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.