The launch of the new Ford F-150 pickup truck has been giving the Wall Street a case of the jitters ever since it was unveiled at the 2014 North American International Auto Show.
Ford Motor Co. stock tumbled again after an analyst’s note suggested the recent drop in price of oil, which has cut the price of gasoline to the lowest point in five years, might undercut Ford’s the strategy behind the new truck, which is made of aluminum to reduce weight and improve fuel economy.
In trading Monday, the value of Ford shares dropped 4.7%, to close at $14.28, the lowest since Nov. 10. By way of comparison, the Dow Jones Industrial Average declined than 1% (.58%) on Monday, while the Standard & Poors also declined less than 1% (.63%). Ford’s shares are off 7.5% so far this year, while the Standard & Poor’s 500 Index has risen 7.6%.
The undercurrent of concern about Ford’s strategy also sent Ford shares down in October after the company’s new chief executive officer told analysts that Ford’s profits this year would fall short of its goal of between $7 billion and $8 billion. Instead Ford expects pre-tax profit of $6 billion.
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Ford appears to have been swept up in the turmoil surrounding the plunge in oil prices and lingering doubts about the aluminum truck. In addition, the change to aluminum-bodied truck required a wholesale change in the company’s manufacturing operations, which has cut sharply into Ford’s truck production.
Deutsche Bank’s Rod Lache downgraded Ford shares to hold from buy.
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“Ford’s new 2015 F-150, which incorporates a number of advanced, but costly, powertrain, light-weighting and safety technologies, represents one of the most prominent early examples of this forthcoming change,” Lache said in his note to investors. “We question whether consumers will pay the price for this content with $2-$3 gas.”
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The Ford F-150 is perhaps the single most successful product in automotive industry. Its been the best-selling vehicle in the U.S. for more than three decades and Ford sold 763,402 F-Series pickups last year, 18% more than in 2012.
It’s also the most profitable vehicle in Ford’s line-up and helped keep the company solvent during the double-dip recession of the early 1980s and the 2008-2009 recession, which followed the global financial crisis that left rivals Chrysler and General Motors in bankruptcy.
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