DEARBORN, Mich. — Ford Motor Co.’s return to profitability last quarter won’t last long unless it can boost sales of cars and trucks and continue to grab market share from rivals.
On Thursday, Ford cemented its position as the healthiest U.S.-based automaker by reporting a surprise $2.3 billion net profit in the second quarter, mainly because of $10.1 billion in debt reductions that cut annual interest payments. The nation’s second-largest automaker also cut 1,000 more blue-collar jobs with buyout and early-retirement offers.
From its core operations, however, Ford lost $424 million. That was still a significant improvement over the second quarter of last year, when it lost $1 billion from its automotive and car-financing businesses.
But being the top-performing automaker in dysfunctional Detroit doesn’t mean a whole lot. Ford’s U.S. competitors, Chrysler and General Motors, both are living on government aid and had brief stays under bankruptcy-court supervision.
Aaron Bragman, an analyst for the consulting firm IHS Global Insight, attributed Ford’s progress to restructuring and product improvements made under chief executive Alan Mulally, who was hired away from aircraft giant Boeing in 2006. Mulally kept Ford from the same fate as Chrysler and GM by mortgaging its factories and even the familiar blue-oval logo to borrow $23.5 billion before the credit markets froze.
Although borrowing money has moved Ford to the head of the class, that debt could come back to haunt the company if auto sales don’t make the modest comeback predicted for next year.
