Financial Analysis

Henry Ford built his first car the Quadricycle in 1896 and started mass production in 1908. Henry Ford did not invent the car. He produced the car which is affordable for the average people. His concept remains until today. TodayЎЇs Ford is the third largest automobile manufacturer and the largest auto finance provider in the United States with 325,000 employees worldwide, offices and facilities in 34 countries and 200 markets. After several acquisitions, Ford owns a total of eight brand names including Ford, Lincoln, Mercury, Mazda, Volvo, Jaguar, Land Rover, Aston Martin and Hertz, the worldЎЇs No.1 car-rental firm (Hoovers, 2005)

In 2001, distracted by investments in technology and services, and intent on maintaining too many brands, Ford lost $5.5 billion despite the $1.45 billion its financial service contributed. Thereafter, Ford seemed not to be able to regain the positive profit margin from the automotive production and sales, although the financial service steadily increased its net profit to $5 billion in 2004. In the past few years, FordЎЇs unit of vehicles sales in America has been decreasing. On the other hands, its international market continuously grew. The number of vehicles sold increased from 2.63 million to 2.87 million. Although the sales revenue was going up, its cost remained high (page 57, 2004 annual report) . One of the reasons is because of the unstoppable lawsuits due to the quality issues. The recent recall in September this year affects nearly 3.8 million pickups and SUVs. It could not only hurt the corporate performance but also lose the consumersЎЇ confidence to the brand name. Therefore, quality control is the key to FordЎЇs business.