At Ford Motor Co., the market is discovering out the reply to that question proper now. Despite the automaker’s being among the many 10 U.S. companies flush with the most cash — Berkshire Hathaway, Apple and Microsoft are others, by FactSet information — each inventory and bond analysts say Ford faces so many challenges over the subsequent few years that it wants to carry on to each penny.
Start with two associated, close to-time period challenges: Ford has introduced a multi-12 months restructuring, primarily in Europe and South America, that may price an estimated $7 billion in money, in response to Moody’s Investor Service bond analyst Bruce Clark. Then, think about billions for an overdue refresh of essential automobiles together with the corporate’s finest-promoting F-series pickup line, and an estimated $11.5 billion more to get Ford ready to deal with the push into electrical and autonomous autos highlighted by the Mustang Mach E crossover introduced Sunday. With seven electrical fashions due by the tip of 2020, Ford’s effort is seen as smaller and fewer bold than many rivals’ strikes, mentioned CFRA Analysis inventory analyst Garrett Nelson.
On the similar time, as a result of Ford is redoing costlier automobiles likes its Explorer SUV whereas phasing out cheaper sedans which are no longer standard with customers, particularly within the U.S., the corporate is within the means of changing 75% of its North American lineup, measured by sales quantity, by the tip of 2020. And automotive making is such a cash-intensive enterprise that Ford wants to verify its money steadiness stays above $20 billion to deal with a recession every time it might come, bond analysts say. Predictions a few recession are a notoriously poor science. However, it’s, in the end, a matter of when not if.