Ford at Bank of America Conference Notes

Bob Shanks – EVP and CFO

China looks really really good

“China started off very strongly. Little hard to tell in the first two months because of the impact of the Chinese New Year but it looks really, really good. Pricing there is starting to stabilize. We still expect it to be negative year-over-year but certainly we’re starting to see pricing stabilize, if we look at it on a sequential basis, which is a good sign.”

See auto sales in the US in the 17.5-18.5m range

“Yes. We see the U.S. economy, as I just mentioned, growing at sort of probably the low twos percent, maybe. We’ve got a range of 2.3, 2.8; we think we’re probably at the low end of that range. We think the industry is going to be in that range, I just mentioned 17.5 million to 18.5 million. So that seems to be holding up well. Pricing is looking good. Our pricing is up more than the industry but the industry actually is up in terms of transaction prices, although incentives within that are up modestly but pricing still looks to be healthy.”

Cars are under pressure vs trucks and SUVs but overall industry is quite healthy

“We see cars as being under pressure, and that’s more I think driven by the fact that consumers for quite some time have been shifting from cars into utilities; trucks holding up pretty well. And so, I think that’s really more of what’s happening there. It’s more of a consumer demand driven dynamic than anything else in terms of cars. But, the industry still looks quite healthy.”

No imminent recession and even the market seems to be recognizing that

“There’s nothing that would suggest that we’re eminently ready to go into a recession here in the U.S., which is what we’ve been saying for quite a number of months, which I think the market is starting to recognize as well. So, things seem to be getting back on track in terms of even a market perception. So, I think that everything is being set up of for the type of year that we had thought it would be, in terms of the U.S.”

The industry has been moving to more leasing at longer terms

“What we have seen is a continued shift, and this has been something that’s been happening for many, many years, not just recently to longer and longer terms. We’ve also seen more and more leasing in the industry.”

For Brazil to turn it’s going to take some structural changes to the economy

“It is entirely externally driven; it’s — an economic downturn is driven by the commodity cycle, but it’s also overlaid I think by all the political issues that we see in Brazil and read about every day. Frankly, the turnaround is going to require the cycle to turn. And I think resolution to some extent of the political crisis that we see because – for Brazil to unleash its potential is really going to require some structural changes to the economy, which is going to take government just have the ability and the will to do that. So, I think it’s dependent in part on that.”

Auction value of cars has been falling due to the demand shift into utilities

“Cars is a different issue. I think this is more of an industry issue. We’re seeing the auction value of cars decline and pretty sharply. And again, I think, this is going back to what I said earlier around the whole consumer demand shift from cars into utilities, and that’s playing out now in the auction price.”

Ford credit is going to have headwinds from auction values

“I think things appear to be a little healthier than what we thought, when we look at January and February. But I think if you — as I mentioned yesterday, if you — when you see our results for the first quarter, our expectation is that when you look at Ford Credit’s results, which I think will be quite good in the aggregate but within that on a year-over-year basis, you’ll see headwinds from auction values;”