Ford 1Q16 Earnings Call Notes

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Ford Motor (F) Mark Fields on Q1 2016 Results

Chinese consumers are almost “fervor” for SUVs

“I just came back from the Beijing Auto Show, and it was very interesting to see consumers are almost fervor for SUVs. You saw it not only in the exhibitors that were there, but just looking at the folks that were crowded around the vehicles. ”

Used car prices is a supply issue not a demand issue

“And then, Ryan, on your question on used car prices, obviously you’ve seen some of the Manheim reports. This is not a demand issue. The demand is there. It’s really a supply issue as more of these three-year leases come off. We’re going to watch it closely. Obviously, we’ve done a lot of the studies to see, are used car buyers actually cross-shopping with new cars. It’s very small, it’s in the single digits, but clearly it does have implications for trade-in values, so we’re going to continue to watch that closely.”

We’re looking at autonomous vehicles in terms of miles traveled

“in terms of what technology, whether it’s autonomous, or semi-autonomous, or all the connected cars will do for the industry, what is it going to mean? From our standpoint, we’re looking at this – first off, it’s too early to tell, but we’re really looking at this as vehicle miles traveled. And you could argue that in urban areas there may be less car density, either because of costs or just outright legislation, not allowed to use personal vehicles, which could dampen car sales. But also, at the same time, if you make something more available and you make it less expensive, it’s used more. And if you think about things like autonomous vehicles that will be used 24/7, they’ll rack up miles sooner, which will drive, as I mentioned earlier, more service revenue and, ultimately, more car sales.”

Robert L. Shanks – Chief Financial Officer & Executive Vice President

Used car prices falling as lease rates have been high

“you can see our experience in terms of auction values at first quarter mix across all periods there. And you can see that we have seen a decline in both 24 months and 36 months auction values versus a year ago. We are up sequentially from the fourth quarter. We would normally have expected that increase to be higher. It hasn’t occurred and that is largely based on supply. We have, across the industry, more units coming back from the increasing rates of lease over the last number of years. We’ll have about 200,000 units coming back this year. Demand, for us anyway, is still very healthy and about where it has been, we just have more units coming back.”