Ford Motor Co. (NYSE: F) earnings were better than Wall Street had expected even with the U.S. auto market slowing down and aging model lineup. Their second quarter adjusted earnings per share was 56 cents, but expects a 15% tax rate for the year after their used credits from overseas markets have posted losses to lower its tax bill after Jim Hackett became CEO in May.
Ford plans to cut costs in new model introductions since the auto market has been declining for the first time in 8 years as Hackett tries to come up with a strategy to set new long term goals for the company. Shares fell 2.8% which is the steepest intraday drop in more than 2 months. The manufacturer predicted full year profit between the ranges of $1.65 to $1.85 per share.
Hackett plans to reinvigorate the Focus compact which American consumers have been pushing away along with other passenger cars in favor of sport utility vehicles. He wants to move Focus production from Michigan to Mexican and intends to build the car in an existing factory in China where labor costs are cheaper hoping to save $500 million. The company also cancelled plans to sell the Focus in South America as well as reducing spending on the next Focus by $1 billion overall.