Ford Motor and GM ‘continue to drive the core to future transition’ – BofA
By Sam Boughedda
The General Motors (NYSE:GM) and Ford Motor (NYSE:F) restructuring plans are “chapters in Core to Future transition,” BofA analysts said in a note Monday.
The analysts, who maintained a Buy rating on both companies, stated that the plans were not big news but needed.
“In recent days, General Motors has provided additional color on its cost reduction plan, and some details are also emerging from Ford, which has released less of a direct comprehensive restructuring plan,” they said.
“Ultimately, cost-saving plans aren’t new to the auto industry, but with the volatile macroeconomic environment and growing investment needs with the transition to electric vehicles (EVs), it is more important than ever for the companies to max core operations to fund the future,” the analysts added.
GM is targeting a $2 billion reduction in annual run-rate fixed costs by 2024, with 30% to 50% expected in 2023 and the full amount in 2024, while it also announced a voluntary separation plan on March 9.
“Ford has committed to implementing a lean operating system to take out billions of dollars of costs. While Ford has not yet provided a new cohesive restructuring plan, more color is emerging, including with recent news that it is planning to cut 1,100 jobs at its plant in Valencia, Spain,” the analysts explained.
“We maintain our Buy ratings on GM and Ford as the companies continue to drive the Core to Future transition,” they continued. “GM’s ongoing execution and strength in its Core business continue to enable it to step up investments across EVs and autonomous vehicles, further Future-proofing the business.”
“Meanwhile, Ford is aggressively repositioning its business model by leveraging the combined strength of its Ford Blue and Ford Pro businesses to fund its growing Model e business along with vital connected technology.”