It's an understatement to say that it's a tough time to be an American automaker. As the bankruptcies of General Motors and Chrysler showed, the American auto market is far riskier than it used to be and, as such, businesses in the car industry face funding and sales pressures that threaten their very existence.
During the tumultuous days of 2009, when GM and Chrysler went before Congress to ask for financial assistance, Ford remained the odd duck out for its apparent economic strength. A well-timed acquisition of a long-term credit facility during 2006 and prudent spending at the end of the boom years in 2007 put the car and truck manufacturer on more certain, if not steady, ground.
Since then, the global auto market has seen prosperity come and go, and Ford has not been immune from the shifting winds. The collapse of car sales in Europe hit Ford particularly hard, as its operations in the European Union have made up for shortfalls experienced in the United States. The post-Great Recession market realities have forced Ford to provide more consumer innovations, some of which have led to very public black eyes for the company.
According to Automotive News, an American industry source, Ford was forced to compensate customers this year after misleading sales pitches were authorized for the C-Max Hybrid, which was publicized with inaccurate miles-per-gallon averages. There are also reports of shortages for parts, as well as mounting complaints over mechanical issues that the company has refused to take full ownership of.
What does this mean for its stock? Using the SmartStops Risk Signals analysis, you can see that the [F] stock price has been in flux since the start of 2013. Although still high compared to January, it has been in an elevated Risk State since July, and these pressures, combined with the seasonality of the global auto market, could lead to headaches for Ford's investors.
Categories: Stock News