Ford Australia Reports $40 Million Loss
May 22, 2007 by Alborz Fallah
Australia’s 3rd largest manufacturer is running at a loss. Ford Australia has reported its biggest financial loss since 1993. In the 2006 financial year Ford Australia managed an after-tax loss of $40.3 million.
Its a big change from the last four years which have been profitable for the manufacturer. In 2005 Ford managed an after-tax profit of $148 million with an even bigger profit of $192 million in 2004.
So why last year? Ford Australia has made a profit in 7 of the last 10 years. Ford blames the production cost of the new Ford Falcon as one of the main culprits, also there is talk that the one-off costs for redundancy packages (after cutbacks at Ford’s Geelong and Campbellfield factories) have significantly hurt Ford’s profitability.
Of course the new VE Commodore has had its share of Ford’s profits too, with the company selling 14,175 less cars last year than it did the previous year. However there are brighter days ahead with the new Falcon on its way, it will surely push Ford back up the profitability scale.
Ford Australia president Tom Gorman is willing to admit that the Australian public is slowly changing its perception of the ideal family car:
“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.” Ford Australia president Tom Gorman
Mr Gorman said the 2006 figure was also affected by reductions at Ford’s Victorian plants, which scaled down production to coincide with slowing demand.
Speaking of the new Falcon, Mr Gorman squashed rumours that the car might be released late this year.
“However, Ford remains committed to investment in future products, such as the new Falcon that’s due for release next year.”
Ford’s profitability for the next few years rests on the success of the new Falcon, as we can see from the table below, when the disastrous AU falcon showed its ugly face (1999-2001), Ford ran at a loss. We assume that Ford has learned its lesson from the AU falcon and the new Orion will present an easier face to live with.
- 2006 – $40.3 million loss
- 2005 – $148 million profit
- 2004 – $192 million profit
- 2003 – $154 million profit
- 2002 – $20 million profit
- 2001 – $5.5 million loss
- 2000 – $16 million loss
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I find it odd that they have had a massage loss and yet they are going to bring out an all new Falcon.
The Falcon isn’t that out of date and Ford could easier wait another year or two before a new car comes out.
well its not really massive
if you count up their profitability in the last 6 years or so
its around 450 million profit!
they plan these massive spending sprees in their budget.
I wouldnt be worried… Im sure the development of the new Falcon is playin a major role in that loss, investment in a new model isnt cheap, but just like they have profited in the past they will do so after this new Falcon comes out.
doesent mean too much. nissan was running huge losses in the 90’s and look at some of the cars they came out with in that period, gt-r, s-chasis.
thanks to strong leadership and optimism they made one of the biggest turnarounds in history and are now making huge profits.
like alborz said in the past 6 years they made over 450 Million in profit.
I too am hoping FORD can bag another good car like BA style did for them. Difficult to say though when you don’t have the same people running the opperation they did back then.Would love to see them kick Holden ARSE again . The Aero Dynamic’s of the BFs in Supercars this year seems to be killing them against the VEs {Very Exaggerated } .Unless there in the wet!! Just PLEASE pick up the quality from the last?????