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Ford admits consumer shift toward small cars will eat into profits

Posted Nov 16th 2012 2:30PM

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Big, expensive cars and trucks equal big profits. Small, inexpensive cars equal small profits.

The mathematics in today's marketplace simply can't be argued, and the result, as buyers increasingly switch from trucks, truck-based 'utes and big family cars into smaller sedans and hatchbacks, is less earning potential for full-line automakers. Like Ford, for instance. Citing the rising trend of smaller cars and crossovers, Ford Chief Operating Officer Mark Fields warned that fourth-quarter earnings will be down compared to last year.

Smaller profits in the North American market are one thing; an even bigger problem is the almost complete lack of profit margin in South America and huge multi-billion-dollar losses in Europe, where economies are in crisis and automakers are laying off workers and closing plants. In other words, we're thinking Ford's eight to ten-percent margins in the States aren't looking so bad...

News Source: Businessweek

Image Credit: Copyright 2012 Jeremy Korzeniewski / AOL

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