Ford appears to be on a roll, as the automaker has successfully slowed its cash burn. Despite suffering losses, the first quarter of the year ended with Ford having $21.3 billion in cash reserves on hand. This is up from $13.4 billion at the close of 2008. Although a fourth straight quarterly loss is still bad news, it shows that even without government help, the automaker is surviving in the harshest of environments.
The financial standing of the Detroit automaker is by no means in good shape. However, Ford has impressed analysts and Ford Salinas alike in recent months as they’ve shown more resilience to the current economic hardship and declined new car demand when compared with their Detroit neighbors. Unfortunately, with auto sales reaching a 27 year low, Ford is far from out of the woods.
Ford still is hoping to avoid any government intervention. Already, Chrysler and General Motors have received $17.4 billion in federal aid yet their financial situation remain dire. The reduced cash burn at Ford is the result of structural cost cutting that New Jersey Lincoln Mercury see as a necessary component to turning operations around. As the automaker expects the economy to improve in the second half of this year, it is also expected that Ford will also slow its cash burn even more.
As a GM or Chrysler bankruptcy may pose an additional hurdle for Ford. The effect of a large automaker going under will create an industry-wide ripple effect that will disrupt the supply of parts and other materials, warns one body shop Richmond VA. With this is mind, Ford is also working on contingency plans to help prepare such for this scenario. Meanwhile, Ford is also looking for a buyer for its Volvo brand which should help give Ford additional cash.
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