VW investment helps Ford make a profit

Due to a joint participation with VW in a robot car company, the US automaker has generated a surplus. But sales have dropped 50 percent.

Argo AI Self-Driving Car – (photo by Ford)

$1.1 billion net profit in second quarter

The entry of Volkswagen into the robot car division saved Ford from a loss in the crisis quarter. The second largest US automaker from Dearborn near Detroit Auto City posted a net profit of $1.1 billion from April to June after $100 million a year ago.

VW invests $2.6 billion in Argo AI

The reason is the increased value of Ford’s Argo AI subsidiary for self-driving cars after VW transferred $2.6 billion to its American partner for its investment. As a result, the value of the company, in which Ford and VW now hold 40 percent each, rose to $7.5 billion.

Autonomous & EV alliance

Volkswagen and Ford sealed their billion-dollar alliance for electric cars and autonomous driving last month. Together, the partners want to share the costs of new developments and strengthen each other in times of crisis. No merger of the two groups is planned.

Operating loss of $1.9 billion

The associated appreciation of the subsidiary Argo has a positive balance sheet effect for Ford. In the auto business itself, however, the crisis has the same impact as other automakers: In the second quarter, Ford reported an adjusted operating loss of $1.9 billion, or 35 cents per share. That was far less than analysts had estimated and Ford itself had promised.

As of April, the automaker expected the net loss from the Covid 19 pandemic to double in the second quarter to more than $5 billion from the previous quarter. Ford shares benefited from the better-than-feared result and rose 2.5 percent in after-hours trading.

150,000 Ford Bronco reservations

Thanks to its robust liquidity, Ford sees itself well equipped for the coming months and is selling models such as the newly launched bestseller F-150 and the SUV Ford Bronco. More than 150,000 reservations have been made for the upcoming two- or four-door Bronco SUV. For the current third quarter, management led by CEO Jim Hackett announced a pre-tax profit of between half a billion and 1.5 billion dollars, which should also contribute to further savings. Management expects a loss for the fourth quarter.

2021 Ford Bronco

Overall, according to experts, the chances for Ford are not bad to weather the crisis: “After Ford has survived the worst phase of the upheaval by Covid, we believe that the focus is now again on the efforts to redesign,” wrote Analyst Dan Levy in a comment. The chances of the new products are promising, but there is still more to be done with the restructuring.

Author: Nabeel K
Email: nabeel@wheelsjoint.com

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