Another concern for some Ford analysts is that the automakers' future earnings may not be as high as the one just reported because the company has brought on some "very significant products launches," which cost a lot to launch, Edmunds analyst Michelle Krebs said.
Much of these costs, of course, go into retooling the plant in preparation for the launches, which include the upcoming new Ford Focus and new Ford Fiesta. Krebs believes that the return on investment will be high. She calls them "very promising launches." The Ford Fiesta, for example, has by most measures been a successful launch, helping Ford outsell Volkswagen in the first quarter. "Rare even in Europe," Krebs remarked.
"Product launches are expensive, but Ford has been flawless in its recent product launches," she said. "While they've been expensive, they've done them well. For example, Ford has been doing a lot of premarketing for the new Ford Fiesta, and have been taking orders for it for a while already.Clearly Krebs feels much more positive about Ford in the coming quarters than the Credit Suisse analysts. "The headwinds are of concern, but my feeling is they're not insurmountable. Some of the concern is over Ford's debt -- I think that's the biggest probably. But I think they can manage it." Ford has done a strong job in keeping inventory in line with demand. According to Krebs, Ford vehicles took only 51 days to sell to a consumer from delivery to dealerships during the first quarter, which was extremely low. Past quarter averages were about 65 to 80 days.
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