Vfacts For December

[vztrt]

Originally Posted by GTP006

In Holdens case (who are the ones discounting), the lesser profit is the better option as they have an over supply issue. Any profit (or least loss) is better than having old stock costing you 10's of millions a month just sitting around.

I had wondered which way those maths were supposed to work - for Ford or for Holden.

New Holden: sell $10 - profit $2 - sell 10 = $20 (if they don't sell, drop $1.50 for cost of cash, storage, downtime, cost to move them).
New Holden (with their over-supply) Make that profit $0.50ea. Sell 10 = $5.00 profit.
Discount Holden: $ 9 - profit $1 - sell 18 = $18.00

Hrmmm, wonder what I'd be doing?

Thats a good point, but Ford apparently didn't have the stock so not discounting was a better option for them.

[DanielXR8]

Originally Posted by 4Vman

Nobody is saying Ford is happy, you've totally failed to grasp the concept of profit v turnover.
You don't know holden made a profit do you? they havent made a profit for years and that's before the heavy discounting... you don't need to be Einstein to see where that's leading.
READ what people have written, discounting below cost is a very good way to ensure you're not around too long if you cant make up the financial deficit shortly after.... You can't service cars with a dealership network that no longer exists.

Ok so I sell one Falcon, because you placed an order. ;)

Now there is also this thing called "fixed costs" like plant, materials and labour. I would think with the current sales volumes, Ford is sailing close to the wind. This is aside from suppliers who also would be feeling the effect of Fords decision to basically not make many cars. A slight downturn from here and things get ugly for Ford. I understand what they have done, but I doubt in the current climate that its any less risky or secure then Holdens approach to dump large quantities of discounted stock. Both are in it up to their necks. Fords takes less capital outlay, but gambles there will be no sudden surge in demand (which they would never scale up in time to really capitlise on) and that their supplier network is strong enough to live for an extended time on low volumes.

Ford is not a niche player like a exotic sports car company. It can't just scale back production until three guys in a shed are happily assemblying one Falcon a year. They do need volume and so do their suppliers. The current results of Ford and Holden are just plain ugly. They are both heading towards importer only status, if the new stratergies to build smaller cars fail to pull the punters in.

Looking at Focus and Mondeo sales, which are both fine cars, I think the dealer network is doing an excellent job of ensuring Fords lousy reputation in the market, prevents any real sales turnaround.

The next five years will be interesting for them.

Dan

[TZENU]

Originally Posted by ltd_on20s

i always thought turnover was the best sign of a healthy business...the more stock turned over even at a lower cost is more profitable in the long run......more customers, more incomings, more business.

IMO, a healthy business is the one with the healthy bottom line (profit)... You can have a turnover of 1.5billion but can also have overheads exceeding 1.5billion which produces a loss. While an incresing turnover can show an increase in consumer sales etc more often than not, it will always have an adverse affect on the P&L through an increase in expense.....Obviously this will not always be the case (as capital expenditure can be accounted for in many ways)

Until we can see a set of full financial reports by both sides we can't really tell who has managed their finances better; Ford or Holden

[4Vman]

Originally Posted by vztrt

Thats a good point, but Ford apparently didn't have the stock so not discounting was a better option for them.

Yep, holden "fire sale'd" excess stock at what i'm reliably told in most cases was at less than cost. Ford have significantly reduced generic stock and focused on MTO so the need to discount wasn't as desperate.
Neither situation is ideal, but i'm more at easy with Fords model of "shrinking" their business while trying to maintain margin.
Holden have taken the other approach of continuing to pump out cars then trying to find ways to sell them.
I think its fair to say Holden have much greater fixed operating costs than Ford, so they may not have the options to down size or reduce capacity efficiently as quickly as Ford have..

[4Vman]

Originally Posted by GTP006

In Holdens case (who are the ones discounting), the lesser profit is the better option as they have an over supply issue. Any profit (or least loss) is better than having old stock costing you 10's of millions a month just sitting around.

I had wondered which way those maths were supposed to work - for Ford or for Holden.

New Holden: sell $10 - profit $2 - sell 10 = $20 (if they don't sell, drop $1.50 for cost of cash, storage, downtime, cost to move them).
New Holden (with their over-supply) Make that profit $0.50ea. Sell 10 = $5.00 profit.
Discount Holden: $ 9 - profit $1 - sell 18 = $18.00

Hrmmm, wonder what I'd be doing?

Yes, i agree, and you are right except for 1 thing, holden are selling for $7.. so its -$1 (loss).

[Scott]

Originally Posted by 4Vman

Yes, i agree, and you are right except for 1 thing, holden are selling for $7.. so its -$1 (loss).

I used the maths from above which suited the Ford discussion ;). But still, -$1 and liquifying the cars is a far better result than having them sit for months costing, roughly, a bazillion dollars more than the -$1 per unit.

Holden aren't commiting suicide, they are liquidating stock. Why they have so much stock is another discussion but the fact remains that the best way for them to get money in the bank is to lose some first. You can't cut up cars to pay your staff with.

Though, if they did, I would take 4 weeks leave and get me two SS's!

[4Vman]

Originally Posted by GTP006

I used the maths from above which suited the Ford discussion ;). But still, -$1 and liquifying the cars is a far better result than having them sit for months costing, roughly, a bazillion dollars more than the -$1 per unit.

Holden aren't commiting suicide, they are liquidating stock. Why they have so much stock is another discussion but the fact remains that the best way for them to get money in the bank is to lose some first. You can't cut up cars to pay your staff with.

Though, if they did, I would take 4 weeks leave and get me two SS's!

I agree with that too, given the circumstances thay were in it was a short term fix to maintain/bolster cash flow... they can't maintain that strategy though.. that would be suicide.

[Smoke Pursuit]

Hmm...

I still think Holdens in a better position, and know their dealership network is... They have had to sell the cars at a lessor cost to dealers to get them pumped out at the prices they have advertised, so the dealers would be laughing at the moment... Ford delears on the other hand have no incentives to bring customers in and very little stock to sell, leaving them high and dry...

As a car ages the cost of that car decreases, as development costs are always highly factored early in its life, so when it does get older / tired manufacturers have some buffer to discount...

Fixed cost is another big issue... If your not turning over cash then your not covering it...

[500SEC]

I think GMH had to clear stock because their finance company GMAC has pulled out of the vehicle market. By 31/12, GMAC no longer financed vehicles in Australia. Presumably many Holden dealers were financed by GMAC and were forced to either discount (with factory backing) or auction their stocks. Ford were not forced into this margin-losing position.

[Smoke Pursuit]

Originally Posted by 500SEC

I think GMH had to clear stock because their finance company GMAC has pulled out of the vehicle market. By 31/12, GMAC no longer financed vehicles in Australia. Presumably many Holden dealers were financed by GMAC and were forced to either discount (with factory backing) or auction their stocks. Ford were not forced into this margin-losing position.

That was providing they didnt get someone else to refinance their floor plans.. Most Holden dealers were safe in this regard and have changed over to St George or GE...

I don't think the Factory would have backed a discounting spree for the sake of dealers although i could be wrong.

[Nikked]

Holden must be worried somehow, the ads are flowing, 'new Techology' is being promoted (AFM), getting the Prime minister to launch green technology in the form of a local built chev...Holden are the masters of spin.

[ltd_on20s]

Originally Posted by bfiipursuit

That was providing they didnt get someone else to refinance their floor plans.. Most Holden dealers were safe in this regard and have changed over to St George or GE...

I don't think the Factory would have backed a discounting spree for the sake of dealers although i could be wrong.

factory would have had to back it for it to go thru. no dealers are going to discount that heavily without getting kickbacks for it. would be suicide for dealers.

[phillyc]

Top 10 vehicles for 2008 calender year

http://www.drive.com.au/Editorial/Ar...=60020&IsPgd=0

1. Holden Commodore (51,093)
2. Toyota Corolla (47,901)
3. Toyota Hilux (42,956)
4. Mazda3 (33,755)
5. Ford Falcon (31,936)
6. Toyota Yaris (26,097)
7. Toyota Camry (23,067)
8. Mitsubishi Lancer (19,688)
9. Toyota Aurion (19,562)
10. Hyundai Getz (17, 256)

You can see why Toyota is clearly number 1 in sales, they have 5 of the top 9 vehicles on sale.

[whales]

Remember Holden had a winner with their 99 cents per litre campaign because of the price of fuel now, so they have used this savings in bigger discounts on the Commodore range without going too much over budget in total IMO

[Peter B - CV8]

Originally Posted by 4Vman

That is exactly right....

Its better to sell 7500 cars at break even or a small profit than 11000 cars at a loss...
Ford's strategy to move more towards manufacturing to order and away from commodity predicted sales is a good one at this time.

Good point. Also, the purchasers of those cars will then need them serviced - which adds to the dealerships profit. In fact, it wouldn't surprise me if service departments were the most profitable part of a dealership.

[Auslandau]

Originally Posted by GTP006

In Holdens case (who are the ones discounting), the lesser profit is the better option as they have an over supply issue. Any profit (or least loss) is better than having old stock costing you 10's of millions a month just sitting around.

I had wondered which way those maths were supposed to work - for Ford or for Holden.

New Holden: sell $10 - profit $2 - sell 10 = $20 (if they don't sell, drop $1.50 for cost of cash, storage, downtime, cost to move them).
New Holden (with their over-supply) Make that profit $0.50ea. Sell 10 = $5.00 profit.
Discount Holden: $ 9 - profit $1 - sell 18 = $18.00

Hrmmm, wonder what I'd be doing?

All I wanted to show in the example is that the quantity of something sold doesnt relate to how well someone is doing as many get fixated on being number one. Companies are only in buisness to make a profit! Nothing else. They do not do it for charity. To discount a small amount, in many cases you need to sell 3 times more to make the same profit.

Of course in the case of liquidating over stocks ..... yes you may need to get rid of stock as it costs alot of money sitting ....... Still not a good thing to do but if you can cover your losses long term there isnt a problem. If you can't you can be in the poo real quick. If you leave stock sitting you can be in the poo just as quick. Hopefully Holden can long term but I can promise you so many of them have fingers and toes crossed. Its a huge balancing act and hopefully they know what they are doing.

I could write a 15 page mini thesis on the subject and would bore everyone to pieces ..... there are so many scenarios on this and only the head honchos would have the facts to base thier particular decisions on why they do things. Stuff we of course here do not have access too.

Originally Posted by bfiipursuit

I still think Holdens in a better position, and know their dealership network is... ...

You beleive this thats no probs. I know they are selling alot of cars .... but able to pay the bills? I know two DP's very well (Ford), things are tough but they are very happy they aren't pushing Holdens .....

Originally Posted by bfiipursuit

Fixed cost is another big issue... If your not turning over cash then your not covering it...

Turning over cash is great isn't it .......... sell $1,000,000 with outgoings of $1,100,000 a month : WOW turning over 12 million a year. Who pays the 100k extra a month??????



| [/url] |

[Rodp]

Originally Posted by Peter B - CV8

Good point. Also, the purchasers of those cars will then need them serviced - which adds to the dealerships profit. In fact, it wouldn't surprise me if service departments were the most profitable part of a dealership.

...and I think that's being overlooked by nearly everyone.

Servicing and spares - going to make a whole lot more in the backend if you simply have more vehicles on the road.

[4Vman]

Originally Posted by Rodp

...and I think that's being overlooked by nearly everyone.

Servicing and spares - going to make a whole lot more in the backend if you simply have more vehicles on the road.

Nobody's overlooking it, it just isnt such a big deal... barring issue it will be 12 months before anyone spends a cent at their dealer... a couple of hundred for a basic 15K service isnt going to make a big difference.
On the other hand the dealership could have been turned into flats by then....

[Rodp]

Originally Posted by 4Vman

Nobody's overlooking it, it just isnt such a big deal... barring issue it will be 12 months before anyone spends a cent at their dealer... a couple of hundred for a basic 15K service isnt going to make a big difference.
On the other hand the dealership could have been turned into flats by then....

It isn't?

I'd like a clarification from someone in the know as well. I'd put money on the dealership making significantly more out of service, spares and accessories than the sale of a new car.

[Burnout]

I'm sure you'll find this interesting:

Car Sales Figures for the UK

The Society of Motor Manufacturers and Traders figures show new car registrations in December fell 21.2% to 108,691 units, a smaller monthly fall than the 35% that had been predicted – possibly due to the VAT reduction.

That brings the full year sales total to 2,131,795 units in 2008, down 11.3% from the year before.

The SMMT figures also show that diesel market share reached an all time high of 43.6 percent, while average CO2 emissions fell by a record 4.2% to an average of 158.0g/km.

2008’s top sellers:

1) Ford Focus – 101,593
2) Vauxhall Corsa – 99,574
3) Ford Fiesta – 94,989
4) Vauxhall Astra – 90,641
5) VW Golf – 65,029
6) Peugeot 207 – 53,462
7) BMW 3 Series – 49,384
8) Ford Mondeo – 44,150
9) Vauxhall Zafira – 43,169
10) Vauxhall Vectra – 42,555

http://www.pistonheads.com/news/defa...?storyId=19195

FoMoCo are doing OK over there.

[vztrt]

Ford in europe have been making a profit for years.

[ea90gl]

It's the same deal every month, Commodore sales almost double falcons then theories and ideas are thrown around in order to justify the sales difference for that perticular time. Well if you ask me I believe its because of the sheep out there, the ones that get all warm and fuzzy after they hear things like "Times are tough but Australians and Holden are tougher". It might not be the most scientific or most factual based reason but hey since there's alot of sheep out there and alot of BS spinning in advertisments then it makes perfect sense

[Windsor220]

Originally Posted by Rodp

It isn't?

I'd like a clarification from someone in the know as well. I'd put money on the dealership making significantly more out of service, spares and accessories than the sale of a new car.

I always thought the dealership survived on service and parts.
Where I work the other month our service department made around $190k in a month. $100000 went on expenses so $90k was pure profit. Our DP said the other departments struggled and didnt come close. New car department only make a couple of grand on each car and then there's expenses to come out of that like commission to the seller etc. So yeah I would reckon it was more the service/parts side of things making the money.

[GTP290]

Its been a strength of Ford to sell less cars and make more profit on there car even though they dont and havent sold as many Falcons than Commodores over the past 13 years or so. The only difference now is the Falcon is 5k-7k dearer than the Commy whereas in the past the Falcon was always the cheaper option over the Commodore.
One has to ask why the Commodore is heavily discounted against the Falcon with a longer list of options, either they are overstocked, or they have found ways of producing the car a hell of a lot cheaper, common sense would point to the first reason rather than the latter.
Given the news that Ford Geelong will continue building the local six cylinder engine, and the Fact the Holden/ Pontiac ute deal failed to materialise along with GM accepting a Government hand out in the US whereas Ford didnt even take a cent, common sense would also tell you that GM are in deeper trouble than Ford with the evidence thats been reported so far!
What I find extraodinary is when theres a hint of bad news for Ford, the Journalist will come up with an opening statement like" More bad news for Ford today "!
When I heard of the export colapse of the VE ute to America, it was not reported as bad news or even a blow to Holden, it was just put down to the fact that economic times are tough right now so its not good business sense for Holden to export at the moment. I may be biased in some way, but I sure as hell hear what im hearing with an open mind, but I cant help feel that theres a lot of sentimental support for Holden, I dont think that will ever change!

[imugli]

Couldn't agree more with all of that.

It seems the press are suckers for the whole "Australians and Holden are tougher" BS as well. Never mind the fact that Holden is just as UNAustralian as Ford is these days.

[Gobes32]

Time will tell, but I feel Ford is in a better position than Holden. In July when the profits/losses are announced we will know for sure.

Interesting in europe, not one toyota in the top 10???????

[vztrt]

Originally Posted by Gobes32

Time will tell, but I feel Ford is in a better position than Holden. In July when the profits/losses are announced we will know for sure.

Interesting in europe, not one toyota in the top 10???????

Toyota (and Lexus) aren't all that crash hot in europe. The cars need to have good quality but also packed with features at a cheap price.

[Martyvan]

Originally Posted by Gobes32

Time will tell, but I feel Ford is in a better position than Holden. In July when the profits/losses are announced we will know for sure.

Interesting in europe, not one toyota in the top 10???????

I would say over the years, Toyota hasnt built the same reputation as what it has here... people flock to Toyota dealerships on reliability.... i personally wouldnt buy another one.... my focus has been much more reliable than my corolla, and they are both 03ish.

When Ford make the focus here, it opens up a massive world of opportunity and new profit... they can make a lot of different cars, running production at near capacity, and continue with the make to order scenario....

[imugli]

Not to mention that Focus is being produced here to be exported, too.

[Quicksand]

Originally Posted by imugli

Couldn't agree more with all of that.

It seems the press are suckers for the whole "Australians and Holden are tougher" BS as well. Never mind the fact that Holden is just as UNAustralian as Ford is these days.

Tell that to this guy - http://au.youtube.com/watch?v=VpPT-1...e=channel_page

Obsessed much? Checkout his profile LOL