Carmageddon for Ford in the US, China, and Europe

The New Emissions & Fuel-Economy Cheating Scandal is just a Dimple. 

It’s tempting to think that Ford’s Carmageddon is a new “dieselgate” after Ford announced last night that “a handful of employees raised a concern” about its testing procedures for fuel economy and emissions certifications. Sure, Ford might get nailed. It’s furiously trying to make the getting-nailed less painful by announcing a slew of actions and self-reporting this debacle – well, the “potential concerns” – to the EPA and the California Air Resources Board rather than covering it up.

Ford might have to pay fines and face lawsuits. It – along with other automakers – has already been caught red-handed overstating fuel economy. No problem. It got through those debacles. Volkswagen got through dieselgate. Other automakers are going through, or have already settled, their own dieselgates. Corporate malfeasance can be costly. But it blows over.

Declining vehicle sales are harder to fix.

This scandal is just a dimple compared to Ford’s global problem. Its vehicles sales have been on decline in Europe since 2008; they’ve essentially collapsed in China over the past two years; and they fell in the US for the past three years.

In addition to disclosing the testing debacle yesterday evening, Ford also filed its annual report (10-K). It contains audited numbers, including global annual vehicle sales — the number of vehicles that Ford sold to its dealers (that they then sell and “deliver” to their customers).

Ford’s China sales have collapsed

Ford’s annual sales through its joint ventures in China – by far the largest auto market in the world where GM sells more vehicles than in the US – peaked in 2016 at 1.297 million vehicles, according to Ford’s 10-K. But in 2018, Ford sold only 731,000 vehicles. A two-year plunge of 44%.

Across all automakers, the number of vehicles sold in China dipped 4% in 2018, as a solid beginning was wiped out by a sharp decline in the second half. 2017 had been a record year for the auto industry. For Ford, both years were Carmageddon. Its 2018 sales were not that much higher than its sales in 2012:

Ford’s US sales dropped for the third year in a row.

In 2018, Ford sold 2.54 million vehicles in the US, according to its 10-K. It was the third year in a row that sales declined, bringing the total decline to 5% from its peak in 2015. This puts the 2018 sales volume below where it had been in 2013:

CEO Jim Hackett, whom Ford promoted in May 2017 from his Silicon Valley gig at Ford Smart Mobility, is running around the media-and-analysts circuit, pitching his layoffs-and-cost-cuts turnaround plan “Fitness Redesign,” after his predecessor flagellated his arms wildly, pitching his own layoffs-and-cost-cuts turnaround plan before getting sacked. These plans come with many billions of dollars in write-offs.

The idea of Smart Mobility, Hackett’s former gig, is to compete with Uber and Google and whatnot. The unit houses, among other things, self-driving ventures and a jewel called Chariot Transit, an app-based shuttle service Ford acquired in late 2016. At the time, it ran a few vans around San Francisco to shuttle folks between residential areas to tech-job locations. It then expanded to other cities and countries. It competed directly with city buses. A month ago, the high-tech venture was shut down. This kind of stuff sidetracks an automaker.

Ford of Europe’s long-term decline

When the Eurozone went through the Financial Crisis and its subsequent Euro Debt Crisis, Ford’s sales plunged 37% between 2008 and 2013. Then they recovered. In 2018, sales rose to 1.44 million vehicles.  Quite a feat for a company whose global sales are swooning. But those 2018 sales were still down 16% from 2008:

Ford’s global vehicle sales dropped 10% in two years

Ford sells vehicles around the world, in North America, South America, Europe, Russia, Turkey, across Asia and the Pacific region, in the Middle East, and Africa. These “Total Company” sales peaked in 2016 and have since dropped 10% to 5.98 million vehicles. This puts sales just above where they’d been in 2012 and 2011:

So just increase the prices.

How does Ford try to keep its dollar sales from taking the same steep route of its unit sales? Jacking up prices. And executives are bragging about it to prop up the swooning shares.

The metric they toss around is the average transaction price – the price at which the vehicle is sold to consumers after haggling. During the earnings call for the fourth quarter, Executive VP James Farley, Jr. bragged about the “double-digit increase in transaction prices last quarter” for the Escape and Focus models; and CEO Hackett bragged about pickup transaction prices being “about $2,000 above segment average.”

Raising prices on declining volume to cover up the decline in volume is not an elegant solution for the long term.

Waiting for Junk.

Last August, Moody’s cut Ford to Baa3 with negative outlook. This is Moody’s lowest investment-grade rating (here’s my color-corded credit-rating scale for the three major US ratings agencies). Moody’s cited the erosion in Ford’s “global business position and the challenges it will face implementing its Fitness Redesign program” that comes with a cost of something like $11 billion.

A downgrade to “junk” would make borrowing costlier and pose a slew of problems for Ford. So it’s trying to keep its margins intact by raising prices and do other things to persuade the ratings agencies to not cut it to junk.

But the real trouble is in Ford’s vehicle sales. That’s the core of its business. The fact that Ford seems to have trouble finding any buyers for its vehicles in China, that in the US, its sales have been falling for three years, and that in Europe the decline has now been going on for over a decade: that’s the real Carmageddon for Ford, not the evolving emissions and fuel-economy cheating scandal, for which it will be slapped on the wrist in the worst-case scenario. But with these kinds of declines in vehicle sales, year after year, good luck.

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  102 comments for “Carmageddon for Ford in the US, China, and Europe

  1. Joe says:

    The is even worse for Ford when you consider the rest of the worldwide auto market is growing.

    In 2016 77.3 million vehicles were sold and Ford accounted for 6.651 (8.60%)
    In 2017 79 million vehicles were sold and Ford accounted for 6.607 (8.36%)
    In 2018 78.7 million vehicles were sold and Ford accounted for 5.982 (7.6%)

    And the 2019 worldwide auto market is expected to remain level.

    “International car sales

    Along with a recovering automotive industry in the UK, Germany, Sweden, Poland and other European Union member states, it is forecast that increased demand for cars from customers in Asia will successfully offset tepid growth figures in South Korea and Japan, and help automobile manufacturers sell close to 80 million vehicles by the end of 2019, up from an average of fewer than 55 million units in the years between 2000 and 2015.”

    • andy says:

      On a bright side Ford’s dividend yield is higher than its P/E.

      • Omg says:

        Considering that car and truck prices have almost doubled over the last few years most people can not afford to pay $40k for a car or truck so they buy $20k Hyundai and Honda

    • kevin says:

      Joe, the chart from your link in statista actually shows global car sales leveling off, not growing.

      All the major car markets in the world are seeing the same trends of very tepid growth figures.
      I would expect the next phase will be a true collapse of (new) private vehicle sales.

      There are several key developments (which Wolf has also indicated in this and earlier articles), that is forcing a sea-change in the automobile markets worldwide, such as:

      – the EVs as a disruptive force, which IMO is similar in impact as the advent of internet music downloads versus CD sales during the 90s (i.e. compact laser disc – for those millenials that go huh?)

      – the increasing use of Uber/Lyft model of vehicles-as-a-service (VAAS) instead of outright car ownership, which was the prevailing model for private urban transportation for the past 6 decades or so.

      Note that, rural /suburbanites will still require the use of a private vehicle but the population is relatively small compared to urbanites. Even within the African sub-continent, 50% of their population will be shifting into cities by 2030s, which implies once again that cheaper forms of shared or public transportation will be the norm even for developing countries.

      Hence, we can see that trucks are doing relatively well primarily also because this is the most functional vehicular format for rural areas. Not so for the cities where you have taxis, Uber and public train services etc.

      – China, the world’s biggest car market, has already peaked in sales volumes. The Chinese went in droves to purchase their (mostly) first vehicle because that is their first taste of modern luxury after decades of communist deprivation.
      The “pent-up” hedonistic demand has already been satiated.

      The next stage for China is basically the formation of a, previously non-existent, 2nd-hand car market.
      In other words, those poorer mass of Chinese will seek out those 2nd-hand cars, which once again reduces new vehicle demand.

      – Other developing countries with large populations and growing aspirations, such as India, Vietnam, Thailand and Indonesia mostly can’t afford cars, so they are sticking to the more functional and much cheaper motorcycles, or using the same VAAS via their localized versions of Uber or Go-Jeks.

      To summarize, the urban millenials in mature markets in US, Canada, Europe, Japan etc. are mostly NOT buying cars, either because they can’t afford it AND because there are much more affordable options.

      Then, those in the fast-growing markets such as China, India, certain African states are also converging with the similar economic dynamics as with mature car markets.

      Hence, its all headwinds for car manufacturers worldwide.
      There is little upside to new (ICE) car sales because practically all the developing regions for car sales has already been exploited.

      Unless, the existing car manufacturers can come up with a feasible flying car or some other breakthrough innovation thats better than EVs, I really doubt the current major car brands for the ICE (Internal Combustion Engine) vehicles will survive the coming harsh winter.

      It will probably be worse than say Kodak film cameras fighting against the tide of mobile camera phones – a heroic fight but nevertheless a hopeless one…. eventually.
      If you own stock in those big global ICE car manufactures, you’d better start selling them.

      • Dave says:

        We would have no problems at all with car sales in the U.S. if our Federal Government didn’t tell the manufacturers how to build them. Cars keep getting smaller and keep getting more expensive, all because of Government regulations. Case in point, consider the price of a typical late 1960’s well-equipped full size car (125″ wheelbase) with a V8, inflation adjusted to today’s Dollar. One of those cars could easily carry 6 passengers, and would sticker for well under $20,000 in today’s money. A mid-size V8 sedan from that era (115″ wheelbase) would go for around $17,000. All of our problems come from Government car regulations.

        • Wolf Richter says:


          “Cars keep getting smaller and keep getting more expensive,…”

          YES, on part 2 “keep getting more expensive” but NO on part 1 “cars keep getting smaller.” Look what sells the most: large pickups, SUVs, and compact SUVs, and what’s dying: sedans and compact cars.

          And a good 4-cylinder engine today has more power than most standard V-8s had in the 60s.

          I don’t share your nostalgia. I had a 68 Mustang (in the mid-1970s). Today’s basic Mustang runs circles around it. No comparison, without even going up the substantial performance ladder.

        • Laughing Eagle says:

          Dave, you can have those cars of the 60’s without the airbags and all the safety features we have today, plus better gas mileage.

  2. MCH says:

    China needs trucks. F-150s. Lots of them. So does Europe.

    • Old Engineer says:

      With the exception of a small segment of the pickup market that actually use their pickups in their jobs no one needs F-150s except masculinity challenged men trying to boost their self esteem.

      • TXRancher says:

        Where does that leave the women that drive them?

        And what about masculinity challenged men pulling a boat, horse trailer, utility trailer, jet ski, etc or hauling lumber for Paulo’s garage enclosure, plywood, etc

        Old engineer myself and truck driver.

        • Paulo says:

          Laughed at that one because of the following. My mechanic friend has informed me that he doesn’t think my 33 year old Toyota PU will make it another 9 months due to frame rust. (9 months, not ten, or six, go figure) Of course he said that last year, but now I accept that the rust flakes are what is holding it all together even though the body and new box looks pristine. A few years ago…6 years ago I did a frame weld, but that is verboten so one roadside inspection will ground it. I have gone through 3 roadside inspections since welding and every time it has been missed by the RCMP. I think they are missing the repair because the truck has been restored and I also painted the frame black.

          Decided to buy a FORD a few days ago. (That is why I laughed at the article and comments). A Ford Ranger, to be exact. My son gets 25% off through his company which should cover all those little hidden fees and pesky add-ons (PDI , taxes, etc). The Ranger has a 2.3 Litre 4 banger on all models and all CDN models are 4X4, only. Good customer reviews so far. I am looking to see if they offer a fleet truck…a more basic model and wish to squeeze the remaining life out of the Toyota over the summer.

          The blue paint on the Ranger matches my wife’s eyes. :-) She likes it. Happy wife happy life and all of that.

          If I get 33 years out of this baby that will take me to age 96. Should be good for it.

        • OlliBoy says:

          Fact remains; in Europe NOBODY buys/drives/needs a pick-up truck and you see very few throughout Asia.

        • Reply To PAULO
          Are you aware the Ford Ranger you are planning to purchase gets (only) 16 MPG? Ford is already in hot water for overstating their MPG figures. I would recommend picking up a copy of March 2019 issue of Car and Driver (page 50 for article, page 55 lists the fuel mileage). While the article says they expect owners to get better than their observed 16 MPG the mileage is still about the same as the V8 in the F150. American V8’s are still the world’s best and longest lasting engines. Something to think about. Good luck with your choice.

        • safe as milk says:

          @paulo just change the oil especially if it has twin turbo ecoboost.

          @olliboy expensive gas and narrow roads is why they don’t drive them in europe or asia. asian mini pickups are cool but you are the crumple zone.

        • GuiriCateto says:


          Not in most towns or cities, but in rural areas, especially further south, they are not uncommon. Smaller than modern US versions most of them though, Toyota and Nissan for example.

      • Marc Labbé says:


      • Wolf Richter says:

        Old Engineer,

        Having spent much of my life in truck country — Texas and Oklahoma — I knew lots of women who owned and drove trucks, and loved driving them. Nothing to do with manhood. It’s just a nice piece of equipment that allows you to sit up high, have a good view, and tow that horse trailer that you’re going to buy next year.

        Some people just like trucks. Other people like Mustangs or whatever.

        Also, if you have to move, you can put all your crap in the back and go, is what a couple of girls told me back in the day.

        • Bet says:

          I started driving pickups at 18 yrs old when in the horse racing biz. Drove Fords and a Chevy with a 454 that could have pulled a house over. Then moved to a south Texas farm for 20 years. Ground zero for PU’s. When I moved back to Seattle 10 years back. Back to the mild suburban place I was spawned, I went four long years without a truck. I bought my 2000 Tundra and when I drove it misted up with a lump in my throat . Love my truck. Drove it through two feet of snow two weeks ago in my now mountain neighborhood My truck is a commercial!! Oh and yes I am a truck loving Wimmins

          As an aside this truck was the first PU my software engineer hubs drove. Broke his maiden
          Proper ;)

        • yeah except the PU with a full size bed went the way of the dinosaur

      • MCH says:

        Well, can’t really argue with the truth. But I am sure Ford marketing will find a way. May be they can make them electrically powered in China. But in all seriousness, Ford needs to come up with something. Their line of normal cars are being decimated. They are gradually pushing themselves into a niche.

        In truth, there is likely not very much room in Europe or Asia for F-150 or most other forms of pickups. If Ford is really serious about this notion of mobility, they should go whole hog and buy one of these self driving companies, a start up like a Zoox and try to make that work while leveraging the pickups and SUVs like the cash cows they are.

      • Realist says:

        I did read some times ago in the leading “newspaper” of Sweden, Aftonbladet, a series where they “investigated” flyover-America where the journalists claimed that the main reason for the popularity of trucks was that if people managed to drag themselves to their cars, they needed a car with room enough to fit into …

        • JoAnn Leichliter says:

          I live in flyover country (please, please just keep flying over–don’t land), for whatever that is worth, and have not found pickup cabs whole lot roomirr than my sedan.

      • TruckMan says:

        75.1% of vehicles sold last month in Canada were trucks*. It is, as the last PM made official, Truck Nation. The reasons are because of the cost of transportation, the rural activities (even for city dwellers), and regulations that still allow Joe Public to do their own construction. I just took my snowblower for repair yesterday afternoon. I can’t do that in a sedan. My used truck has paid for itself in saved delivery fees alone in 2 years.
        On the fuel figures, my 11 year old F150 is still delivering within 2% of book value for gas mileage. It has problems with repairs, perhaps more than other makes, but it seems that their fuel consumption figures are more accurate than the others. The reason I think people buy more Fords than other brands up here are the gas mileage, and the fact that the problems don’t disable the vehicle immediately – you can make it home/drive it carefully until (relatively cheap) repairs can be done.
        In the UK, doing reno work, I only owned a station wagon. That’s because all the heavy stuff comes delivered from 3 miles away in 2 hours, not from 45 miles away the next day as here.


        • van_down_by_river says:

          fix your snowblower yourself girly man.

          Learn how to do that and a 1995 Geo Metro will be all the car you need.

      • Setarcos says:

        OE, I arrived at my airport destination after sunset and it was raining, so I swapped my sedan rental for a truck at a higher price. After 15 minutes on the freeway with the really big trucks, I was patting myself on the back. A very rational decision.

        Also was the hit at breakfast when everyone saw me get out of a very red ford f150 with a suit and carrying a briefcase.

      • van_down_by_river says:

        You speak the truth sir.

      • IronForge says:

        Can’t Agree.

        I don’t drive a Truck; but my Friends drove Trucks and SUVs.

        They were the most popular People in my Social Circle. My Friends and I helped move People (recall one Church Call that got a Work Party Move a Battered Wife and Child to Shelter). Move Food for Charity Pantries (non work, volunteer), move chords of wood for friends early winter for their stoves, etc.

        There may be those who look weak who drive Trucks. My Friend looked skinny and weak; but he drove Delivery Trucks for a Living and drove a Toyota P/U for his Personal Truck. He has the Biggest Heart who helped many in need.

        I am honored to call him Friend; and was glad to help him help others along.

      • M. Eiford says:

        I can only transport others, groceries, puters, and clothes in a car—–In an F-150, I can do all that, plus a ton other stuff, like haul your crap to the dump.

        Are you a jealous Gm buyer with remorse syndrome?

    • roddy6667 says:

      Privately owned pickup trucks are rare in China. 99% of those you see belong to the utility companies. Why would anybody drive a pickup truck for a personal vehicle instead of an SUV? In China people do not DIY. Home Depot found out the hard way. They live in mid- and high-rises and don’t have lawns. A middle class person here would not be caught dead in a blue-collar vehicle.

      • Bobber says:

        Are you saying there’s a desire for a rich image in China? I’ve sensed that. Not sure what would drive that, knowing per capita income is nothing to crow about.

        I did hear males struggle to get married because of demographics, so maybe they want to show off a wealthy appearance.

        • Bobber says:

          Not saying it’s any different in America, debt and spending capital of the world.

        • MCH says:

          Sadly, in Asian culture, appearance or face counts for a lot. That’s why you tend to not want to go out of your way to embarrass an Asian colleague. The ones not born in the west will have a fairly strong reaction. And besides, appearances means a lot.

          And of course the projection of wealth is an excellent way to ensure the propagation of the gene. In that way, humans are no different than preening peacocks.

        • roddy6667 says:

          Chinese are very materialistic and status conscious. That does not mean that they are trying to look “rich”, just financially stable and prudent with money.
          Per capita income means absolutely nothing unless you also factor in the cost of goods and services where the money is being spent, and the financial condition of the consumer. If a person has near zero debt and does not need to pay for a lot of expenses that others do, they need a lot less money to sustain a given lifestyle.
          $9600 USD annual household income (not per capita) buys a middle class life in China, measured by Western standards.

      • njbr says:

        Yes, why would a person who is wealthy enough to buy a western vehicle that makes them look like a delivery guy ?

    • Willy2 says:

      – Forget it, mate. I have contacts in Europe and they say that won’t touch the F-150 with a ten foot pole. The reason is that fuel consumption per mile of the F-150 is (way) too high.
      – It’s not a problem when you have low gasoline prices (like in the US) but it’s a disaster when you have high gasoline prices like they have in Europe.
      – Again, forget it mate. But you seem to have the same mindset as one Donald J. Trump. Trump urged the europeans to buy more US made cars. But the europeans simply can’t afford them. (think: high fuel prices).

      • JoAnn Leichliter says:

        Think high fuel prices due to fuel taxes…

        • Bankers says:

          Think trade deficit and resource conflicts…not that I like taxes at all…

        • Willy2 says:

          – My personal opinion is that the price for gasoline here in the US should be double from what it is today.
          – Increase the national gas tax, it can help to pay to repair all those pot holes in the roads.
          – And: Oil is a finite resource. US citizens think that low gas prices and driving a (big fat/large) car are a birth right for them. I don’t encounter this kind of attitude in e.g. Europe.

      • Dan says:

        Not just the fuel prices, the roads and car parks are too small as well; they’re just not practical for most people
        Plus the fear that every time you pull up at the lights, someone’s going to steal whatever you’ve put in the back of it…

    • Willy2 says:

      – Decrease the per mile fuel consumption and perhaps the europeans will buy the F-150.

      • Si says:

        Live in the UK, drive in Europe frequently. Rarely see F150’s. Not just fuel, but the size of roads and parking (particularly). I drive a VW Touareg and even parking that can be a b1tch, have to squeeze myself out of a small door gap. Would love to run around in an F150 but too many places where it would be a pain.

        • JoAnn Leichliter says:

          Really informative comment, and something that we all should have realized.

        • US says:

          Very much true and bang on – fuel economy and narrow roads make large trucks “less desirable” in any where else other than North America.

        • Gene says:

          I agree completely. When my wife and I lived in Germany, our 2001 Pontiac Grand Am (a compact) seemed like a big car. Our house was at the end of a narrow street. If I saw a car coming down the street in my direction, I would wait for it to pass. Otherwise there would just be no room. One of us would have to pull way over to let the other pass. No way is a F-150 a feasible vehicle for most Germans/Europeans.

        • njbr says:

          Personal experience, from last fall–a rented Ford Escape is too big for Italian streets–autostrada OK, but in cities, towns and villages–no good.

          F-150–why would anyone subject themselves to that type of misery ?

        • M. Eiford says:

          Small minds build small roads.

    • economicminor says:

      When was the last time you were in Asia? Or India? They have lots of scooters.. Not a lot of even large SUVs.. To many people, not much room. Trucks there are for delivery. That is when you can’t get it all on your scooter.

      In Europe, they still drive mostly on the same roads that the Romans built.. There isn’t much room for an F150 there either. Try and drive one around Rome or Barcelona. Or Paris.. In England, Scotland and Ireland there are some *major* roads where the tour buses have to back up to a wide spot to pass.

      Poor Ford doesn’t make the kinds of vehicles that much of the developed world wants or needs. In the US we still have lots of Cowboys who’s image would be ruined if they didn’t drive a Truck. Kind of silly as many of them have no saving but they have their big Pick-em-Up Trucks. Its their right.. Can’t be seen otherwise..

      • Marc Labbé says:

        Better…the bridges…. :-)))))

      • MCH says:

        Actually, at one point in the distant past, Ford did make such types of vehicles. But then, they became margin driven. It’s the same old situation. They go to the best possible niche they can find, optimize the living hell out of it. Then survive off of that. The problem of course is that they aren’t adapting to the markets. Ford is more of a mass market brand, but from that respect, the pricing is an issue, and their target audience are just as likely to buy a Geely.

        Although I disagree with the assessment on SUVs, in China, you can find plenty of Q7, X5, , Porche SUVs, these are more status symbols, but the US brands aren’t viewed as much as luxury brands. So, Ford really doesn’t have a chance there. As been pointed out, not really much of a need for trucks or most of Ford’s other products. They don’t denote luxury, sophistication, or sex appeal.

    • yngso says:

      No, they buy cars.

  3. roddy6667 says:

    GM has been making money in China for 21 years. They share the profits and the technology with a partner company. This is the price of admission to the world’s largest auto market. It is not underhanded or unfair. The system allows GM to make more profit than they do in America. This money is propping their faltering stateside market.
    VW has been making money in China for 40 years. They understand the system and make it work for them.
    Ford has a reputation here in China for fighting tooth and nail over every detail with its Chinese partner company. They have not been playing the game, and now their foolish actions have bitten them on the ass.
    I also wonder how much of the American brand cars decline in China is due to the so-called trade war. The Chinese are very quick to vote with their wallets.

    • andy says:

      That’s why I buy Italian shoes, and made in the US soap. Quit chinese goods for couple of years now

  4. andy says:

    The last design from Ford that could stand the test of time was early 60’s Mustang. Meanwhile 20-year old 3-series bimmer still looks like a toy

  5. Lemko says:

    Excellent article!

  6. Lion says:

    Ford used to be a significant owner of KIA motors and tried to buy them, but was outbid by Hyundai. To me it looks like Ford is going the way of GE, and other old-time Corps whose Mgt. is slow to change. Maybe KIA will bid for Ford this time.

    • safe as mlk says:

      @lion not quite how I remember it. The Korean govt forced Hyundai to buy Kia because Kia was going bankrupt and they didn’t want it taken over by a us company after the disaster of losing Daewoo to gm.

      • Lion says:

        Quite true and thanks for the added details. My thought is that Ford best be careful with its Mgt. decision to exit autos. Demand for trucks will shift in time and Ford may end up in need of a partner.

  7. timbers says:

    The solution is obvious:

    The U.S. Just-us Dept should round up, arrest, and charge top officials of car manufactures from Japan, Germany, France, Korea, with crimes against America and imprison them.

    They did it for 5K. They can do it for cars.

  8. rivereddy says:

    Anyone notice the apparent consumption pattern? First, houses become unaffordable for non-elite workers, then automobiles; what’s next…7 year payment plans for major appliances? I think regulatory requirements have become so burdensome that the cost to produce houses, cars, etc. is now higher than non-elite workers can afford to pay without jeopardizing their future. Government and manufacturers seem oblivious to this situation and the Fed can only offer low, low rates to keep the economy rumbling down the road. I wonder if 25% of the workforce (my estimate of elite and near elite workers) can support the entire economy or if it has to shrink, e.g. let 75% live in the worst part of the economy (old houses, used cars) and right-sized home-builders and car companies only produce new for the top 25%?

    • roddy6667 says:

      Aren’t foolish Americans buying bass boats on a 72 month plan to tow behind their $50,000 P/U trucks financed on a similar scheme? Let me guess. These are the same people who live paycheck to paycheck and have little or no savings for retirement.

      • HowNow says:

        Yep. Same ones. And all their ex’s live in Texas. And their non-supported children are scrounging around all over the place. It’s the redneck badge of honor – owning something that sparkles, a pick up, and a few holes where teeth used to be.

        • HowNow says:

          And the really sad news is that they cannot calculate interest rates, so, if they can make the monthly payment for a while, who cares what the actual cost is?

        • Setarcos says:

          Stereotyping people has never ended well …and for a good reason. It is an exercise that is based on errors.

  9. Double D says:

    Ever notice how those 0% financing and huge cash incentive deals have been ongoing for the last 10 years. To me that’s the telltale sign about the overall health of the automaker industry in the U.S. as a whole. GM was bankrupt & needed a bailout. I think Chrysler did as well & Ford was not far behind. They’ve never been able to reinvent a sustainable business model.

    Great deals are still plentiful. In December I hope to buy a new 2019 Dodge Ram 1500 4×4 Truck when they’re having their usual fire sales at year end. I’ve always been a GM man but I think the new Ram is a much better truck all around & a much more comfortable ride over Ford or GM.

    With the Housing Bubble 2 collapse coming closer & closer to reality, maybe more retired Boomers like us will be in the market for a new pickup that can help sustain the industry a little longer.

  10. RD Blakeslee says:

    @ Paulo:

    When I mounted a platform with the ball hitch for my gooseneck cattle trailer atop it, I used rectangular u-bolts around the frame to avoid welding.

  11. Setarcos says:

    I was car shopping well over 20 years ago and there was a diesel on the lot that supposedly some doctor passed on after ordering it because of some missing option detail. Out of curiosity, I took it for a test drive. I asked the guy to describe the typical buyer of the car and he described someone very closely resembling my orientation. After looking at depreciation rates vs a non-diesel model and the est. cost per mile, I bought it. My adult daughter who was a week old at the time still drives that car with a quarter million miles on it.

    My much newer diesel sedan was very compliant with all the new emission reg’s. In fact, the service guy explained how compliant it is right after he estimated the cost to repair it ($4K). He went into great detail on how the emissions system had to be engineered …. I was amazed. After reflecting on it, my anger has been exceeded by my sympathy for the manufacturer. I suspect owners of EVs will have similar repair cost stories to tell soon enough.

  12. Bill W says:

    The big problem I see with automobile sales is state sales tax, county property tax, outrageous insurance cost and the shafting we receive when we visit the dealer for out of warranty repairs.
    This all adds up. A car buyer thinks the cist of the car and interest is it, the spending never ends.
    As a former shop owner, once in a while we’d refer a customer to the dealer for a pcm indtall/reflash. They always got cheated in my opinion.

  13. Bobber says:

    I’ve noticed that retiring boomers are big purchasers of F150s, which partially explains the jump in unit prices. Boomers have the money. Plus, they don’t have to worry about parking at work any more, and they usually have an RV to pull. I know many Boomers that have bought the fancy new truck immediately after formal retirement.

    Problem is, Boomers don’t have the longevity, so this is a short term tailwind for Ford that could turn into a headwind pretty soon.

    Also consider that many of the trucks will outlast the Boomers, so the used market may be a big alternative to new trucks down the road.

  14. Unamused says:

    You Yanks floor me. What’s left of your democracy is evaporating before your eyes, but you’re quite mad about your personal transportation. When are you going to put your toys down and start acting like responsible adults?

    • HowNow says:

      Don’t hold your breath while waiting for an answer.

    • Wolf Richter says:


      As much as possible, this is a politics-free zone. Here, commenters are requested to take a break from political squabbling and look at other aspects of life. Not everything is politics. And politics doesn’t have to dominate every discussion.

      • Keeper Hill says:

        Thank you for this Wolf. I get tired of America bashing and it seems many here want to do nothing but that.

      • HowNow says:

        I got your gentle reminder, too, Wolf. But debt is a serious, serious issue in the U S. Some of it is no doubt due to necessities, but a good chunk of it is the result of ignorance – the ignorance of not understanding basic arithmetic: ratios, interest rates, fractions, percentages, compounding. I taught and can tell you that a lot of people graduate high school without understanding, let alone being able to calculate, these things that are vital to avoid being enslaved with debt.

    • yngso says:

      Good question…

  15. Endeavor says:

    All good points about the truck market. Perhaps another point is small business owners also had 100% expense write off on investments for the business including trucks in 2018. Might have pulled forward some sales. The bigger if for autos may also be the claim millenials will embrace CUV’s and SUV’s. My three all like cars.

  16. MF says:

    With the F-150, Ford seems to be suffering from the Olds Cutlass victim-of-its-own-success problem.

    Hopefully, it can pivot toward the younger demographic without having to say “This isn’t your dad’s F-150” out loud. Maybe the Ranger was their strategy to do this? If so, the mpg scandal might prove more damaging to the brand than we expect, given the high priority young buyers place on environmental impacts.

  17. David in Texas says:

    I had a late 90s Explorer that I drove for 10 years before it was sadly wrecked. It was the favorite car I’ve owned and was trouble free for 110+K miles.

    I’d buy another one today if they made it, but unfortunately, Ford management decided to change the Explorer from a truck platform to a car platform (I suppose the soccer moms wanted a smoother ride). The new Explorer has lower ground clearance is not nearly as suited to off-roading as the old one. Now I’m a former customer, even though I would prefer to buy Ford especially since it wasn’t bailed out.

    • Double D says:

      We bought a new 1998 Ford Explorer AWD fully loaded with the 5.0l V8 engine. Put over 180k miles on it & it was the best vehicle we had owned. Sold it to my sister-in-law & now her son drives it back & forth to work. As I mentioned in my previous post, I never liked Ford products, but at the time that was the SUV with the best options. Ford did it right with that SUV. Then they had to go & ruin a good thing & change the design.

  18. Unamused says:

    Ford, and the world Fords with you.

    Rolls, and you Rolls alone.


  19. Rowen says:

    One of the reasons some of my male friends are fine only owning trucks is that they have no kids, or at least the two legged ones.

    Just another side effect of the collapse of household formation.

  20. raxadian says:

    Getting an extra truck is different, because either the family has grown or you just need one. But getting rid of a decent truck that’s not even five years old, what are you, a millionaire?

    • WES says:

      Whenever I see a CEO plan with a vaguely defined title like “Fitness Redesign” I know there is no real plan in place. This plan means whatever you think it means! There is no clear barn door to aim at! How do you measure if this plan is working?

      I wonder how long it will take the powers to be at Ford to realize that their current smoke and mirrors CEO has no plan!

  21. Gillet Junes says:

    Ah, I love Wolf. He sums up what’s wrong with this world in one sentence. “Corporate malfeasance can be costly. But it blows over.”

    We need a corporate death penalty! If we are told that we must have such deterrent measures to stop street crime, then surely the same principle must be true for corporate crime. A judge brings the gavel down, and all assets are taken, and all the shareholders have are the liabilities. That happens a few times, and I’d bet shareholders start paying more attention to the criminals they elect to run their investments.

  22. Madman says:

    So, how is being a brand name closely associated with America doing in China as the American political system works hard to convince a billion people to hate America?

    One sure effect of Trump’s trade war and the entire American elite embarking on a We-Hate-China campaign, including the kidnapping of Chinese executives, is that this will cut off American corps from the largest market in the world. Yep, trade wars are easy to win.

    • Bobber says:

      Better question: How do middle class Americans like seeing their jobs offshored as a result of a US/China trade imbalances?

      Balanced trade is the only long-term solution, and we are far from that with China right now. Until that happens, trade tensions are a good thing.

    • Unamused says:

      They’re not so much ‘wars’ as they are extortion contests, conducted by national proxies for the benefit of transnational corporations, none of which have any loyalty to either side, to the exclusion of the interests of the actual populations of either country.

      Pass the popcorn. It’ll be more interesting than the show, unless there’s a good bribery scandal.

  23. Laughing Eagle says:

    FORD RANGER- my wife had two, a 1993 and a 2000 and both had a a manual tranny. One had the low hp 6 cylinder (1993) and the other the high hp V-6. The 2000 was a gas hog as it was geared for towing loads. Both were low quality in my opinion. Always had trouble with a miss at idle. Usually it was the spark plug wires. I would not buy the 2019 as it only has a 4 cyclinder and will not be enough power for that truck. And changing spark plugs was a pain as the right side back plug you usually broke it as you tried to tighten it into the block.
    Bringing the ranger back is all about the name, but the quality is even worse.

  24. yngso says:

    It’s incredible how stupid the makers of many things are. Raising prices when sales decline is exactly the wrong thing to do. They should offer the models they already made a lot of money on for a nice low price and keep on making money instead of having people walk away from the bling they can’t afford. Those who can – or think they can – buy the bling, still will.

  25. Cyclops says:

    Biggest weakness for Ford F-150 which are all over ABQ are bought by retired baby boomers and all contractors! Mellinium moved to the big cities and didn’t buy smaller cars because it was a hassles and public transportation is much cheaper. Domestic makers are in serious trouble!

  26. safe as mlk says:

    While Ford is definitely in a tough spot right now, I wouldn’t count them out. I have huge respect for their ability to survive rough spots. Remember that unlike gm and chrysler, the us govt did not bail them out during the financial crisis. They have been slow to the ev party and they don’t have the right product mix for the international market but they are a technological powerhouse. They are industry leaders in gas direct injection and turbo technology and their new 10 speed automatic is damn good.

    With Wolf’s permission, this is what Jeremy Clarkson thinks of the Ford GT:

    • WT Frogg says:

      Sweet !!!! At around $500,000+ a copy I’ll order 2. LOL. Not exactly the a$$ busting, by the seat of your pants with your hair on fire of the original GT 40 though. ;)
      Guaranteed to have the LEOS all over you on the interstate. My old 427 CobraJet Mach 1 was fast as all get out but the one thing it couldn’t outrun was a Motorola. ;) .

    • ft says:

      The Ford GT and current Mustangs are rehashes of earlier successes. That might work on us baby boomers but it’s not much of a way forward.

  27. Yerfej says:

    Obviously it would be best if the government were to nationalize the vehicle manufacturers and reduce models to create less buyer stress in having to define all the options. Plus the federal managers could introduce their professional management techniques around successful five year plans tailored to demand.

  28. Cashboy says:

    Love the comments about the Ford F150 selling in Europe.

    Take the top 10 selling cars in 2018 in the UK:

    1) Ford Fiesta (smaller than a Ford Focus)
    2) VW Golf
    3) Vauxhall Corsa (GM but now owned by French Renault)
    4) Nissan Qashqai
    5) Ford Focus
    6) VW Polo (smaller than VW Golf)
    7) Mini Hatchback
    8) Mercedes A Class (smallest Merc)
    9) Ford Kuga (SUV)
    10) Kia Sportage

    Petrol (gas) is US$7.65 a gallon !
    The time of the car for pleasure (just going out for a drive) are gone in the UK and Europe.

    In Europe we have little demand for pick up trucks (1 tonne only) because trades people and delivery use vans probably because of a combination of theft and weather.

    I often watch your American guy “Scotty Kilmer” on You Tube who, in summary, says the only vehicles worth buying are second hand Toyota Corollas (4 cyl) and Hondas (4 cyl) and Lexus and for pick up trucks, the Toyota Tacoma.

    I also live in Thailand and 60% of vehicles are 1 tonne pick up trucks; Toyota Hilux, Isuzu, Ford Ranger, Nissan Navara.
    Best selling vehicle in Australia is the Toyota Hilux.

  29. Cashboy says:

    Maybe people will start to realise the “American Dream” is not worth the stress anymore and living within one’s means and realistictly is the way to go:

    The “American Dream” is:
    Buying stuff you don’t need.
    With money that you don’t have (debt)
    To impress people you don’t like.

  30. Frank says:

    When I was younger I had severe back pain and driving in my sedan would make it worse. Switching to a pickup truck felt awesome. I could sit up higher and driving a bigger vehicle made me slow down. I had a used Ford F-150, but the heating system had issues and they wanted too much to fix it. Ended up getting a new Silverado in 2009 and that truck has served me for 10 years. It uses as much gas as the F-150 that had a v6. I still look fondly on F-150’s but I can’t afford a new truck and I probably never will again. In Iowa the roads are wide for these vehicles, but any time I need to go to Chicago, I get a rental car. I do occasionally use my truck bed for when I buy large items at the store or when I need to move my son to a new apartment, but for most of the year, the truck is meant to get me from point A to point B when the weather is bad… and lately it has been very bad.

  31. Emma says:

    As part of the “One Ford” initiative we have seen not only the introduction of global models at Ford but also centralization of responsibilility for development and decidions about models at Ford North America. Both ideas – global models and centralization – can harm the company if exessively applied. I think not only China suffers from exactly this: decisions that have been made too far away, in North America, about models their market does not want. Luckily they seem to try to counteract with a Chinese CEO. Maybe too late. I am not sure about their plans for Europe where we have a tough competition with multi-brand car OEMs.

    • char says:

      Centralizing in North America is probably the big mistake Ford made. It is a very weird market with its cheap gas, wide roads and pick-up fetish. Rest of the world looks much more like Europe.

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