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Mixed sales results, but automaker stocks rise on need for cars in Houston

DETROIT — The Big Three Detroit automakers on Friday reported better-than-expected August sales and issued optimistic outlooks for demand as residents of the Houston area replace flood-damaged cars and trucks after Hurricane Harvey, sending their stocks higher. General Motors, Ford and Fiat Chrysler posted mixed August U.S. sales, with GM up 7.5 percent and Ford and Fiat Chrysler down. Japanese automaker Toyota improved sales by nearly 7 percent, while Honda fell 2.4 percent. Still, analysts focused on the potential for Detroit automakers to cut inventories and stabilize used vehicle prices as residents of Houston, the fourth largest city in the United States, are forced to replace tens of thousands, perhaps hundreds of thousands, of vehicles after the devastation from Hurricane Harvey. Mark LaNeve, Ford's U.S. sales chief, told analysts on Friday that following Hurricane Katrina in 2005 "we saw a very dramatic snapback" in demand. That said, Ford sales fell 2.1 percent in August. It sold 209,897 vehicles in the United States, compared with 214,482 a year earlier. Sales were down 1.9 percent in the Ford division and off 5.8 percent at Lincoln. Demand was down for cars, crossovers and SUVs. It was not clear how many vehicles in the Houston area will be scrapped, LaNeve said, saying he had seen estimates ranging from 200,000 to 400,000 to 1 million. Ford's Houston dealers may have lost fewer than 5,000 vehicles in inventory, he said. Ford is the No. 1 automaker in the Houston market, with 18 percent share, according to IHS Markit. The company plans to ship used vehicles to Houston dealers and has "every indication we would have to add some production" of new vehicles to meet demand, LaNeve said. Investor concerns about inventories of unsold vehicles and falling used car prices have weighed on Detroit automakers' shares most of this year. Now, automakers can anticipate a jolt of demand from a big market that is a stronghold for Detroit brand trucks and SUVs. "It's got to be a positive for the industry," LaNeve said. Investors appeared to agree. GM shares rose as much as 3.3 percent to their highest since early March. Ford increased 2.8 percent at $11.34, and Fiat Chrysler's U.S.-traded shares were up 5.2 percent $15.91, hitting their highest in more than five years. GM reported a 7.5 percent increase in U.S. auto sales in August, helped by robust sales of crossovers across its four brands.

‘Ford v. Ferrari’ hype prompts Ford to open its Le Mans GT40 vault

“Ford v Ferrari,” the big-screen adaptation of a book about the famous rivalry over racing supremacy in the 1960s, opens next week, and the fevered anticipation has prompted Ford to revisit that period of its storied history by opening its GT40 Le Mans vault. Literally. The Detroit Free Press reports that a group of Ford executives and staffers gathered this week at the Ford Engineering Laboratory in Dearborn to view vintage artifacts from the years-long duel between the intercontinental automakers and reminisce. Those archives contain an incredible 3 miles of shelving, a video vault maintained at 41 degrees and an actual safe. The archives manager reportedly wore protective white gloves and removed the only known copy of the original plans for the GT project. Also shown was an exact replica of the GT40 driven by Bruce McLaren at the 24 Hours of Le Mans in 1966, the year Ford finally vanquished perennial winners Ferrari form the victory podium. It was created and used for the film, with more than 500 miles added to the odometer during filming. Directed by James Mangold (“Walk the Line,” “The Wolverine”) and produced by 20th Century Fox, the film hits theaters Thursday and opens wide Nov. 15. ItÂ’s based on A.J. BaimeÂ’s 2009 book “Go Like Hell: Ford, Ferrari and Their Battle for Speed and Glory at Le Mans.” The film predictably takes some liberties with the real-life story and characters. It focuses on the relationship between Carroll Shelby (played by Matt Damon), whom Henry Ford II and Lee Iacocca charged with developing a Ferrari-beating GT, and maverick British driver Ken Miles (Christian Bale). The Blue Oval had no involvement in the making of the film, beyond offering up archival material for background research. “It was, wow, especially if you had to go out and service a car during a pit stop,” Mose Nowland, a retired mechanic and sports car engineer who worked on the GT40 Le Mans program and spent 57 years with Ford, told the Freep. “Your hip pockets are only several inches away from cars going by at 160 mph.” Read the full Freep story here.

Ford and GM link bonus checks to quality scores

The poor first quarter earnings of Ford and General Motors are having an effect all the way up the food chain. Both automakers struggled with recalls in the first three months of the year, and, according to The Detroit News, they have responded by increasing the percentage of bonuses tied to vehicle quality for salaried workers, including top executives.
GM announced that 25 percent of bonuses (up from 10 percent) for all salaried workers would be tied to its vehicle quality standards. The automaker revealed in its financial report that it spent $1.3 billion on recall-related repairs in the first quarter, and net income was down 86 percent.
Ford also increased the quality proportion of bonuses for about 26,000 salaried workers all the way up to CEO Alan Mulally from 10 percent to 20 percent. The company announced in its report that the amount paid out in warranty and recall claims was about $400 million higher than expected in the first quarter. Its net income fell 39 percent from the previous year. "The change reflects how critical quality is to our overall business," said spokesperson Todd Nissen speaking to Autoblog.