Ford has $27.5 Billion in Cash Stashed Away - Ford Inside News Community
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post #1 of 3 (permalink) Old 02-13-2017, 08:05 PM Thread Starter
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Ford has $27.5 Billion in Cash Stashed Away

$27.5 billion. I'll say that again: Twenty-seven point five billion dollars. That's the cash Ford Motor Company (NYSE:F) had stashed as of December 31. That's not all: On top of that huge hoard, Ford had another $10.8 billion in available-but-unused credit lines as of the same date, for a "total liquidity" of $38.3 billion.

To be clear, that's not some fluke number related to Ford's in-house bank, Ford Credit. That's cash, cash equivalents, and marketable securities available to its core auto-making business. It's a real cash pile, and it's just sitting there.

Why doesn't Ford spend it on new products, or a big share buyback, or fatter dividend payments? Why aren't Ford's shareholders screaming about that idle pile of cash?

It turns out there's a very good business reason for Ford to have a giant war chest. Read on.

Lots of automakers are sitting on big cash piles now
Ford isn't the only automaker sitting on a big pile of cash -- far from it. Ford's is pretty big, but most of the major global automakers have $15 billion or more in cash just sitting idle. General Motors (NYSE:GM) had $21.6 billion in cash as of December 31, Fiat Chrysler Automobiles (NYSE:FCAU) had $18.4 billion, Honda Motor (NYSE:HMC) had $15 billion -- you get the idea. On top of that, like Ford, many automakers have set up huge credit lines that they don't tap, often another $8 billion or more.

What's that about? Simply put, these are rainy-day funds. They're huge because when it rains in the auto business, it rains really hard.
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Every sub-$50,000 car on the market will have to answer to the Ford from now on, no matter what badge it brings to the table.

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post #2 of 3 (permalink) Old 02-13-2017, 08:21 PM
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Re: Ford has $27.5 Billion in Cash Stashed Away

Smart move specially after 08

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post #3 of 3 (permalink) Old 02-13-2017, 10:45 PM
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Re: Ford has $27.5 Billion in Cash Stashed Away

That's understandable....

"According to John Wolkonowicz, Senior Auto Analyst for North America at IHS Global, "It can be as much as $6 billion if it's an all-new car on all-new platform with an all-new engine and an all-new transmission and nothing carrying over from the old model."

With 15 to 20+models in some lineups, if the market gets real tight again, the automaker needs to be able to design and build what consumers want to buy to get the automaker back on track.
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