Detroit automakers rely on U.S. truck sales for global profits
By Bernie Woodall and Ben Klayman
DETROIT (Reuters) - Detroit automakers have come full circle, relying as they did before the financial crisis on profits from selling trucks and sport utility vehicles in the United States to cover losses overseas.
That's the profit formula Detroit was supposed to move beyond after the financial crisis, gas price shocks and the federal bailouts of General Motors and Chrysler. Ford Motor Co's (F.N: Quote) first-quarter results on Tuesday highlight how reliant the Detroit Three have become once again on their biggest, least- fuel-efficient models.
Industry executives and analysts say the pattern may look familiar, but the risks aren't the same.
Ford lost money in South American and Europe, and Chief Executive Mark Fields told analysts on Tuesday that "we are seeing slower growth" in the Chinese market.
But Ford reported $1.34 billion in pre-tax profits from North America for the quarter, down from $1.5 billion a year earlier. Higher costs for materials, manufacturing and engineering dented the results, but Ford's North American take was more than enough to offset the $404 million in pre-tax losses from other regions. Ford also reaffirmed its full-year profit guidance.
Central to Ford's profit forecast is continued success for the launch of the aluminum-body F-150 pickup, which is still chugging toward full speed. Company executives say demand for the new F-150 is strong.
General Motors Co (GM.N: Quote) last week reported a record $2.2 billion in first-quarter earnings before interest and taxes from its North American auto operations, but break-even results outside North America.
Fiat Chrysler Automobiles NV (FCAU.N: Quote) reports first-quarter results on Wednesday and is expected to show a similar dependence on North American sales of its Ram pickup and Jeep SUVs. Continued...