$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.