If your motor company’s name happens to be Ford, it’s tough to make news this week given the buffoonery of Toronto’s mayor who shares the same name. Simply researching this through a Google search proved difficult given that three-chinned idiot’s on-camera ridiculousness. That said, the reason that Ford Motor Company (NYSE:F) was never a part of the U.S. government’s bailout is its global purview. A willingness to make the best panel-van for Brits, or even more impressive, the acknowledgement that cars need to be smaller in large parts of the world, never mind moving the steering wheel to accommodate “wrong-side” driving.
Ford’s new car to be smaller, cheaper
Today saw Bill Ford and Joe Hinrichs in Brazil explaining its newest concept car: the Ford Ka, a five-passenger hatchback designed to be an affordable family car for millions of buyers in China, India, South America and other growth markets.
ValueWalk's Raul Panganiban David Barse, Founder and CEO of XOUT Capital, and discuss his unique approach to investing. Q1 2021 hedge fund letters, conferences and more The following is a computer generated transcript and may contain some errors. Interview with XOUT Capital's David Barse
Unlike when Chevy tried to market the Nova to Spanish speaking countries despite its name, Ford Motor Company (NYSE:F) seems to have it right with the Ka. Nova, or no va, means “it doesn’t go” in Spanish. Yes, I also know that they speak Portuguese in Brazil.
Ka an acknowledgement of global landscape
“It is one of the most important product programs we’re working on and I know the things we’re working on for North America,” said Hinrichs, referring to the redo of both the Mustang and F-150.
“It’s a big deal for us,” Hinrichs said of the smallest car Ford Motor Company (NYSE:F) makes. “It’s been an important product program from the beginning and gotten a lot of leadership attention,” he continued.
“We’ve been talking for a long time about leveraging global platforms, but there have been questions about the lower end of the spectrum,” he said, and “whether Ford can move its global strategy down market.”
This is speech that American automakers for years have been unwilling to utter as though it’s somehow sacrilegious.
It’s true that smaller cars mean less profit per car, it is, however, also true that profit is profit and 100% of nothing is still just that, nothing.
“It’s a necessary segment to play in,” said analyst Dave Sullivan of AutoPacific.
The developing world is just that, developing. One can’t expect to enter a market when you price yourself above it.
“We need to be in this space,” Hinrichs said. “There is so much potential around the world.”