even if you take this years and last years loss out of the previous years profit for 12 months there is still change
May 9th, 2008 at 7:09 pm
Good to hear they are loosing money, if they make decent cars they would be making the profit. The public has spoken. The sooner we get rid of these taxpayer-money swallowing loss-making local car manufacturers maybe we actually have a chance that the federal government will bring our taxation on decent cars equal to the rest of the world.
We pay 80% premium on decent cars from EU or Japan or USA just so we protect the local manufacturers, and the funny thing is that it’s not doing much. Nobody is buying Fords or Holdens because they are dinosaurs. Just read about the modern engineering developments in EU and Japan and then compare it with the local products. Stuck in the 1990’s is an understatement.
May 9th, 2008 at 7:25 pm
Net AFTER TAX loss? I didnt think losses got taxed
May 9th, 2008 at 7:35 pm
TP,
it does seem an odd way to word it doesnt it. ha ha ha
May 9th, 2008 at 7:47 pm
BTVQ38DETT - I wouldn’t quite say Holden and Ford are dinosaurs..yet. However the economics of producing a car for just the australian market really don;t stack up.
Ford sold say 10,000 cars per month, say 15% of those are Falcons, thats about 18,000 p.a.
Thats really not enough to fund Ford Au and the respective development costs. I wouldn’t know what the break even point is. Ford need to revisit the demanded market and sell whats in demend, Oh they do with the Fiesta and Focus, but its early days yet.
I agree that the tax payer should stop subsidising the local produced vehicles.
May 9th, 2008 at 7:51 pm
Yair, serve ‘em right for “loosing” money. With spelling like that, I agree with Andrew M - we are most likely dealing with our master wordsmith, TP. Or one of his mates with equal skills and intelligence.
And what about the employees. Should they be sucking eggs, too?
May 9th, 2008 at 7:55 pm
Oopsy, TP and BTV9857KJFDNBKJHGI75TIUHJ may not be the same person. I take that back, TP.
May 9th, 2008 at 8:21 pm
Serving of humble pie on it way Golfie - cream or icecream
Only a matter of time and providing Toyota levels of customer service then Ford might become profitable once again.
May 9th, 2008 at 8:22 pm
Ford’s local sales, quality/customer satisfaction surveys and financial losses speak for themselves … what else do i need to say !!
cheers
May 9th, 2008 at 8:25 pm
Hipster Dufus. All things are cyclic, kinda like your mindset. Trouble is sheep boy cant see things change!
May 9th, 2008 at 8:26 pm
Keep grazing and hope it is not weed as I suspect - where there is smoke there is fire. LOL
May 9th, 2008 at 8:40 pm
Ford Iam convinced is turning corner and coming back. Look out is my response as they clearly are dark horse! It may take another year to start, but it will. This is cause of whole flood of new wave models penned and sorted…. including, and not limited to:
1. Capri and there are two versions of this
2. F250 Reflex
3. Fiesta 3dr and 5dr
4. Focus 3dr and 5dr, Euro Wagon and cabriolet
5. Mondeo sedan and wagon
6. Galaxy
7. C max
8. S max
9. Iosis (stunning as)
10. Iosis X (stunning as)
11. Ka
12. Kuga
13. Puma
14. Start
15. Verve 3dr and 5dr
16. Visos
17. Airstream
May 9th, 2008 at 9:20 pm
I think Ford is the next local car maker to shut local production. Look at its range
Falcon, dinosaur
Focus, boring expensive to maintain Euro rubbish
Fiesta, the same but smaller
Mondeo, same but bigger
Commercial vehicles, not a patch on Toyota
The only car with a bit of commercial excitement is the Territory and its days are numbered as are all SUVs
Their only hope is the locally produced Focus in a couple of years. It they localise it properly, fix the brake wear and build it right they may have a chance.
May 9th, 2008 at 9:28 pm
Sam you obviously don’t like Ford thats your right, but you’re a minority thinking that. The Mondeo is a great car challenging the Falcon. The Focus since its launch in 98 is considered highly by many and has sold million (UK’s best selling car.
Sounds like your a real redneck Australian. Thats no critisism by the way, its you identity. Stick with it mate.
May 9th, 2008 at 9:36 pm
Up Yours Samr, I think rubbish talk kick jobs out of Australia, have a look at GM Daewoo Holden, not much better hey, is there anything positive being said about this American owned company except exporting the G8 at a present loss… remember that rebadging Daewoo is no positive step either, get a grip pal…
May 9th, 2008 at 9:37 pm
local have no-one to blame but themselves other manufacuters can build over-seas and bring it in cheaper than the locals.BUt sure teh fg is nice and new but really compared to a euro or heck even a nerw fiersta has better technology in it.Bmw brings in new thing every gen the aussies are just a remake of a 30 year old car on a new platform and stuff but really the new falcon will be here till 2013 thats a long time
May 9th, 2008 at 9:37 pm
Maximuff - are you saying that Ford AU should bring all those models to Australia. Rather too many I think for a small market.
May 9th, 2008 at 10:13 pm
Iam sighting examples of new Ford designs come across or at concept stage that are new look in regards to Kinetic design
May 10th, 2008 at 12:02 am
This isnt good for all manufacturers in Australia, GM, Toyota etc.
Most of the profits for TMCA is from exports, and most sales are from imports.
GM has lost sales also, and as discussed are favouring exports.
From the local standpoint its not really looking good.
The “bad” thing is…. Holden and Ford do design their big cars for sale locally and judging by way things are, they are heading to a direction where R&D is done in Oz, but manufacturing is done overseas….
Ford and Holden recently have a lot of job opennings in R&D and I should know, some work mates have been recruited to them…. and it seems a lot of R&D are “global” projects as opposed to just local…. which really does bring questions… like, manufacturing plants significantly compressed to cut losses?
Toyota isnt looking that good either, sure sales are nice. But the Oz dollar almost matching the US means trouble for exporting…
This is a huge issue and have been touched on SAE reports.
I’ve got other information that might be confidential so wont say it.. but definitely some strategic changes are to happen for all 3 major manufacturers in Oz.
May 10th, 2008 at 12:10 am
“No Name” Sorry mate look in a mirror, Rednecks buy Holdens and Falcons because “We always buy a Holden/Ford”
“Ford G Series” To keep buying Holdens and Fords because of jobs is lunacy. Both are foreign owned as is Toyota.
Holden is almost as bad as Ford, selling cars that real people do not want. If it was not for Govt, big business and Novated lease tax benefits they would be gone already.
The head of Holden said as much on TV the other day, if they bring in fuel efficiency laws they are out of here.
They should have had a diesel in the Falcon and Commodore years ago.
May 10th, 2008 at 1:16 am
I hope the FG pulls them out of trouble, and after inspecting one at a dealer, I think this is a distinct possibility. The key lies in the silhouette of the car (which is the most prominent aspect in the metal). It really appears smaller than Aurion, VE and BF in the metal- significantly so. The shape of the car is quite striking, and the ergonomics and material quality of the interior are beyond reproach. The doors dont thunk hard, but it’s acceptable, as it fits in with the theme of the car. The switch to G-series could work, as even the base G6 has an aura of sportiness- instead of Fairmont/ Berlina/ Prodigy middle pack image. So the product is sorted.The most worrying aspect (drivetrain) will receive full attention in less than 2 years. Let’s not forget, people have dismissed Falcon since it’s inception and its now nearly 50. They wouldn’t have made a 2010+ commitment if it was doomed.
What I lack faith in is the inept dealer network. If they don’t pull their socks up then customers will flock to obsolete rivals.
Didn’t Ford Oz profit Q1 2008?
May 10th, 2008 at 1:52 am
Poison Eagle, we in Perth got our first glimpses of the FG at our recent motor show. I must say, Bavarian Missile and I were expecting and hoping for good things, but we saw no sign of the much vaunted interior style and quality except for maybe in the G6 and above.
The interior door pulls feel like eel skin, the same metallic grey console paint is splashed around as liberally as it was in the BA-BF and door closing feels very tinny. I still thought VE is better, except for some nasty plastic flashes on the side of the handbrake lever and console.
Otherwise, I’m with you. I hope the FG pulls them out of trouble.
May 10th, 2008 at 9:44 am
Samr, you say the Focus, Fiesta & Mondeo are boring. Have you driven one? I’d assume not because all 3 are brilliant cars to drive and very exciting. The next update for Focus comes out next year and the car is far from boring.
Samr I’m guessing your a Toyota fan, HOW ON EARTH CAN YOU CALL ANY TOYOTA EXCITING????
Falcon = Dinosaur??????
The only thing ancient on the Falcon is the name plate. How’s this, DOHC Dual VCT Engine in the entire range, 6 Speed ZF Auto Box, Control Blade IRS, ABS, ESC, EBD, 4 standard airbags (curtain airbags for $300 so don’t complain) So may I ask what does an Aurion have technological thats more advanced than the Falcon????
May 10th, 2008 at 9:47 am
And if you say “Oh BMW has this & that” pull your head in, the cheapest BMW is $50,000+ It better have more stuff with it.
May 10th, 2008 at 10:26 am
Toyota Rav4, Honda CRV and Nissan Xtrail all use more fuel than the FG Falcon. That is real world economy, not some completely ridiculous ADR test.
May 10th, 2008 at 10:42 am
Wow, now we will judge person IQ just because of typo. Losing, alrigh, but which away way you spell that the result is the same.
The reasons why BMW is 50K more is because of the highest taxes in the world. should I repeat again that my favourite car at the moment R35 GT-R costs 75K in USA and in Japan but it will set us back 150K.
If the local manufacturer does not export vehicles then they are doomed.
With a small market like ours (population of 20mil) we cannot support anything more than 2 OEM, clear and simple.
May 10th, 2008 at 11:48 am
There is a fair amount of truth in what BTVQ38DETT has said, for the tiny economy (population) we have it is ridiculous that we produce from the ground up two very ordinary cars(Commodore and Falcon) and manufacture another (Aurion), we just don’t have the economies of scale to do it. It’s like the city of LA (U.S.A) producing 3 cars just for it’s self, to me that sounds crazy and it is, but thats what we are doing we are simply to small to be doing this sort of thing.
the sooner local manufacturing dies the cheaper worth while cars will be.
May 10th, 2008 at 11:57 am
But you’ll keep your job, right?
May 10th, 2008 at 12:13 pm
Danno go back to Hawaii and stick with something you know, book ‘em..
Its in the national interest to maintain a manufacturing base in this country. For many and varied reasons including defence, employment, retaining a skilled workforce, a diversified economy et al.
The answer is not to kill off local manufacturing but to strengthen and develop export markets…
Also the FG Falcon is the best locally made vehicle bar none, but they are all; Falcon, Aurion and Commodore world class cars for their segment, and an absolute achievment for Australian manufacturing.
May 10th, 2008 at 12:21 pm
I couldn’t have written it better myself.
May 10th, 2008 at 12:33 pm
Its in the national interest also to maintain a manufacturing base as best as we can compete on the world stage. The sooner people deal with reality and stop being doom and gloom always…………then cool. Until then Danno, go stick your head in the sand you emu (and real negative).
May 10th, 2008 at 12:34 pm
typo…..(AND YOUR REAL NEGATIVE)
May 10th, 2008 at 12:39 pm
local manufacturing doesnt have to cease to make australias design teams a worth while venture.
i mean its the developmental costs that are ridiculous.
if the US adopted the falcon and commodore recipe, then it would combine development costs and halve the out lay.
thats why i say take our aussie recipes and make them in the states and keep making them here too.
they would halve development costs and keep up their responsibility in maintaining jobs both here ans O/S
bringing 100%imports isnt the only answer
May 10th, 2008 at 8:33 pm
Guys. We are all pretty patriotic people here, and we all understand the need to support the local manufacturers, but it should not be supported while local customers are suffering due to unfair tax system to prop-up the local OEM’s.
If you still think that having three OEM’s is a pre-requisite for a powerful economy then you should look at some other, bigger nations and look what kind of local car manufacturing they have.
Lets have a look at Spain, 45mil people and their one and only locally grown, now VW owned car producer, Seat makes cars which are sold throughout Europe. They also have a number of manufacturing only plants.
By all accounts I would not call Spain a weak, defenceless nation just because they don’t have 6 or 7 local car producers, if you compare what we have here, and compare the population of the two nations. They also made 9 times as many vehicles as Oz producers.
GMH - Exporting at a loss. Yes, I love that one too. The SS type vehicle is cheaper in USA than in OZ. Kick in the guys to the local buyers.
May 10th, 2008 at 8:35 pm
Sorry - typo I meant to say “guts”.
May 10th, 2008 at 8:50 pm
Alright, let me try this - Previously known as BTVQ38DETT.
May 10th, 2008 at 9:05 pm
so whats the difference between the government supporting car manufacturers versus the government supporting the many other manufacturing ventures they have handed bucket loads of cash to in order to bring jobs to specific countries/regions?
its how the cycle works guys. get over it.
if you really think the automotive industry is the only industry that recieves grants from the government, then perhaps your time is better spent finding out what is really going on rather than wasting time whinging
May 11th, 2008 at 6:38 am
On a closer inspection, Some FG models share the similar design plastics, You need to really get in close to see them, The ones I’m talking about are on the sides of the display on the Omega, There in the lower section cover under the steering wheel, Top part of the doors, And the lower section that meets into the lower centre console, They feel the same and look the same. The section on top of the dash looks the same but feels soft to touch.
As i have said on other parts i own a Calais-V.
On the handbrake, It’s superb down nothing beats it no hitting it no kneeing it at all, You wouldn’t even know it was there. But up looks funny, And to some that’s enough to bitch!. Well like most things you take the bad and good weigh them up and say fine the good out weighs the bad sold!.
But anyway past that.
Holden has been running losses because of the Development on VE. Give it till the end of 2010 and if it’s not turned around then panic.
On development cost, Ford hasn’t quoted a price range.
But the 700k i have read seems funny to me, I’m sure that was the AU, And BA prices?.
May 11th, 2008 at 8:36 am
just to clarify on the profit/loss for the period, there are a number of things you would have to consider (being an auditor of another large automotive manufacturer).
Development costs for the special tools used to develop the vehicle, including the “intellectual property” can all be capitalised as an asset (rather than treated as an expense) for the period it was under “Development” - the “research” component HAS to be treated as an expense.
And then you would have to assess the cash flows which you will receive from those and try and ‘match’ off the annual expense to the revenue.
What may have killed this figure was a number of inventory writedowns for BA/BF materials/parts which are in excess of their scheduled production, and also any special tooling (assets) which can not be used for the FG would have to be written down for the component of the asset if based on the current depreciation, once production finishes, the asset will still have a value > future cash flows (which will be nil).
other ‘one-off’ things that would have effected profit are redundancy payments (~640 jobs), and also a number of sales incentives provisions that your dealer would get in January/February to run out the BF if this relates to the vehicles already produced at year end…
hope that makes sense in layman terms… and also, to clarify on Loss AFTER Tax - yes, you don’t PAY tax, but you get a tax benefit to use against future profits, so it looks like this loss was actually $124m, then reduced by a 30% tax benefit…
So yeah, in summary - don’t take the bottom line as any future indicator of the company, you need to break-it up and normalise to find out what the true operational profit is…
May 11th, 2008 at 10:06 am
Don’t forget that Ford also lost money the year before, that should help to paont a less rosy picture still……
May 11th, 2008 at 10:51 am
Reckless a carried forward loss isnt offset against a loss, its offset against future profits. But yes it will reduce the after tax profit when they do make a profit
May 11th, 2008 at 11:27 am
^
Its going to reduce their taxable income*
May 11th, 2008 at 3:20 pm
TP, I think you should stick to sucking Toyota lollipops.
You are out of your depth on any other topic.
May 11th, 2008 at 3:32 pm
I couldnt bother less what ford does with their money!
May 11th, 2008 at 7:14 pm
Well fingers crossed the FG will bail them out from this hole their in,
It would be a shame too Ford fall into the same fate as mitsubishi.
May 12th, 2008 at 5:37 am
I know send the Ford Bosses to Korea and they can get some ideas from Hyundai on how to run a car company,global car sales increasing at a fast rate,just reported a nice profit they pay their staff well and after 3 years your ford willnot be looking like a peice of crap because it is falling apart.Sorry some wont understand this 80% of the Australian population are braindead and/or rednecks when it comes to cars.
May 12th, 2008 at 9:41 am
Ford needs to change things up a bit. They have some good cars. As god if not better than Holden and Toyota. Bringing the new model Focus from Europe and start pushing the Mondeo harder would help Ford. Also put the FGs 4L six on the back burner and start pushing the proposed 2.7 Diesel.
May 12th, 2008 at 10:21 am
Big deal. Up until 2 years ago Toyota AUS was in the red for long period.
Profits for car makers in Australia are cyclic.
May 12th, 2008 at 10:58 am
The only people who think/believe that the Federal Government should stop subsidising/protecting the Australian Automotive Industry are those narrow minded imbiciles who think that because they work in another industry other than the automotive industry - they will still have a job and be able to maintain the same standard of living etc as they do at the moment. They don;t seem to realise the negative impact the loss of such a mjor industry would have on the economy.
If Ford Holden and the other mob were to close and pull out of Oz; it would mean the [direct] loss of approximately 20-40000 jobs.. then therse the loss of jobs in other areas of the auto industry such as Parts suppliers and repairers etc.
which would mnean these former auto workers wouldn’t:
have any money in their bank accounts with which to repay mortgages; or be able to go on holidays; go to restaurants; buy new electrical equipment or furniture; buy or build a home; buy a new car
Which means there would also be a downturn in the activity in other industries including building; retail; banking; hospitality/tourism which would mean significant job losses in those industries as well.
Not only that because of so many widespread job losses there would be more people dependent on social security which would mean the govt would have to increase centrelinks budget inorder to cope with demand. This would then mean they would have to increase income tax and other charges on those who are lucky enough to still have a job so it would still have an effect on their standard of living too
May 12th, 2008 at 4:52 pm
Hahahaha, sucks 2 be FORD!!!!
May 12th, 2008 at 5:14 pm
Hehe, Holden’s will be worst. Polites (god rest his soul) saw the oil crisis coming (he supposedly gave a green light on a diesel Falcon, which was cancelled by Gorman), and was prepared. Ford is able to keep the losses minimized - these deficits are nowhere near as bad as what Holden’s will be. With Holden continuing to make these ~$150 mil losses, don’t be suprised if the Commodore is built in the US within 10 years if the G8 is popular and the US dollar stays at rock bottom - GM bosses are thinking “Why export from another country with minimal profit (possibly deficit) when you can export it there with a HUGE profit?”. Ironically, seeing that Ford doesn’t make exports to the US, limiting itself to it’s own country could be a smart move, at least for the Australian operations.
May 12th, 2008 at 5:29 pm
Hahahah , sucks to be FORD!!
May 12th, 2008 at 6:14 pm
u are right wheelnut. We are a developed country should be encouraging high tech manufacturing.
May 12th, 2008 at 7:35 pm
Point well made Wheelnut but remember in the 70’s the UK government propped up the ailing motor industry. I failed to work and cost the tax payer millions. Subsequently the manufacturers were forced to go it alone. It hurt for a bit but now The UK has many foreign car owned manufacturing faciliities providing much employment. Honda, Toyota, Nissan, Peugeot, amongst many prop up what is now big business. Although European subsidies encouraged these companies here they only got initial funding and now stand on their own feet. Nissan for example are know to produce better built vehcles than the originators in Japan.
So why should the tax payer continually prop up the motor inductry.
May 12th, 2008 at 7:46 pm
But it isn’t just the motor industry.
Its wines, paper mills, mining and exploration, whitegoods (no not the toyota type), glass products etc etc etc ad infin-bluddy-nitum.
May 12th, 2008 at 8:17 pm
Bret,
ive tried that line before too.
isnt it sad that we are in the minority that is up with reality in this world?
May 13th, 2008 at 8:06 pm
the reason we should be prepared to prop up the automotive industry is simple..
Because its less of a cost to have 10-15 million [working] taxpayers contributing towards the payments made by the gummint to keep the car industry here and maintain jobs.. than it would be to have 4-9 million people contributing towards the same amount if not more because approx 6 million people lost their jobs due to the flow on effect should we lose such a major industry.
May 13th, 2008 at 8:11 pm
I agree with you there starky - in a couple of years I expect that GM will decide to build LHD Holdens/Pontiacs in Canada whilst RHD Holdens will continue to be built in Elizabeth.
This will then free up some space on the line which will enable Holden to build other new cars such as the Sandman and Torana [which I think will be renamed the Commodore when it is finally released in a couple of years]