Ford shares fall as disappointing forecasts overshadow sales growth

Ford (F) shares are falling during extended trading hours after the automaker's outlook came in at the low end of its forecast and dwarfed its sales surplus. The results come after General Motors (GM) posted a profit rise and a forecast upgrade last week.

Nishit Madlani, managing director of S&P Global Ratings Autos, joins Josh Lipton and Josh Schafer on “Market Domination Overtime” to break down the results and what they mean for Ford going forward.

Madlani says: “From a credit rating perspective, we currently have a stable outlook. And that depends heavily on the cost improvements that we expected over the next 12 to 18 months. We lowered our margin forecast in the summer, which reduced the scope for significant underperformance. So the numbers you know today were at the lower end of their range. It doesn't inspire too much confidence. But we had already anchored that in our lowered forecasts.”

When it comes to electric vehicles (EVs), the analyst expects “a slowdown” but notes that this weakness is not specific to Ford: “This is consistent with what we have heard from several players in the near-term term.” The bright spot in the EV downturn is that “they can sell more of their more profitable vehicles,” but “that means there are costs that need to be incurred because they changed their strategy on certain products, which was necessary,” he said become.”

The analyst says traditional automakers' difficulties with electric vehicles have raised further long-term questions about strategy. “It will take a while. They have already postponed some of the (investment) plans. I mean, Ford in particular has made changes. “They've basically gotten rid of the all-electric three-row SUV and now they just want to build a hybrid SUV.” He points out that pricing will likely be the next biggest headwind for traditional automakers trying to make a profit from their electric vehicle business.

For more on Madlani's take on Ford's earnings and what they say about the broader U.S. auto market, watch the video above.

For more expert insights and analysis on the latest market activity, check out Market Domination here.

This post was written by Naomi Buchanan.