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Ford CEO: Brand Really Resonating In China

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Ford Motor Company (NYSE:F) CEO Bob Shanks speaks with Fox Business Network’s (FBN) Liz Claman about second quarter earnings, Chinese customers, and the environment in Russia. When asked about second quarter earnings Shanks said, “It was a strong quarter for Ford,” and, “it was driven by good cost performance.” Regarding sales in China Shanks said, “we’re finding in China is that our brand and our products are really resonating,” and that, “there’s a lot more to come in terms of the China story for Ford.” When asked about the environment of Russia affecting Ford, Shanks says, “We’ve seen declining industry sales,” and, “a lot of that I would just call the normal volatility of an emerging market.” As for the future of Ford Shanks says, “I think we feel very much on track to our guidance for the year.”

Ford CEO on second quarter earnings:

“The one word I would use is strong.  It was a strong quarter for Ford. Well, they had a record quarter for any, a record profit for any quarter, which you mentioned.  And it was driven by good cost performance and we also had strong profits coming from our after-sales service and parts business.  But the other word I would use if you asked me is the breadth of our performance.  We had good news across many parts of our business, outside of North America as well.”

Ford CEO on sales in China:

“Well, Asia Pacific is important because it’s by far the largest individual region of the world in terms of sales in China.  Within that is the big gorilla.  And what we’re finding in China is that our brand and our products are really resonating with customers. We’re seeing strong growth in what we call the tier 2, 3, 4, 5, 6 cities.  The quality of our products is great.  We’re getting good pricing.  And as you said, we have more capacity coming on stream.  We’ve got right now three plants, three additional plants under construction in China, one of which we’ll open later this year and two next year. So there’s a lot more to come in terms of the China story for Ford.”

Ford CEO on the Lincoln brand in China:

“Well, actually it’s interesting.  The Chinese customers have a good view of the Lincoln brand, even though we don’t officially sell anything there yet, we will later this year, as you mentioned. And the products that we’ve — that we’re going to bring to market there are very fuel-efficient for the segments in which they participate and we’ll have not only larger vehicles, but we’ll have midsized.  We’ll have SUVs.  We’ll have smaller vehicles, including the brand-new MKC small utility, which we’re in the process of launching right now. So there’ll be a broad range of choices for consumers once we launch the brand there.”

Ford CEO on growth in the European markets:

“Well, we’re certainly seeing very, very modest growth in the Euro area.  Our view is that GDP will probably grow this year about sort of in the 1 percent range.  In the U.K., which is an important market for us, we’re seeing much stronger growth, 2.5 percent to 3 percent range. So it’s no longer declining but I think it best when one views the Euro area, you know, you could only call that modest. But nonetheless, it’s still improving, seeing the positive effects on that in our business.”

Ford CEO on the environment in Russia affecting Ford:

“Yes, the overall environment in Russia clearly is challenging and it is very fluid.  And putting aside the geopolitical issues, you know, we’ve seen for some time now the GDP growth rate sort of softening.  We’ve seen declining industry sales.  We’ve seen some adverse segmentation within those sales among the various different segments. So the ruble is weakening.  So the overall environment is quite challenging.  And a lot of that I would just call the normal volatility of an emerging market.  Clearly, though, the geopolitical issues are an overlay on top of that.  We haven’t been seriously affected so far in terms of the sanctions that have been announced by both the U.S. and the E.U.  And if something else comes out from either government, you know, we’ll respond as appropriate. But at the moment, we’re moving ahead with our business and working with our partners to find actions that can improve the business as we go forward, given the environment that we’re in.”

Ford CEO on the future of Ford:

“Well, we certainly expect to deliver the guidance that we’ve had out there since the beginning of the year, which is to make a profit of $7 billion to $8 billion.  We’re still on track on that.  Obviously as the year progresses, there’s always both positive surprised and negative events that transpire. I mean, that’s the nature of our business, where everywhere in the world — and it is a — it is a volatile world.  And we’ve got a great process in place that just simply responds to that.  And it makes adjustments as appropriate. And so I think we feel very much on track to our guidance for the year.”

Ford CEO on what Ford vehicle Shanks is currently driving:

“Well, you know, I just got a brand new MKC.  That’s that new small utility that we just launched.  And I’ve been driving it the last two nights.  Love it.  It’s great.  It’s the perfect size for me.  It’s just solid, quiet, everything you want a luxury car.  So I would highly recommendation it to you when you’re thinking about a new product.”

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