Plagued by bad tires and bad press, Ford Motor Co. made an abrupt reversal from best shareholder value gain to the worst decline among global automakers in the second quarter.
Ford's shareholder return dropped 11.8 percent in the quarter amid a second wave of Firestone tire recalls and questions about the stability of its best-selling Explorer sport-utility. Uncertainty about the cost of the tire recall is pushing down Ford's stock value, analysts say.
Ford's shareholder value had soared 21.3 percent in the first quarter of 2001 to lead a rebound of the Automotive News/PricewaterhouseCoopers automaker index. That rebound continued in the second quarter as the group averaged a 4.2 percent gain. Other than Ford, only Renault and Fiat showed declines for the period. The group still lagged behind two key market benchmarks: the Dow Jones Industrial Average and the S&P 500 Composite Index.
'The outlook on total year production has improved somewhat from a quarter ago,' said Jay Singer, a PricewaterhouseCoopers director. 'There's been improvement in the general stock market trends, and restructuring activities were heavy at the end of last year and announcements continued into the first part of this year.'
Ford's crosstown rival, General Motors, made the best gain in the second quarter.
GM's 25.2 percent improvement was driven by cost-cutting, first-quarter profits that beat Wall Street expectations and expected continued improvements in productivity. GM's failure to strike a deal for Daewoo Motor Corp. also may have helped the company's valuation as some analysts question the wisdom of that plan.
Nissan, boosted by the turnaround efforts of CEO Carlos Ghosn, followed GM with a quarterly improvement of 11.3 percent. Nissan tops the index over a three-year period with a return of 119.8 percent, while Honda leads the one-year index with a gain of 29.8 percent. Continued improvement by Asian automakers, along with some European manufacturers, is likely down the road.
Said Singer: 'Some of the OEMs, particularly the Big 3, (are) being challenged by the market share of the imports and transplants, and that's a continued thing to look into as you analyze the future movement of the stock.'