Wednesday, April 13, 2011

Ford (F) Expects Asian Production Slowdown

After taking some big hits on Tuesday early in the trading session, shares of Ford Motor (NYSE:F) rebounded some after the company said it may have to completely halt production in the Asia-Pacific region in the latter part of April, or a minimum, slow it down.

Probable parts shortages because of the earthquake in Japan continue to be the impetus behind the situation.

Ford said in a filing, “Should the supply of a key material or component from Japan be disrupted and an alternate supply not be available, we could have to reduce or temporarily cease production of vehicles, which could adversely affect our and Ford Motor Credit Co.’s financial condition and results of operations.”

Competitors Toyota Motor Corp. (NYSE:TM), Honda Motor Co. (NYSE:HMC) and Nissan Motors (NSANY) continue to come to grips in their domestic market. Some analysts believe the Detroit car makers, including General Motors (NYSE:GM) and Ford, will be able to grow more market share as a result, but that doesn't seem to be as certain as some may think, as it doesn't matter how many parts are short, but what those parts will be and if they're interchangeable or have alternative sources.

Citigroup (NYSE:C) analyst Noriyuki Matsushima noted last week, “The full extent of damage to the supply chain and production disruption from the power outages are being underestimated by the market, and we would avoid the sector as things stand.”

I think he's right. It appears there is far too much optimism in the auto sector by analysts and media outlets, who seem to ignore the realities and focus on their own wishful thinking.

Ford closed Tuesday at $14.91, up $0.05, or 0.34 percent. In after hours the company was trading the same, as of 6:30 PM EDT.

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