Ford
Motor Company (NYSE:F) shares sink 1.50% as a report shows
that the car sales in Europe continued to decline throughout the first half of
2012.
The car
producer’s sales plunged 16% to 124,200 cars in
the month and 9.6% to 733,900 cars in the first six months of fiscal 2012. The
automaker had reported a plunge of 20% in the net profit of $1.6 billion in the
first quarter of 2012 as compared to net profit of $2 billion reported in the
same period year ago. Though the
earnings per share of $0.39 beat estimates of $0.35 per share but it was still
down 17% as compared to earnings per share of $0.47 posted in the first quarter
of fiscal 2011.
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Analysis
The main driver of such lower profits was higher tax expense, lower
operating results and higher charges in the U.S. under the UAW agreement in
2011.
The Company had to recall 8,266 units of its recently launched Escape
compact sport-utility vehicles (SUVs) in order to fix their improperly
installed carpet padding. Previously in
May 27,000 units of Windstar minivans from Virginia had been recalled
due to certain defect caused by salt that could cause the axles to rust, crack
and even break, leading to loss of vehicle control.
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Analysis on Ford
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The auto
industry on a whole has been unable to escape the slump in Europe caused by the
lower consumer confidence, weak economy and the
sovereign-debt crisis in Euro zone. Car sales in European Union has declined
6.8% to 6.64 million units in the first half of 2012 in spite of the automakers
providing free road tax, high discounts and incentives.
The auto industry has declined 6.96% in the last six months.
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