Governments Help Ford Cut Debt
Ford Motor Co. is getting help from the U.S. and other governments around the world as it races to slash its debt and boost its credit rating—an ironic position for the only U.S. carmaker that didn't receive a government bailout last year, reported The Wall Street Journal.
Ford Chief Executive Alan Mulally and Chief Financial Officer Lewis Booth are on a drive to get back the auto maker's investment-grade credit rating, which it lost in 2005. Their goal, said a person familiar with the situation, is to get to investment grade in 2012 or possibly by the end of 2011, which may not be a stretch given the $7.3 billion profit Ford has made since the beginning of last year.
A higher credit rating typically lowers a company's cost of borrowing money.
For more than a year, car buyers have flocked to Ford, with some saying they wanted to support the only Detroit car maker that didn't receive a government rescue. Ford's U.S. sales so far this year are up 22% over the same period last year, well outpacing General Motors Co. and Chrysler Group LLC.
Ford increasingly has been able to pay back debt ahead of schedule in part by winning government loan guarantees that allow it to borrow funds more cheaply. It uses these government-backed loans to make investments in its operations, then uses its own cash to pay down its privately issued debt.
Ford officials say the company, like its competitors, looks for government assistance when appropriate. "If we can take advantage of attractive interest rates, we will," Ford spokesman Mark Truby said.
Ford's steep debt stems mainly from a decision in late 2006 to borrow $23.5 billion to fund its turnaround. While the move helped keep Ford out of bankruptcy, it left it with a debt burden for which it paid $318 in interest for each vehicle it produced in the second quarter.
Meanwhile, Ford's two Detroit rivals have relatively little debt thanks to their U.S.-funded reorganizations.
As of June 30, Ford's overall automotive debt totaled $25.8 billion, down from $32.6 billion at the end of the first quarter. Ford paid $951 million in interest on its debt in the year's first half.
More Industry

Pennsylvania Dealership Under New Retailers
The sale of the Chrysler Dodge Jeep Ram store puts a family auto group on a leaner path as first-time dealers take the helm.
Read More →
Battery Storage Takes Priority Over EVs
U.S. automakers are prioritizing battery energy stationary storage over electric-vehicle production as the consumer demand for EVs lags the rest of the world.
Read More →
Auto Dealers Feel Better But Not Great
A second-quarter Cox Automotive poll of franchised retailers and independents found better views of the current market after a good spring but anticipation of third-quarter storminess.
Read More →
New-Vehicle Sales Picture Relative
A May forecast is complicated by last spring’s trade tariff effects on auto retail. Despite continued hard realities, many consumers took advantage of ways to bite the bullet.
Read More →
Auto Group Acquires Third Nissan Rooftop
Iowa-based Coleman Automotive Group recently acquired its seventh dealership, McGrath Nissan, which it renamed Nissan of Elgin.
Read More →
April Less Affordable
Based on prices, reduced incentives and slower household income growth, consumers found it more challenging to buy new last month, Cox Automotive reported.
Read More →
Building an Extraordinary F&I Agency
Work to determine your specialized talent, because that fact will determine everything about your agency’s future.
Read More →
Recipe for Compliance
The secret to both amazing barbecue and compliance is the same: understanding the basics and committing to a process.
Read More →
EVs Getting More Attractive
A growing percentage of U.S. consumers are open to switching and fewer are adverse to the idea, according to a recently completed survey. That’s despite the end of a tax break.
Read More →
EV Sales Drop in April Following Surge
North American electric-vehicle sales were down 28% year-over-year, a sharp contrast from global EV sales growth of 6%.
Read More →