Tomahawk, WI 10/09/2014 (Basicsmedia) – The swift changeover to Ford Motor Company (NYSE:F)’s new model F-150 is unlikely to go well with customers as earlier anticipated, according toMorgan Stanley’s analyst Adam Jonas. During an interview on CNBC, Jonas argued that a number of things will have to work to the automaker’s favor if the F-150 is to be a success in the market. Jonas also believes that an increase in deflation due to the opening of more plants in the U.S will considerably affect General Motors Company (NYSE:GM) performance going forward.
A bearish cycle in the U.S auto industry has prompted Morgan Stanley (NYSE:MS) to downgrade Ford to a share a price target of $14 with an ‘underweight’ rating. Some of the things that will have to work properly for Ford’s F-150 to be a success in the market include conducive temperature and humidity levels in the new model that is purely made of aluminum.
“Ford Motor Company (NYSE:F) has recently said very publicly and as recent as the capital markets that everything regarding the truck launch and preparation are going according to plan. But things can and do go wrong as the auto business is difficult. […]We just think there should be more balance in the debate and investors to prepare for reasonable uncertainty and technical difficulty when the machine goes which will be later this month,” said Mr. Jonas.
The fact that 90% of Ford Motor Company (NYSE:F) global profitability comes from the sale of the F-150 truck means everything will have to work to its advantage if it is to register the desired returns
Jonas also remains bearish on General Motors Company (NYSE:GM) mostly because of the impact of the Yen that has underperformed year to date considering 40% of the auto industry in the U.S is made of Japanese cars.
“We are concerned about the capacity growth. One of the best predictors of automotive demand is the number of plants that are opening up. In our calculation from the company Data; we are opening a hell of a lot of a number of plants, our ability to produce has never been higher. So we think there is deflation coming, “said Mr. Jonas.