Mr. Mulally said during a teleconference this morning that overall vehicle demand slid substantially in Europe during the period and noted that U.S. new-vehicle sales in October were the lowest in 25 years.
On an after-tax basis, the automaker said its operating loss from continuing operations, excluding special items, was about $3 billion for the period vs. a loss of $24 million a year ago. Auto operations in North America were a major drag on the company, causing a pre-tax loss of $2.6 billion vs. a loss of $1 billion a year ago. Ford cited unfavorable volume and product mix, as well as unfavorable net pricing.
Profits hold up overseas
Ford's auto arms in South America and Europe both reported pre-tax profits in the third quarter: $480 million in South America (an improvement from the year-ago period's $386 million) and $69 million in Europe (a decline from $293 million a year ago). Ford's auto group in Asia Pacific and Africa was a bright spot in the third quarter, reporting a pre-tax profit of $4 million, but that was down from $30 million a year ago.
Ford's Volvo unit posted a pre-tax loss of $458 million vs. a loss of $167 million a year ago. Ford lost $1 million from its majority stake in Mazda in the third quarter, compared to a profit of $14 million a year ago.
Lewis Booth, exec VP-chief financial officer, said the company spent $200 million less in advertising and promotions globally in the period vs. the third-quarter 2007. That's the same amount Ford slashed in the category in the second quarter, when it reported a record global net loss of $8.7 billion.
Mr. Booth said Ford was "fortunate to have gone to the markets at the right time two years ago to obtain significant liquidity to implement our plan and invest in the new products that will secure our future." He added that the automaker will "continue to aggressively reduce costs and manage our cash with absolute discipline to ensure we have the resources to fund our plan going forward."
Ford's third-quarter revenue, $32.1 billion, was down from $41.1 billion a year ago. The company said the drop reflects lower volume, the sale of Jaguar and Land Rover in June, and changing product mix.
The automaker launched the redone the F-150 pickup, the best-selling model in the U.S., late in the third quarter, although an insider told Advertising Age the campaign won't be as large as the $100-million-plus Ford spent the last time the truck was redone in fall 2004. Ford also rolled out a new-generation Fiesta small car in Europe and remains on track to achieve $5 billion in cost reductions in North America by the end of 2008 compared with 2005. Ford reduced its hourly workers by some 3,000 since the end of the second quarter.
Although Mr. Mulally said the downturn in the global auto industry next year is expected to be "broader, deeper and longer than expected, some recovery is expected in 2010," when Ford will introduce several new small, fuel-efficient cars. Mr. Mulally remains optimistic. "These are challenging and historic times for the global automotive industry, but I am more convinced than ever that Ford has the right plan to see us through."