Ford Stock to Take a Big Leap in 2017
Ford Motor Company (NYSE:F) stock had a good start to the year, as the company announced that the company’s December U.S. sales beat all expectations. Ford’s sales went up by 0.1%, to 237,785, and retail sales went up by five percent, to 183,454 vehicles. Ford stated that the sales of its “F-Series” pickup trucks posted their best month in 11 years.
Ford stock got a big boost on this news, and 2017 is likely to be a busy year as Ford’s CEO is set to prepare the company for the future of mobility.
At the biggest technology show of the year, CES 2017, Ford Motor Company shared its plans for “Ford Smart Mobility.” This road map is drawn with an aim to make the company a leading player in mobility, connectivity, autonomous driving, and creating great customer experiences.
Ford CEO Mark Fields is upbeat about the future of Ford Motor Company, as the carmaker also announced that Ford cars and Amazon.com, Inc.’s (NASDAQ:AMZN) “Alexa” are now a team, which means that Ford drivers with “Ford SYNC 3” can now access Amazon’s cloud-based voice service Alexa to play audio books, add items to shopping lists, and check the weather. Drivers will also be able to search their destinations and control their smart home devices.
Not only this, but Ford has joined hands with AT&T Inc. (NYSE:T), with a goal to bring high-speed connectivity together with great customer experience to more than 10 million Ford customers by 2020. With the help of “Ford SYNC Connect,” owners would be able to interact with their vehicle from any location through the built-in AT&T network connection. Customers can use their smartphones to unlock doors, check the fuel level, or locate a parked vehicle. (Source: “AT&T 4G LTE To Power Ford Sync Connect In More Than 10 Million Vehicles In North America By 2020,” Ford Motor Company, January 5, 2016.)
Ford stock had suffered earlier, along with the stocks of other auto manufacturers, when Donald Trump intensified his war of words with the industry. Through his tweets, Trump made it clear that a hefty border tax would be imposed on companies that were building their cars in Mexico.
Early in January, Ford had canceled its plans to build a car factory in Mexico and announced that it would invest $700.0 million to expand its Flat Rock, Michigan factory. Ford had said that the company would make new electric, hybrid, and autonomous vehicles in the expanded facility. Ford CEO Mark Fields defended the move, saying that the decision had nothing to do with Donald Trump; the declining North American market demand for small cars led to this move.
Ford had plans to invest $1.6 billion in a new plant in Mexico, a move which was disliked by Donald Trump. The decision to invest in the Michigan plant would lead to the addition of about 700 jobs. F stock added a few points as investors heaved a sigh of relief.
Challenges for Ford Stock (NYSE:F)
As Ford Motor Company comes to terms with the new Trump administration, as well as the changing landscape of the automobile industry, things are likely to get more challenging in 2017. In a recent interview with Business Insider, Mark Fields shared how the company intends to take on the coming challenges. He talked about how the move towards electric and autonomous cars has forced the automaker to rethink the way it has been doing business. (Source: “Ford’s CEO reveals his plan for the company’s biggest transformation in history,” Business Insider, January 16, 2017.)
Fields said, “Our business model over many years has been about how many of the vehicles did we sell. Now, we are looking at the ecosystem around that and essentially it’s looking at services and revenue, it’s about looking beyond just the sale of the vehicle.” This change of strategy will be a big leap forward for the company, as well as for Ford stock.
The Ford CEO added that, although Ford Motor Company will continue to build and sell cars, it is also looking holistically at mobility. The company had established its subsidiary, Ford Smart Mobility LLC, which has a complete focus on creating, growing and investing in new transportation services.
In September 2016, Ford Smart Mobility bought Chariot, a San-Francisco based shuttle service. The company has also partnered with a bike sharing company, Motivate. Ford will continue to experiment with lot of ideas, which is likely to keep F stock under pressure.
As the company continues to invest big in technology this year, there will be an impact on F stock. However, things are bound to improve. Ford Motor Company is on track to tackle its competitors as the race toward autonomous vehicles and shared mobility intensifies, and this is good for Ford stock in the long term.